Ben Wells, the current director at Well Said, published a review on LinkedIn this week that, in my opinion, reflects positively, but also critically on the role of the sports sector in the digital age. The following summarizes his main points.
Why is Amazon one of the world’s most innovative companies? There are many developments in the company’s 20-year history from which other companies can learn – including the sports sector.
Amazon started out as a pure online bookstore before it began to diversify – first in the form of related goods like CDs, video games and DVDs, then today in the form of a platform where we can buy almost everything. This is what comes to mind when most people think of Amazon.
Amazon is now the world’s fourth largest publicly listed company, with 2016 sales of 136 billion US dollars. This does not happen by just selling books. In the past 20 years, Amazon has continually challenged itself – with spectacular results. Amazon Web Services (AWS), the largest cloud company in the world, has developed from the project of a cloud infrastructure for internal needs.
From the sale of CDs and books, Amazon first moved to the download market, then towards streaming. The launch of Amazon Prime enabled the development of the OTT player for all media, and competition with Netflix on their basic core service (Netflix, by the way, is an AWS customer). As the latest solution, the digital assistant Alexa will play a decisive role in the lucrative bot market. At the same time, rumors about Amazon investing in the phone business again are going around.
Amazon is not a simple online retailer anymore. Of course, online retailing will remain an important part of the company, but it is clear that Amazon has consistently redefined its activities to become a global giant.
What does sports have to do with it?
One can describe Amazon as a child of the digital age. It is not just about technology or data, but about an entrepreneurial mindset. A mindset that is agile, curious and hungry. A mindset that appreciates and accelerates innovation. It is about a mindset that is always one step ahead of the market and constantly finds new ways to monetize its values.
Only very few sports organizations, companies or associations have emerged in the same period as Amazon. In the 23 years that Amazon has developed and evolved, most of the key players within the sports sector have followed the same model they started with. A model that is basically almost 100 years old.
The consequence: many stay behind as the world continues to turn. This is very clear, for example, in the traditionally popular clubs in the second football league. Whoever depends one hundred percent on game day e.g. ticket sales or gaining club members, neglects the other 99% of the year when there is no game being played. The clubs are undoubtedly in a difficult tension between tradition and modernity, or even commercialism. Still, only interacting with customers in the most basic way causes these clubs to miss out on other opportunities from fans who might want something more if only there were other options offered.
What has to change in sports?
The sports business is largely powered by media-driven sponsorship packages, favoring brand communities with extensive reach and impressions rather than direct and personal links to fans / customers / users. Similarly, there is a dependence on linear TV deals.
The attempt to outsource the company or club’s own commitment strategy to third-party providers who have the customer data, which is actually of high value for the club, must also be called into question.
In 2017, brands are likely to invest more money in digital than traditional platforms, at least in the US. A large part of this in the strong, purposeful and measurable, simultaneously faceless algorithms of Programmatic Advertising platforms. But, despite all the technical possibilities, brands still want to network with people. Why can’t sports make the connection between the power of Big Data and the emotions that it offers?
Companies in the sports sector must cease to think and act as though they are in the sports sector. Nobody should give up their core, which is sports, but the bigger competitors especially need visions. In parallel to the “club core,” FC Bayern Munich and other clubs should consider how they can further develop their business model in the direction of technology, data, lifestyle or media.
Neither tradition nor modernity should be neglected.