20 years after the birth of sports streaming, here's what marketers need to know today
As the World Cup reaches its climax, and 20 years on from the birth of sports streaming, Samuel Scott talks to Nielsen to discover the present and future of sports viewing and what it means for marketers and advertisers.
/ Gustavo Ferreira on Unsplash
In today’s fragmented media world, it is now difficult for any program to gain significant market share. That makes sports viewers extremely valuable – and an increasingly fierce area of competition between the linear and streaming TV industries.
On August 26, 2002, Major League Baseball in the US became the first professional sports league to stream a regular season game. (The New York Yankees defeated the Texas Rangers by 10-3.) Two decades later, Americans and those in other countries now have several linear or streaming options for many live sporting events.
Streaming always gets the headlines today. But what are people in the US actually doing? The answer is more complicated. And what can marketers learn? In this column, I look at recent Nielsen reports, review company data and interview an executive there for the answers.
Sports are the savior of linear TV – for now
If there is one reason that traditional television will not die anytime soon, it is sports.
But first, the bad news for linear TV. According to Nielsen, overall streaming surpassed broadcast and cable in July 2022 to claim the largest share of US TV viewing for the first time. In September 2022, streaming’s share hit an all-time high of 36.9%. Streaming usage increased almost 35% and gained 9.2 share points from September 2021 to September 2022.
More information from Nielsen. Rights holders are increasingly pursuing streaming-first deals such as Apple TV with Major League Soccer and Amazon Prime Video with Thursday Night Football. 80% of sports fans have regularly or sometimes watched streaming or online channels this year. 85% of soccer fans watch on a streaming service. NBA fans index even 6% higher in propensity to watch on a streaming service or OTT platform than sports fans in general.
Now, the good news for linear TV. According to Nielsen’s 2022 global sports marketing report, linear TV subscriptions have declined 18% since 2019. But month-over-month linear TV viewership has increased 22% because of sports programming. (And this is especially noteworthy considering that sports represents only 2.7% of total broadcasts.)
Nielsen put it to me this way: 94 of the top 100 programs shown on broadcast TV were sports. So were 69 of the top 100 viewed shows on cable TV. Most significantly, one-third of linear TV ad revenues now come from live sports programming.
"Sports continue to provide an enormous lift to traditional linear television viewing and it remains as the largest live appointment-to-view entertainment,” Jon Stainer, managing director of Nielsen Sports in North America, told me in an interview for this column. “However, as media consumption habits shift to streaming-first platforms, sports leagues and events are rightfully meeting the consumer around these platforms."
Remember: streaming may or may not be the future of television. But to sell stuff today, marketers need to reach people how they are watching TV today.
Linear TV might still be cheaper for sports fans
Still, there might be one more argument in favor of sports advertisers favoring linear TV. In my opinion, people are eventually going to pay for so many individual streaming services that together they will function as the equivalent of a cable TV package in terms of programming and cost.
In the US, regional sports networks (RSNs) usually hold the rights to broadcast local sports games in their areas. RSNs are not included in popular streaming services but are in cable TV packages. CNET reporters Kourtnee Jackson and Ty Pendlebury recently ran the numbers and discovered another reason that sports give an advantage to linear TV.
“Depending on your location, getting a cable subscription that includes sports channels like ESPN, FS1, TNT and the local RSN, as well as local CBS, Fox and NBC stations for the NFL, might actually be cheaper and easier than streaming,” they wrote.
Basically, sports is slowly becoming the only reason that people watch linear television. But it is a very big reason. So, what does that mean for marketers and advertisers?
Brand sponsorships are still the most important in sports ads
People hate ads on TV and skip them on YouTube. They use ad blockers on computers and unsubscribe from spammy email newsletters. Apple’s iOS now forces mobile apps such as Facebook, Instagram, and Snap to ask users for permission to track them, and 84% are saying no. And much of digital advertising may be contributing to climate change.
Whether sports advertisers want to target people on linear or streaming TV, what are they supposed to do in such an environment? The answer seems to continue to be brand sponsorships. According to Nielsen, they are the second most-trusted ad channel.
Some additional findings. Sponsorships drive an average 10% lift in purchase intent among the exposed fanbase. A 1-point gain in brand metrics such as awareness and consideration leads to a 1% increase in sales. Upper-funnel campaigns also increase the efficiency of lower-funnel sales activations.
One marketing talk that I have frequently given is how different media channels are good at doing different things. On the left, a chart from Les Binet and Peter Field. On the right, one from Analytic Partners. They are two of the images I use in the presentation.
Sponsorships are the most brand-building media of all (the left) and are also the most efficient over the long term (the right).
"Being a fan of a particular team, sport or event drums up a certain amount of passion, emotion and interest,” Stainer said. “If you are interested and care about a particular team or player and there's a brand that they've partnered with, our research indicates the likelihood of you feeling positively about that brand or product is likely to follow."
Over the coming years, streaming platforms will undoubtedly try to take more and more sports distribution rights away from cable and satellite TV networks. But that will be only half of the battle.
OTT networks will also need to prove to advertisers that sponsorships on them are as effective as those done on linear TV – if not more so. And cable and satellite outlets will try to prove the opposite. Time will tell who wins that sports competition.
Surprisingly, B2B sport sponsorships are growing the most
With apologies to Nielsen, the chart above is already a little outdated. The crypto and NFT boom on the right has already gone bust – and for good reason, because NFTs are simply overrated pieces of digital artwork.
But what surprised me the most was Nielsen’s finding that sports sponsorships by IT software and hardware companies are projected to grow the most – 44% – by 2026.
