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Mike Chiappetta of MMAFighting.com discusses the latest news regarding a possible UFC on Spike event for April 17th, designed to counter-program the Strikeforce on CBS card on the same day.

The UFC is in the process of laying the groundwork for an April 17 show to counter the Strikeforce on CBS offering, MMA Fighting has learned.

 

Though the company has not officially announced the event and it should not be considered a done deal, two separate sources with knowledge of the situation confirmed that the promotion has begun to ramp up its efforts over the last several hours and that Spike TV — the likely broadcast outlet for the show — has been informed of the decision.

 

…

 

Strikeforce’s show is planned for the Bridgestone Arena in Nashville, and will feature three title bouts, including a middleweight championship main event pitting current titleholder Jake Shields against former UFC star Dan Henderson. The show could reportedly be moved back a week to April 24 — which would result in a head-to-head battle with WEC’s first pay-per-view offering — but tickets sales for the Strikeforce event have already begun, and a change would also require a shift in the CBS programming schedule.

Payout Perspective:

Event scheduling in the month of April is quickly becoming a chess match of epic proportions as the UFC looks to make life difficult for Strikeforce on CBS, while Strikeforce considers the possibility of switching dates to avoid going head-to-head with Kimbo Slice (and do some counter-programming of its own; nixing the WEC’s debut PPV a week later).

I can kind of understand the desire of the UFC to crush its competition: monopolies can be beneficial in certain contexts. Moreover, the production quality and matchmaking at Strikeforce has been suspect at times, which might leave the UFC in the position of feeling like it has to be the sole flag bearer for the sport.

However, I’m also inclined to think that it’s currently to the UFC’s advantage to have MMA on network television – regardless of whom is producing it – because it generates interest and awareness for the sport. The Strikeforce production isn’t so awful that it’s a detriment to MMA; especially with match-ups like Henderson-Shields, Mousasi-Lawal, and Melendez-Aoki.

If I were the UFC, I’d develop a sneaky little ambush marketing campaign, and buy up $1,000,000 worth of ad space on CBS to promote the UFC brand. The UFC could advertise the WEC 48 PPV scheduled for April 24th and UFC 113 on May 8th; both of which would help confound the Strikeforce branding message on that night.

Sound crazy? It’s becoming a popular trend in the sports world; especially during the latest Winter Olympics. Further consider the fact that Mauro Renallo and Gus Johnson mention the UFC name on CBS more than they do Strikeforce. The UFC could really position itself to steal a number of those impressions on April 17th. The only roadblock to this plan might be CBS’s outright refusal to sell the ad space, but even at that, I have to think they’d sell if they knew they weren’t being counter-programmed.

Besides, the idea of counter-programming seems so inefficient. The cynic in me is inclined to believe that Fedor and M-1 may very well tear down Strikeforce regardless of what the UFC does. If not, big events that only garner $8,000 in merchandise sales or $350,000 in gate revenues, while paying out that much in fighter salaries (not to mention production costs), likely will.

Why spend all this time and money to counter-programming something that hasn’t proven to be sustainable in its newest form?

….

The current speculation is that the UFC has lined up Kimbo Slice to headline this April 17th card, possibly against Matt Mitrione of TUF 10.

The short-term benefit of a Kimbo headline is obvious, but I wonder how much damage it might do to the UFC’s long-term credibility. Kimbo sells for reasons other than his fighting ability; in fact, we saw over the course of TUF 10 and its finale that interest had declined somewhat – the cat was out of the bag regarding his skills. So, what does it say that the UFC would put him in a headlining position?

The UFC has worked very hard to cultivate its existing credibility with the mainstream media and fan base – of which, admittedly, there still isn’t as much as we’d all like. Why jeopardize that? Why put non-MMA fighters in a headlining position on an MMA card?

If Strikeforce wanted to promote Herschel Walker vs. James Toney, the UFC should have let them. No successful, long-term mixed martial arts endeavor will ever be built upon the backs of non-MMA fighters – this is a guarantee.

Now the UFC has been sucked into this high risk, high reward game that might end up backfiring on them and the entire industry.

MMAPayout Featured, MMA Payout, TV, UFC, advertising, booking, opinion and analysis

Chuck Liddell and girlfriend Heidi Northcutt have made an appearance in what appears to be a viral marketing video for athletic apparel maker Reebok. The video is shot from the perspective of a peeper as the couple workouts out in a private gym without any clothing, except Reebok shoes.

