Benefits of Digital Marketing in Sports

Abstract

The aim of this paper is to explore the benefits of prioritizing digital marketing in the sports industry based on research derived from measuring the growth of revenue in other industries. While the articles differ in how digital marketing was applied, all instances showed promise that digital marketing not only assisted companies from a business perspective but also strengthened consumer relationships. Tiago and Verissimo (2014) indicate technology is continuously growing and online interactions need to be taken into consideration when business planning. Mangold and Faulds (2009) further support the implementation of digital marketing by discussing the advantages it provides for customers and corporate relationships (an extremely important aspect in the sports industry). Several sports organizations have incorporated digital marketing in their business structure; however, this paper will evaluate how to successfully balance the rapidly growing technology advancements while maintaining traditional aspects of sporting events.

Keywords: digital marketing, business planning, consumer relationships

The Benefit of Digital Marketing in Sports

Originating as an experience once only attainable from stadium seats, sports culture has grown rapidly in response to technology. Over thousands of games now accessible from a smartphone and the comfort of an individual's own home. However, Tinley (2011) states "the effects of science and technology on the state of modern sport cannot be underestimated." The difficulty incorporating technology into sports is maintaining the appeal of watching a game from the stadium but providing access to the fans who simply cannot. Tiago and Verissimo (2014) argue the importance of no longer questioning whether people are using the technology but "what they are signing into and why." To understand how digital marketing could benefit the sports industry as a whole it is essential to grasp an understanding of what digital marketing is and how it can be tailored to sports. This paper will analyze the research of several successful business structures and digital marketing antics to comprehend the benefits of digital marketing in sports.

Tiago and Verissimo (2014) suggest in "Digital Marketing-Why Bother?" the advantages digital marketing provides to the relationship between consumer and corporate relationship. Digital marketing serves as an opportunity to break the fourth wall in interactions and allow fans to feel like they are part of the experiences versus just spectating. Market Research is conducted to allow companies and corporations to receive feedback in response to their marketing campaigns. Marketing often serves as the first communication between corporations and consumers and therefore is the most important. Responding to the consumer perspective and what technology offers them is the first part of business planning (Tiago and Verissimo, 2014). Efficiency, convenience, the extent of information available, product diversity, and a typical broader selection of products serve as the main reasons consumers chose to forego digital experiences. Mangold and Faulds (2009) suggest consumers feel more comfortable having an online network to rely on so they understand exactly what the return on investment will resemble. "Online communication tools allow customers to respond to firms" further indicating that without a digitalized marketing plan, the sports industry could see a large setback in the number of fans they are able to draw into the industry.

Ainscough and Luckett (1996) argue that digital marketing not only aids in consumer relations but also in brand building, sales, publishing, and generating conversation about industries. One of the greatest challenges the sports industry faces is the hyper focus on negative stories regarding athletes and the organizations they play for. These conversations can be detrimental to companies that have not developed a strong brand and online presence. As a result, "…it is reasonable to expect that firms will dedicate substantial financial resources to facilitate interaction with customers." (Weinberg and Penlivan, 2011). Research conducted by Weinberg and Penlivan indicates that digital presence averaged at 81 percent of importance when business men and women were asked to rank the areas of investment for their companies. Human resources followed at 45 percent of importance. While for consumers, technology has allowed them to develop better understandings of the products and quality of experiences through online networks, it can be difficult for businesses to measure the return on investment when developing marketing campaigns; however, new calculators are being introduced to measure this success. With extensive benefits and new opportunities for both businesses and consumers to benefit from digital marketing, it seems inevitable that it would enhance the entirety of the sports industry.

