In May 2015, sports biggest team Real Madrid partnered with leading software company Microsoft in a move that announced to the world how much the sports industry has changed.
Los Blancos now consider themselves a ‘fan company’ focused on their global supporter base of 450 million fans. The fact that less than 10% of their fans are from Spain also reveals how digital and social media have changed sports new responsibilities.
On the same stage Satya Nadella, Microsoft’s CEO, declared sport to be ‘the most disrupted of all industries’.
These observations were to be the starting point to 18 months of research that has culminated in releasing ‘Sports Strategy in Digital’: The DATA Model Story’ course on isport.edu.au.
Across this time, the economy and sports industry have continued to change at great digital pace. Esports emerged from the popularity of gaming and it partnerships with traditional sports are now commonplace; TV viewership of Olympic Games, NFL and other sporting goliaths are in decline as viewership options are fracturing; and sports competitors are no longer other leagues (more on this below).
These are my Top 5 Learnings;
‘Every sports franchise is now a software company’ is how Bill McDermott, CEO of SAP views sport’s disruption as innovation becomes critical for business to sustain.
So, why is sport the most disrupted of all?
The simplest answer I offer is that the ‘product’ of sport is analogue in a world gone digital. Every sporting moment is a purely athletic exchange delivered at a scheduled time that our on-demand lives cannot impact. This means that everything else around the contest has to evolve to a digital-first mode.
Nowadays the most popular activities are digital, i.e. social media, video streaming and gaming. These are sports new competitors, not other teams and leagues – this is a game changer.
Each sports business now has digital-age responsibilities that include being a content publisher, data manager, software developer, digital retailer and experience provider.
As an experience provider, for example, businesses are now changing up their business model as products and services have become experiences. For instance, Coca Cola, thanks to the brands creative use of digital and social media now sells happiness.
If soda is an experience, how compelling does a sports offering have to become?!
To stay relevant analogue sport is now surrounded by a dashboard of digital tools for each fan to tailor their own experience from. The smartphone and other second screens are – now the first screen! – and sports remote control to the game that includes social media for sharing, a game-day app for better live experience and the gaming version for greater immersion.
McKinsey research reveals the comparative state of industry disruption (consider sport as part of their ‘media and entertainment’ category in the table below);
Extracted from McKinsey’s The Case for Digital Re-Invention
The word ‘digital’ sounds like a technical one however the reality is that digital is less about technology and more about a different way of thinking.
The impact of digital is a behavioural one. For example, digital media has given the fan a voice that must be respected – hence the rallying calls for fan engagement – and analytics platforms offer brands the opportunity to personalize fan relationships like never before.
Being digital is about using data to make better and faster decisions, devolving decision making to smaller teams, and developing much more iterative and rapid ways of doing things – McKinsey & Co.
It follows that a new skill set and culture is needed to go with this digital mindset. Leadership is responsible for defining, then communicating, the organizations digitally-inspired purpose.
Real Madrid as a fan company and AS Roma’s vision to be the most fan-connected team in the world offer good examples of the purpose needed to inspire and unify the troops. I created a Digital Line of Sight model to help explain how digital needs to be carried throughout the business and linked to each other.
Redefining corporate strategy in Digital for any sport business will be for either (i) deeper fan engagement or (ii) operational effectiveness (or both, if the team is also the venue operator). Technology investments can be made with clarity to create the organization’s digital platform stack.
Fan-first thinking, innovation and information has to flow through the organization like an internal social media channel – which is what the best data and analytic platforms are becoming. What we share should be more important than what we know as siloes come tumbling (too slowly) down.
At best, around 25% of enterprises in any industry can claim to be ‘digital masters’. From preliminary studies of the sports industry this figure may even be lower at around 15% – according to Stratford Management research for Sport and Entertainment Alliance in Technology.
Whilst unlocking insights from data is where business growth will be won, research indicates that leadership pays less attention to data and analytics than other digital initiatives. This is one of the reasons why even digital masters struggle with data mastery.
Best Practice: Orlando Magic have built their business culture around a digital vision and objective decision-making. For the third year in a row they are acknowledged as Turnkey Intelligence’s leading CRM / data management organization in sports.
Source: 2016 Turnkey Sports Data Systems Study, February 2017
Regardless of title or seniority we are all digital pioneers. In times of great change, more leadership and less management is required. In our most disrupted of industries all staff have a responsibility to interpret digital into our daily decisions and innovate our activities and interactions.
SAP predict 80% of current processes are on their way to being automated by 2020.
A first step to embracing the disruptive impact of digital is in realizing that analogue structures and beliefs no longer hold true.
Traditional department structures no longer work as fan-centric design replaces product and services that we want fans to have. The sales funnel and sponsorship models are also broken as the connected generation – the only growth market there is – opt for an omni-channel lifestyle of consumption, information and entertainment which is fractured by mobile micro moments.
This new state of play makes work difficult. CMSwire identified that 56% of all staff don’t have the technology tools needed. Other studies conclude that most companies don’t have their digital-era vision articulated below the executive level (if one exists) and of the 25% of organization’s that have mastered digital only half of them are gaining actionable insights from their data.