Payout Perspective:

It’s a good approach for a brand that’s increasingly becoming a little more edgy in nature. The strength of the video is not just the fact that both are naked, but also that it sort of fits the party-boy image that Liddell has maintained over the last few years.

Obviously, it’s of additional interest to the MMA community because of Liddell’s involvement; and my feeling is we’re likely to see a lot more companies using MMA personalities in the future (although not necessarily in naked clips) for these types of campaigns. The fighters already have an edgy appeal and and the young consumer identifies with these cheeky videos.

MMAPayout MMA Payout, advertising

David Broughton, Research Director at the Sports Business Journal, has summarized the latest findings in a sports sponsorship study that should provide even more incentive for brands to pair with MMA properties.

Are sponsors connecting with fans? If so, which fan segments have the strongest connection? For all the money sponsors spend on marketing, can fans correctly pick them out of a lineup? And which sports properties have the most sponsor-loyal fans?

 

Those are some of the questions we set out to answer by analyzing three years’ worth of sponsor loyalty studies conducted in partnership with Turnkey Intelligence. The studies, conducted since the summer of 2007, were designed to identify key trends such as fans’ recall of official sponsors, and trial and consumption of products.

 

Since beginning the studies, SportsBusiness Journal has published the results of 15 individual surveys of MLB, NASCAR, NBA, NFL and NHL fans. When we revisited all three years’ worth of data, we identified several top-line trends and behavior patterns among specific demographics.

 

The most visible trend we discovered was that brands can expect a better return on their sports marketing objectives if they target fans age 18-34, non-Caucasian fans, and/or households with kids.

 

For example, 59 percent of MLB fans in the 18-34 bracket were more likely to consider trying a product or service from an official sponsor, compared with only 36 percent of fans age 35 and older.

 

…

 

In fact, two-thirds of the fans who fit into all three of those demographic subsets — age 18-34, non-white fans, and living in a household with children — are likely to use a league’s official sponsor or product, compared with 43 percent of the fans who are age 35 and older, white and have no children.”

Payout Perspective:

Be sure to check out the full article at SBJ; it serves as a nice follow-up to the current trends piece that I posted a few weeks ago.

The appeal of the 18-34 demographic is a growing focus for many companies – especially in the current economy where much of the disposable income in family budgets has been squeezed out entirely. Not only does the 18-34 demo possess a great amount of disposable cash, but its also seemingly one of the most impressionable demographics. The growing potential for significant return on a sponsorship investment that targets these individuals is helping to off-set the perceived risk that a brand takes in associating itself with the sport.

Moreover, as organizations like the UFC and Bellator continue to target the hispanic demographic, the sports appeal to advertisers and sponsors is only going to grow.

MMAPayout MMA Payout, advertising, sponsorships

Rampage Jackson makes a surprising appearance in one of the latest Nike commercials entitled the “Human Chain” alongside other Nike athletes including Maria Sharapova and Lance Armstrong.

Human Chain from NikeSportswear on Vimeo.

Payout Perspective:

Nike has traditionally been very selective of the athletes it chooses to associate with, so it’s somewhat surprising to see Rampage in one of their commercials given his history and the fact that there are probably safer endorsements out there in MMA.

There’s no telling whether the appearance is a sign of Nike jumping into the MMA market, endorsing Rampage specifically, or just a move to capitalize on MMA’s growing popularity while still maintaining an arm’s length relationship with the sport as a whole. Whatever the case may be, it’s encouraging that we’re starting to see a little bit of thaw in the attitude towards MMA – and its athletes – from some of these multi-billion dollar market cap companies like Nike and Microsoft.

MMAPayout MMA Payout, advertising, mainstream, sponsorships

Amy McCullough of the Marine Corps Times writes about the growing relationship between the UFC and USMC on the sponsorship level, and how the two organizations share a similar target demographic in young people aged 17-24.

MARINE CORPS BASE QUANTICO, Va. — The Marine Corps has formed a formal partnership with the Ultimate Fighting Championship that promotes more interaction between Marines and famed mixed martial arts fighters, and calls for a series of new recruiting advertisements that emphasize similarities between the two organizations.

 

The goal, Marine officials say, is to engage the UFC’s rapidly growing fan base of 17- to 24-year-olds by highlighting the Marine Corps Martial Arts Program and the parallel “sense of shared brotherhood” exhibited by Marines and pro fighters alike.

