Digitalisation in Sports: in contrast with the Innovator’s Dilemma.
In the past few years, there has been a tremendous enhancement in the field of digital media and online technology. Consultancy, marketing, finance, healthcare and many other sectors have leveraged this tool and revamped themselves. But in recent years, there has been a slow yet significant adaptation of digital media or digitalization in the field of sports. With the latest technologies, digital trends and big data analysis acting as catalysts, the sports industry is trying to extract benefits from it. In regards to this, the IE Big Data Club, held an interview with Oscar Ugaz – Business Consultant and former Digital Business Manager at Real Madrid. In the one-to-one video interview, Oscar answered a few key questions regarding this trend.
1) First of all, I would like to ask, why are we seeing this trend of digitalization in the sports environment? Is it really necessary?
I think it’s really necessary. As we can see every day there are new ways of consuming content, via digital media , social platform , mobile phones etc. Let’s narrow down our focus to sports and take football as a paradigm. It’s a massive sport, both country and club-wise. People like to watch their teams and favorite players and the main source of engagement is the television or going to the stadium and cheering. But during the past decade, all the contents, or most of them, have become available on digital platforms. So there is a huge opportunity from the business side to leverage this new wind of change. I think it’s not going to be a thing of huge disruption and change the scenario like we have seen in other sectors . Rather it will be a slow process, in which opportunity costs will be important if sports properties don’t learn from the change and start working on it .
“It’s not going to be disruptive, but effective with the course of time.“
2) What are the major changes that we can see because of this evolution?
Right now it’s the classic Innovator’s Dilemma problem. Sports properties don’t pay much attention to the digital enhancement, big data and analytics , not because they are incompetent or na?ve, but because they are more focused in the business and corporate models that provide work for them. Football is a business artifact that requires a tremendous amount of capital to operate basically because of player’s wages and operation costs. In that sense, its interesting to see a club like Leicester City, with a squad value of 50 million, winning the Premier League and discover that, as part of its work, they are using performance analytics and data to enhance their pitch strategy. It will be interesting to see similar examples in the business side of the sports. But right now everyone is talking about digital and trying to jump into this field but, very few are able to break down business as usual inertia and integrate it in a successful way .
“Lots of people are jumping over the digital wagon, but it’s a superficial jump.“
3) Do you think any of the top football club are approaching digital in an appropriate way ?
The sports properties that are making the biggest or deeper efforts are the ones that are been pushed by their sponsors. When you have a sponsor like Microsoft , SAP or any other major tech companies they try to push their technological advancement to the clubs as part of their PR objectives. There are other cases in which the sponsors don’t want to loose the grip of digital savvy younger audiences, so to push the clubs to do a more intensive use of new digital platforms in order to reach them. As you can see there is a huge need of external motivation for the clubs to take this digital and analytics tool deeper in action.
4) Jumping into another major trend that we are seeing, the use of Big Data Analytics. So how can it effect the business side of the clubs?
The data you have or that you generate will need to be put at the service of your sponsors and partners. And it needs to be relevant data that resolves specific problems. Take for example the case of some NBA teams. They are using cookies and other tracking tools to discover that there is a relevant number of fans that, after visiting the team website, go to certain online services and make specific purchases (lets say a supermarket online store and beer). If you consistently record this data for a relevant amount of time you can discover a trend that can be useful for your sponsorship department in their dealing with a supermarket or a beer company eager to pay for traffic with a purchase intention. This requires, technology, discipline, patience and a business savvy approach to discover the opportunity. The problem is that football club has a completely different approach based on brand awareness and image rights. And this approach doesn’t require big data competences
“We can offer intelligence via data to the sponsors, and not just a deal.“
5) Talking about the fan side, how will their experience be improved?
Nowadays football clubs, try to scale their importance and forget about the audience side . “Our fans will watch what we offer “
This may be true during the match. However, the remaining days is where the real challenge lies. Nowadays audiences have got used to an “always on” experience and they expect the same from their favourite football club. On the other hand, these digital savvy audiences don’t have enough time and in the case of the younger – millennial bracket, very little money. How are you going to take advantage of that limited time and share of pocket?
That is why you have to analyze very closely what these people want, how they behave, how they consume media, what is the content that they find interesting, etc. Nowadays, the same press conference, training report or player interview is distributed in different media platforms where the audience is expecting a different frequency, tone and manner. Instagram is not Snapchat, Twitter is not Facebook and all of them are not the traditional TV format. In each case you find different consumption patterns and ways to approach the content. If you take full advantage of that particular elements, the fan experience can be enhanced and with it the business value on the experience in terms of engagement and data capture.
That is a very different approach from the “cookie cut” one that most sport properties have apply in the past and that still provide relevant audience numbers that support the traditional business model of sponsorship activations and broadcasting TV rights. The problem is the potential opportunity cost that is missed from a more digital engaged audience. In the end it’s the fan who cheers for you , increase your cash flow , provide you with the power to stand and it’s the club’s duty to take care of their “always on” experience.
6) Lastly, as all of us here are students and professionals in the field of Business and Big Data Analytics - What would be your suggestion for those who want to follow up their skills in the field of sports?
Data , its capacity and the value it stores will continue growing . Also with the incubation of digitalization in the field, it is going to generate a relevant opportunity value in the up coming future as I mentioned before. So there will be a demand for young professionals who think out of the box and bring actionable insights. There is something very important to take in consideration here: you can be a great data analyst and know about the last tools and techniques , but what make the difference is to know the value you extract from the data . By value I mean the reason why you need the analysis? What is the real problem and what are you trying to achieve? What is the question you are resolving? Is it relevant? Throwing data over a problem don’t resolve it. So technical knowledge plus the managerial mind will really help in implying this field deeper in the sector and play a significant role in generating a change.
“Throwing data over a problem doesn’t resolve it . It’s really important to ask the right questions.”
Thank you so much Oscar for your time and patience to answer all the questions thoroughly and I hope we see a positive outcome in this digital era!