When marketers think of sports advertising, we generally think of what I will call the ABCs – alcohol, babes and cars. A high-tech B2B category seems the furthest away from that. But Stainer told me that IT platforms have been using sports and sports sponsorships to highlight the capabilities of their products for years.
“These tech companies can often be seen as a strategic partner, whether it's equipping a sports venue with state-of-the-art technology to make it smart and energy efficient, enhancing the fan experience, or helping sports organizations drive their digital transformation,” he said. “This differs from a traditional sponsor that is mainly focused on media exposure during live events.”
Some examples that Nielsen provided: Google with the NBA, SAP with FC Bayern Munich, Infosys with the ATP Tour, IBM with Wimbledon and Workday with the PGA Tour.
In general, the idea of B2B companies doing brand sponsorships is sound. Again, I will show a Binet and Field chart.
For a few years now, companies have been realizing that they have been spending too much on so-called ‘performance’ and too little on brand. For example, Airbnb reported this month that its increasing investment in brand is still paying off. Even in the B2B world, businesses, on average, should have a 46/54 split between brand and activation as well as a long-term focus on mental availability.
When it comes to IT companies focusing in part on brand, the principle is sound. But as far as sponsoring major sports events, I have questions about that tactical media selection.
Take what IBM says it does at Wimbledon: “By combining the power of hybrid cloud and AI, IBM Consulting worked with Wimbledon to co-create an open and flexible platform of innovation giving millions of fans a unique, personalised digital experience. This platform transforms massive amounts of tennis data into meaningful and engaging insights for fans, automates key business processes, and secures Wimbledon's entire environment.”
One, I do not think most people watching Wimbledon know what “hybrid cloud” means. (It is when one’s IT infrastructure runs applications in more than one environment such as on both on-premise servers and Amazon Web Services.)
Two, any high-level executives at Wimbledon are probably chief executive officers (for whom IT is likely a low priority) and not chief information officers. People ranging from CIOs to IT ops staff are generally not die-hard sports fans. My day job is now working as head of marketing at a company that sells IT software, and our Tel Aviv office conversation focuses more on the new season of Stranger Things rather than on Israeli or European football.
Investment in TV analytics is increasing – possibly for the worse
At last month’s Future of Media conference in the UK, Attention Council chief executive Andy Brown and media analyst Ian Whittaker discussed how advertisers are increasingly looking to move from social media platforms to television particularly because of the opportunities that streaming will provide in sports and elsewhere.
“Advertisers are interested in what linear and CTV generate in terms of reach, but what they are really interested in is how these channels compare to other digital forms of video,” Brown reportedly said. “Cross-platform measurement cannot be of any quality, it has to be of a high quality – it needs to be independent and have third-party validation.”
In that context, Goldman Sachs and Nielsen have been investing in new forms of TV analytics in the areas of audience measurement, attention measurement and sales attribution. I will leave the debate over whether reach or attention is more important to Byron Sharp, Karen Nelson-Field and the others involved in the recent heated discussions.
My issue is with the increased focus on TV sales attribution. First, television is widely considered to be one of the best builders of mass consumer brands. So, why would anyone want to diminish TV’s most powerful ability? These investors and technology platforms seem to want to turn television into yet another short-term direct response channel that is measured only in immediate sales.
Second, analytics dashboards in general push marketers to focus only on purported “last-touch attribution” even though attribution models are utterly unscientific and completely made up.
If dashboard numbers rise following a TV commercial, then the advertisement will get the credit and not anything that happened before. Why? Digital technology can track only digital channels and not touches that occur, say, in the real world and not on a screen. (But even that is not perfect. So-called “dark social” is just untrackable “word of mouth” from people talking privately online.)
Third, digital analytics platforms can quantify only what people are doing and not what they are thinking. The more that we focus on immediate actions, the less we focus on long-term thoughts and feelings. Eventually, it seems that everything will be measured only in short-term direct response because that is only what analytics platforms can measure.
Want proof? Look at the last 20 years. As soon as digital ad tech first arose in the 2000s, an entire new generation of marketers became obsessed with so-called “performance marketing” largely because they did not know any better. Brand be damned. Sadly, such new TV ad tech will likely lead advertisers down the same path of decreased effectiveness.
Once upon a time, marketers – like Nielsen – surveyed a statistically valid sample of actual human beings. Now, we put digital analytics dashboards between us and the people in our markets. And we measure the dashboards instead of the humans because it's easier and cheaper. But it is not more accurate – especially when the numbers are not audited.
Fourth, take addressable TV – the technology that aims to show different ads to different people while they are watching the same program. That also destroys the ability to build mass brands out of the mistaken assumption that more segmentation and more personalization is always better. One strong message to all potential category buyers is often preferable.
Technology often hides more than it illuminates. Technology can needlessly complicate things that should be simple. Technology just means that something is newer. It does not necessarily mean that it is better.
One more important thing to measure
Still, there is one metric that I would love to see someone measure: what is the rate of piracy in today’s increasingly streamed TV world? Decades ago, it took some technical know-how to steal cable from a neighbor’s connection. I don’t know if there were ever any good statistics on how common that was.
But today, I could watch any streamed sport event on my computer or smart television for free with just a few clicks of a mouse – if I would choose to do so. I have known pubs that will find an illegal stream of a match and put it on a large screen for people to watch. (Thought: should Linear and streaming TV channels as well as producers themselves count such viewers in their official numbers to advertisers? They are watching, after all.)
When we see reports on what percentage of the market watches something on linear versus streaming TV, I also want to see a percentage of how many are seeing it illegitimately. Because that might be the true threat to both linear and streaming TV as they battle each other.
The Promotion Fix is an exclusive column for The Drum contributed by Samuel Scott, a global keynote marketing speaker based out of Tel Aviv, Israel. His opinions are only his own.