 

“The ideologies behind UFC and the Marine Corps now are very similar in a lot of ways — not just in the fighting techniques and mixed martial arts aspect, but … we both share that warrior ethos,” said Gunnery Sgt. Pauline Franklin, a spokeswoman at Marine Corps Recruiting Command. Pro fighters, she added, “are very intense people who like to push their limits, and they focus hard on training and believe in commitment, honor and courage.”

Below is the latest advertisement which attempts to highlight the similarities between the USMC and UFC

Payout Perspective:

MMAPayout.com has long advocated a greater degree of integration between the UFC and its sponsors, and the USMC clearly understands how to activate upon its sponsorship of the UFC. The more a sponsor can associate its own brand with the personalities and other artifacts of the UFC culture, the more successful it will be in attracting the attention of the UFC demographic.

It’s simply not enough to throw up a Bud Light advertisement, for example, during a TUF commercial break. A-B Inbev has to leverage that UFC theme in order to reach the UFC customer. Now, of course, there’s a question of funding – commercials and customized activation strategies are expensive – but that brings us back to the topic of current trends in sponsorship; being prepared not just to invest in a sponsorship, but also in the activation and evaluation of that sponsorship.

—–

The USMC article points out that this relationship wouldn’t have happened even just a few years ago, which is clearly a sign of the times right now. It’ll be interesting to see whether those that oppose MMA and yet support the war, will condone the USMC essentially using the UFC to recruit young people.

MMAPayout MMA Payout, UFC, advertising, sponsorships

Here’s a look at the Affliction advertisement featuring Georges St-Pierre that appears on the back page of GQ’s February edition of the magazine.

Payout Perspective:

Brock Lesnar may be the biggest draw in the sport right now, but if St-Pierre continues to increase his profile with high-level sponsorships, magazine covers, and television appearances, it won’t be long before he becomes the biggest attraction MMA has to offer. He’s not a heavyweight, sure, but he’s one hell of a fighter and his appeal goes also transcends that mainstream divide – he has serious cross-over potential.

MMAPayout Affliction, MMA Payout, advertising

The UFC has long guarded against much of its content appearing on Youtube, but the following promotional video featuring Paul Daley appears to eschew that tendency. It’s a well-produced and effective marketing tool that the UFC should try to encourage in the future.

Payout Perspective:

I’ve never exactly understood why the UFC is so strict with its content usage on video sharing websites like Youtube. Some of the stuff that these fans put together is absolutely brilliant – like “This is Semtex” – and it’s essentially a free and very effective promotional tool for the organization. These videos are something to encourage, not frown upon.

The way social media is taking off, the UFC should be looking at leveraging the passion and creativity of some of these fans by establishing contests or other activation points around which it can build its brand and its fighters. Getting fans involved and letting them do part of the promotional leg work is never a bad thing.

Challenge some of these people to come up with the best UFC 111 trailer and then give them a free video game or some clothes or even a pair of tickets. Not only does that create some excellent content to help build the fights, but its the sort of thing that establishes a foundation for goodwill among the fans.

Note: The nice feature Youtube has implemented to provide users with an option to purchase the songs they’re listening to.

MMAPayout MMA Payout, UFC, advertising, marketing, new media

Jon Show of the Sports Business Journal reports that Leverage Agency and Top Rank plan to partner in what they are calling the first advertising and sponsorship upfront in the history of boxing.

“Before this, boxing was a lot of one-off opportunities,” said Ben Sturner, CEO of the Leverage Agency. “We’re coming with more robust marketing and creative opportunities to tie brands into the platform for an entire year.”

Under a multiyear relationship, Top Rank and the Leverage Agency are pooling sponsorship and advertising rights to 48 fights in 2010, including 12 pay-per-view events and 36 events on FSN or Fox Sports en Español. The 12 PPV events will feature three “super fights,” including Manny Pacquiao’s bout at Cowboys Stadium against Joshua Clottey on March 13.

The price of packages ranges from six figures for lower-profile logo placement and media buys on the Fox events to mid-seven figures for full presenting-style sponsorships of major pay-per-view fights. Inventory includes logo placement on Top Rank fighters, ring signs, banners, press conferences and weigh-ins, as well as in-broadcast integration and television and online ad units.

The three-hour event will be held at the Club Bar & Grill in Madison Square Garden. Organizers expect about 40 media buyers, brand managers and sports marketing executives to attend.