The emphasis on digital marketing versus marketing as a whole is due to the impact of technology on sports. Tinley (2011) writes that technology has effects on performance and profit, consumer expectations, athlete demands, ethics, performance enhancement, and margin of human error. Digital marketing can exist in each of these concentrated areas to benefit athletes and organizations versus technology continuing to have a negative effect. In regard to performance and profit- currently, the sports industry is valued at an "estimated $400 billion domestic market". This value has dramatically altered the stakes and rules for performance, and with additional pressure on amateur, youth, collegiate, and professional athletes it can be deeming to their well-being and ability to play. Casey Wasserman (former arena football player), started his own sports marketing agency to develop athletes into digital entities to protect and prolong reputations. When incorporating digital marketing into a business plan the objective goes further than a consumer using a product or in reference to sports, attending a game. The objective is to get the consumer to return. In order to successfully do this, consumer expectations need to be exceeded. "Fans expect heroic feats and embrace levels of technology that facilitate it and allow them to participate in the action through live digital feeds" (Tinley, 2011). Digital marketing for the consumer can range from scores being texted to cellphones, or to the design and function of large stadiums and sporting venues.

Another challenge facing the sports industry is the difficulty associated with attracting millennials to attend games. Increased mobile applications make it easier for fans to watch on their personal devices but this is harmful to stadium revenue. With stadium renovations valued at billions, it is important to provide incentive to millennials. Smith (2011) writes in "Digital Marketing Strategies that Millennials Find Appealing, Motivating, or Just Annoying" she discusses the most productive ways to capture the attention of millennials through graphics, bright colors, and interactive systems. Ghosh (2010) emphasizes that "such marketing strategies are effective tools". Incorporating digital marketing will not only increase incentives to millennials but also provide significant benefits for organizations. The ease of use, expansive potential, and the promotion of internal/external relationships are examples of the multiple mutual benefits of digital marketing strategies. Several companies have enacted these strategies and consequently increased revenue, consumer relations and loyalty, and stronger branding.

Next-Gen Loyalty is a digital marketing strategy aimed toward prolonging the relationship between the consumer and the organization. Before technology, this took the form of tactics such as "punch cards". Essentially, a token given to a customer that allows them to earn points, stamps, or hole punches and after attainting a certain amount (by continuing to frequent the company), rewards are granted toward the consumer. "Loyalty programs have evolved so quickly that they're now considered a table stake," ( Failla, 2017). While loyalty is still an essential part of business planning, organizations have had to adapt in order to accommodate for modern technology. One company in particular, Dunkin Donuts, has implemented several digital marketing tactics to enhance awareness, strengthen sales, and ease the experience. Through personalization perks, partnering with other companies, convenience perks, and even a Dunkin App, sales increased by approximately 122 million dollars. Dunkin Donuts first put into action their app in 2012 and by 2014 their sales increased by 90 million(Statistica, 2018). After the establishment of On-The-Go ordering in 2016 sales increased by 32 million dollars the following year. It is no secret that the time, money, and effort going into the app is paying off significantly for Dunkin Donuts Sales. Even in 2018, the company is still managing to find ways to offer ease and comfort to its customers through Google Assistant. This information clearly supports the case for creating an app to further brand development and increase consumer usage. Roma suggests in "Understanding the Price Drivers of Successful Apps in the Mobile App Market" that the use of digital marketing becomes "one of the most effective ways to target an audience". Not only does the data from Dunkin Donuts Revenue reports provide reason for the sports industry to follow in their footsteps, the marketing strategy developed by Dunkin is consumer driven. The sports industry can benefit greatly from implementing similar methods concentrated to fit the structure of sports organizations.

An instance of Nex-Gen Loyalty within sports can be seen in Major League Baseball(MLB). The MLB has focused on enhancing the overall attendance in stadiums and therefore most of the functions of their digital platform are geared towards stadium experiences. Through the establishment of their MLB app, fans are able to break through the fourth wall and have the most interactive stadium experience possible. Abrahamson an executive of the MLB says, "essentially we wanted to create micro locations within the stadiums where you can get different experiences." The app features the ability to check into the different stadiums, play with seat options (such as map, upgraded seating), food and beverage order, and a rewards system to continue to earn rewards. The MLB "has attracted the greatest attention from researchers and practitioners interested in increasing game attractiveness" (Boyd, 15). The app launched in 2013 resulting in the greatest increase since 2008. From 7,527 average fans a game to 8,078 over the course of one year. The app generated a 7.3 percent increase which was the fifth highest total out of the duration of MLB existence. Other instances of similar loyalty programs exist with sporting teams like the New England Patriots who launched the "Gillette Stadium App" in addition to their own "New England Patriots App."