These issues are not easy to solve since most sport organizations are still working their way through the business model impact of digital forces like Internet of Things, Cloud Computing and Analytics platforms. Layered on top of these challenges is the emergence of new technologies such as Virtual Reality, Augmented Reality and Artificial Intelligence.
The need for each sports business to chart its own course that starts with a digital purpose is crucial for decision-making when these new opportunities come along (as they seemingly do on a daily basis).
It’s no wonder that digital transformation has been likened to changing a tyre while the car is moving!
Every business starts from a different digital origin which depends on a range of factors including leadership capabilities, existing investments and organization culture. Whilst the contours of success are now clear, there is no one-size-fits-all playbook for digital transformation.
In these next few years, digital masters will increase the distance between themselves and their competitor’s performance because of their ability to make better decisions with data and analytics.
As well as being the most disrupted of all industries, sport is also the most influenced by Social Media.
One of sports unique characteristics is the demand that fans have for their team and stars back story (there isn’t this behind-the-scenes fascination with coffee, hotel rooms or air travel). Social media is the all-access pass that sport fans crave.
Teams with highest levels of online engagement are those that have social objectives linked to organization objectives (which only about one-third of companies across all industries do).
Social media amplifies business objectives and most marketing is now digital. Marketing’s strategic task is to define the organisation’s growth priorities and then determine how digital and social platforms can contribute. Primary goals such as attracting new fans, increasing engagement and business innovation can all be supported by social media. Revenue will follow.
‘Social media isn’t owned by marketing but instead the entire organization, this changes everything’ – Brian Solis
In How to Choose the Right Digital Marketing Model, Strategy+Business offer four strategic models for marketers to consider;
Sport teams typically pursue a Customer Experience Designer marketing model and venue managers would lead with Product Innovator characteristics. Due to sports multiple responsibilities, elements of secondary strategies would typically appear in a well-developed digital marketing program.
Digital asks a lot of Marketing’s skill set, as the following table highlights;
Extracted from Strategy+Business’ How to Choose the Right Digital Marketing Model
As well as linking social to business goals, organizations that are taking full advantage of social are carrying its principles into other areas such as social listening for product innovation; crowdsourcing for new ideas from the fan base and supporting the social business with budget, technologies and talent.
Becoming a social business needs social leadership, which is generally lacking at present. Despite fans and staff wanting to hear from the CEO online most of the time they aren’t available there.
Also, social community management isn’t going so well currently with only 10-15% of service requests answered by brands on social media. Social leadership and a social business would not allow this lack of consumer care.
I anticipate that when digital natives take the corporate reigns and bring their social accounts with them, Social Leadership will become an as-is business concept.
Best Practice; In February 2017, AS Roma were acknowledged for having a best in class website. Their Social Business approach is described below;
Extracted from: Interactive Media Awards Elects Roma Website Best Class Status
For most organizations, Digital started in Marketing since the easiest digital platforms to access and activate were social media channels. Their relationship with IT was important in moving to more advanced technologies. Over the past decade, digital has evolved beyond the capacity of the marketing function to lead. Digital is now an all-enterprise responsibility with the agenda set, funded and resourced by leadership and collaborated on by all staff.
The Traditional Business Model No Longer Works for Marketing
Marketing has undergone a radical shift and digital will shortly account for more than 75% of marketing budgets with 50% devoted to Mobile; earned media is becoming more important than paid and owned media with analytical skills becoming a core marketing competency.
In fact, Marketing is facing a challenging future as markets move from segments to individuals through real-time automation and analytics from increasingly complex sources and technologies.
IBM surveyed 1,700 Chief Marketing Officers which showed that marketers grapple the most with data explosion, social media and growth of device and channel choice.
The report identified a ‘complexity gap’ where almost 80% of respondents expect ‘very high’ to ‘high’ levels of complexity in the next 5 years yet only 50% feel prepared for that level of complexity.
Organizations need to support their marketers to remain abreast of digital trends and technologies including formal training in these areas.
Some large companies have developed their own in-house marketing academy to address this issue. Coca-Cola, Unilever and Japanese beauty company Shiseido have established academies to create a single marketing language and operations appropriate to their enterprise, culture and digital marketing model.
For example, Coca Cola – a great digital brander – teaches their own formula for content success which is to be brave and apply 70/20/10 investment principle, where:
Most sport businesses are small to medium enterprises that don’t have the scale to set up their own marketing academy. As an industry, sport overcomes this issue by sharing knowledge, networking and collaborating like no other.
Digital disruption is the business normal.
Understanding digital from a strategic perspective is the most effective way to put momentum under your own personal or business transformation.
Or to put a digital-age spin on it;
‘Digital darwinism is unkind to those that wait’ – Ray Wang, Digital Analyst
Therefore, disrupt yourself before someone else does!
To find out more about my online course go to
For more of my take on Sports Strategy in Digital you can check out my website sb1sport.
I am an Australian sports business professional living and working in Qatar as a sports strategist. I have a passion for the impact that digital is having on sports business behaviour. I am a global advisory board member of SEAT Consortium and I present on strategic topics at their London and USA conferences.