Payout Perspective:

It was only a matter of time before boxing promoters started to pool and package rights for a series of events. Fans like patterns and something they can consistently follow – part of the reason the UFC has been so successful – and for as tight lipped as the UFC can be with its information, it’s still far and away better at communicating with its fans on a daily basis. There’s a lot to be said for the continuity and flow of a series of events that help to attract not only repeat advertising business, but repeat customers.

MMAPayout MMA Payout, advertising, boxing

Jon Show of the Sports Business Journal reports that Leverage Agency and Top Rank plan to partner in what they are calling the first advertising and sponsorship upfront in the history of boxing.

“Before this, boxing was a lot of one-off opportunities,” said Ben Sturner, CEO of the Leverage Agency. “We’re coming with more robust marketing and creative opportunities to tie brands into the platform for an entire year.”

Under a multiyear relationship, Top Rank and the Leverage Agency are pooling sponsorship and advertising rights to 48 fights in 2010, including 12 pay-per-view events and 36 events on FSN or Fox Sports en Español. The 12 PPV events will feature three “super fights,” including Manny Pacquiao’s bout at Cowboys Stadium against Joshua Clottey on March 13.

The price of packages ranges from six figures for lower-profile logo placement and media buys on the Fox events to mid-seven figures for full presenting-style sponsorships of major pay-per-view fights. Inventory includes logo placement on Top Rank fighters, ring signs, banners, press conferences and weigh-ins, as well as in-broadcast integration and television and online ad units.

The three-hour event will be held at the Club Bar & Grill in Madison Square Garden. Organizers expect about 40 media buyers, brand managers and sports marketing executives to attend.

Payout Perspective:

It was only a matter of time before boxing promoters started to pool and package rights for a series of events. Fans like patterns and something they can consistently follow – part of the reason the UFC has been so successful – and for as tight lipped as the UFC can be with its information, it’s still far and away better at communicating with its fans on a daily basis. There’s a lot to be said for the continuity and flow of a series of events that help to attract not only repeat advertising business, but repeat customers.

MMAPayout MMA Payout, advertising, boxing

Don Frye announced a few weeks ago that he intended to quit MMA in favor of pursuing a career in acting, and now we’re seeing the fruits of the UFC and Pride veteran’s labor with AT&T’s “One Step Ahead” movie/commercial.

Frye also recently made an appearance in the Johnny Depp headlined “Public Enemies,” and has two movies in post-production per IMDB.com.

Payout Perspective:

It’s great to see that Frye has transitioned from MMA into his second career of sorts. He’ll probably never win an Oscar, but he plays the tough guy and silent CIA agent role pretty well.

A career and livelihood beyond the cage is increasingly becoming a more important focus for fighters in today’s era of the sport. The money is now there that many of them do not have to work second jobs to pay the rent, but what happens when the fight checks stop coming in the mail? Will these fighters have the skills to pick-up and continue living the same lifestyle, or must they make other preparations?

It’s an interesting question that shouldn’t just be dropped on the lap of the promotions. Many will argue – and perhaps rightfully so – that the UFC or Strikeforce need to provide pensions and other forms of benefits, but the fighters, too, have a responsibility to look out for themselves. That first means seeking help and asking for advice, and then having the discipline and foresight to follow through on that advice.

The MMA money train doesn’t run forever, and fighters need to be prepared.

—–

The commercial is interesting not only because of Frye’s involvement – in which he plays a CIA type agent running around looking for this AT&T user with GPS – but also the way AT&T uses of Facebook to customize the web movie to each individual user.

It’s clever, but also a little invasive – the web movie requires that you log into your Facebook account through the website and share your information, pictures, and contacts with its database. Some will call it brilliant marketing and customer data mining…others will be concerned about the privacy issues.

In any case, this is one of the ways in which companies are trying to use social networking to find better information on their consumer. The MMA community as a whole might want to take notice; with a traditionally younger, more tech-savvy consumer, it could apply some of these techniques in its own marketing strategies.

MMAPayout MMA Payout, advertising, hollywood, marketing

MMAPayout.com has talked a lot about sponsorships in the past few months, but a great deal of that discussion has avoided fighter sponsorship in favour of those surrounding corporate sports properties. The Bud Light and Harley-Davidson deals within the industry naturally draw a lot of attention. However, in the long run, they are no more important than the sponsorships or endorsements that the fighters are receiving (e.g., GSP-Under Armour).

So, today we’re going to take a slightly more in-depth look at valuing sponsorships from the perspective of a fighter, and the kinds of implications those valuations have on their related corporate sports properties.