The majority of large companies have put into effect successful marketing strategies that reward loyal customers. These strategies continue to draw and attract new customers and strengthen pre- existing relationships. For example, Amazon quickly grew to be the fourth most valuable company, "accounting for 43 percent of all online sales." (Cakebread, 2). The company developed a strategy that focused primarily on consumer experience and bargaining strategies. Amazon encourages customers to spend more money as an incentive for free shipping. The sports industry can follow similar strategies with a reward system encouraging fans to attend more games during a season and spend more while they are there. If Amazon was not enough, companies such as Uber, Lyft, Ulta Beauty, and Sephora have all developed similar reward systems that benefit those who frequent the brand. Referral codes, company credit cards, and guaranteed flat line rates are all examples of customer rewards offered by these brands. Granted, these companies vary in what they can offer the consumer, but it does not deflect from the fact their digital marketing reward systems have benefited them long-term. Further supporting the claim that the sports industry would benefit from developing a higher focus and concentration on digital marketing strategies.

Digital marketing has exhibited a major importance in any company when developing marketing strategies or allocating budgets. Proven to be more effective and less expensive, digital marketing continues to be a necessity in all industries including sports and entertainment. Patrutiu-Baltes (2016) stresses an emphasis on inbound marketing, which exhibits and "organic marketing form" where the company and consumer relationship is prioritized. "Basic levels of personalization are expected by consumers" (Neolane 2018) supports. With continuous improvements and constantly changing ways to strengthen relationship between consumers and awareness of products and services, digital marketing proves to remain competitive. Consequently, different levels of marketing are exploited. Within sports and entertainment, this can lead to issues of consumers no longer opening emails and clicking on links to grab attention. Neolane (2018) explains the importance of adapting digital marketing strategies that cater to the individual sport and venue( and more specifically individual teams) so that sports " generate more ticket sales and increase revenue". "Reaching consumers though digital media is considered to be the most promising field of development for marketing in the upcoming decade." (Okazaki et al. 1). By implementing digital marketing into the sports industry, not only will an increased fan base occur but revenue will continue to grow as the love for the sport continues.

Sport Market Analytics report that 9,633,000 surveyed people out of 17,696,000 people use their phones for game related activities during sporting events. These activities resemble checking statistics of games/players, team website, food and beverage (if at stadium), watching other games, exc. While the entirety of surveyed people admitted to using their phone during any sporting event. Meaning that, 100 percent of people are on their phones and only 38 percent of them use it to engage in related activity. Further concluding that an investment in digital marketing could drastically improve the sports industry. Neolane (2018) argues that within the sports and entertainment industry it is the "poorly timed and coordinated messages" that drive down the effectiveness of their marketing campaigns and that better practices exist within the industry to target fans digitally. Often, it is a result of lacking personnel and budget needed to uphold effective campaigns; however, through marketing automation and streamlining this is realistically attainable within the industry.

In sum, digital marketing goes beyond having a website, it is "having a strategy that includes a mobile friendly site and robust social media." (Rottschalk, 2012). The sports industry is made up of hundreds of organizations, various levels, and a constantly changing roster of participants. An industry as fast-paced as this, the marketing incorporated into these campaigns is required to support the continuously growing industry. Digital marketing will continue to enhance current strategies already in place in addition to building a larger variety of one-to-one lifetime dialogues. As technology continues to increase the ways consumers are able to retrieve and engage with information, the sports industry will also continue to thrive and attract new fans. "The world now runs on connected mobile devices and computers supported by search engines." ( Rottschalk, 2012) and it is no longer a question of whether digital marketing should be a part of business planning, it's a matter of discussing how to incorporate digital marketing into the industry to accommodate the needs of both consumers and organizations.