The Count Method

The count method is a tool used to value sponsorships that involves tracking the number of sustained appearances – or impressions – that a brand logo makes on television. Those impressions are then compared to the typical number of impressions obtained through an average commercial spot during that program. The cost of an average commercial spot is then used to value the sponsorship. 

The method is well-suited for MMA, because of the nature of fight gear sponsorship in relation to television visibility. However, a few adjustments need to be made in order to make the count method a viable valuation tool in MMA; chief among them is discounting the compared value of counted logo impressions to commercial spot prices. No logo impression, in aggregrate, is worth as much as the sustained number and quality of impressions that a commercial spot can generate. Therefore, it’s necessary to discount that compartive figure by as much as 95%.

Let me give you an example:

1. Fighter A is a main card fighter whose bouts have averaged approximately 9 minutes in length over the course of his 12 fight career. He wears board shorts to the ring/cage in which the main buttock sponsorship placement is typically impressionable for 3 minutes, on aggregate, each fight. His next scheduled bout will be televised on a card where the 30-second commercial spots are averaging $120,000.

• 3 minutes = 180 seconds
• 180/30 = the equivalent of six commercial spots
• $120,000 x 6 = $720,000
• $720,000 * (1-.95) = $36,000

This method provides a ballpark range as to how much the sponsorship is worth.

Other factors

As I alluded to earlier, there are other intangibles that must be accounted for (and which could possibly impact the discount rate):

1.) The definition of “impression” must be strict. An impression must only be counted if the brand logo is visible for a sustained period of time such that the consumer has the opportunity to identify it – i.e., the logo must have the opportunity to leave an impression.

Similar to the discussion we’ve entertained previously regarding assessing sponsorship ROI from a corporate standpoint, the clutter in MMA sponsorship really detracts from the ability of a logo to make a clear impression. Fighters and their management may have to begin making the difficult choices in cutting a few sponsors in favour of maximizing the potential return of their biggest clients (and in turn maximizing the price value they receive from those clients).

2.) The popularity of a fighter and his opponent will influence value. The discount rate should be adjusted to reflect dramatic differences amongst the popularity of fighters and their opponents. For example, GSP is always going to draw in more sponsorship money than most, not just because he’s currently the champion, but also because he has many levels of appeal that reach beyond MMA. Likewise, consider how the value of Houston Alexander’s sponsorships should change in fighting Kimbo Slice relative to the likes of James Irvin.

3.) The position of a fighter’s bout on the card will influence value. The size of program viewership grows from the beginning of a program until it peaks near the very end (or last match of the night). Thus, the deeper a fighter is set to compete on a card, the greater value his sponsorships ought to be worth.

4.) The live audience is also a consideration. It’s more of a bargaining chip than anything else, because while the sometimes 20,000 in attendance are watching, the logos are often far too small to make any sort of material impression count.

Endorsement Territory

There’s a distinction to be made between sponsorship and endorsement in MMA. Generally, a sponsorship agreement stipulates the exchange of payment in return for fight gear and banner representation for the client. However, often times an agreement goes further – especially for higher profile fighters – whereby they are asked to wear sponsored clothing to weigh-ins, press conferences, media events, or even appear in promotional material related to the product. 

Valuation of this kind is obviously more difficult, because it must factor in the number and intensity of different communication mediums used to generate awareness and brand image enhancement. Hence, at this stage it’s much less about logo impression as it is a fee for using the fighter’s likeness to boost said brand. 

Implications of Fighter Sponsorship Valuation

Much has been made about the UFC’s “sponsorship tax,” but the valuation above underscores the organizations point to a degree: small sponsors are getting very similar impressions to that of larger sponsors – with, what some would argue, better activation – but for much less cost. The idea of a tax is defensible, because it raises the price of admission for smaller sponsors that were getting way too good of a deal, and it protects the big time sponsors that the UFC depends on.

Where the sponsorship tax raises an issue is the seeming conflict between the traditional code of MMA and the current trajectory of MMA business. MMA has long operated within a small, community-oriented environment, but the growth of the sport is set to challenge that; taking care of the little guy, in some cases, may not be compatible with running a billion dollar business.

MMAPayout Featured, MMA Payout, UFC, advertising, sponsorships

A recent study published by Scarborough Sports Marketing reveals some additional insight into what we already know about the MMA demographic:

MMA Fans are Avid Technology, Automotive and Retail Consumers
http://www.scarboroughsportsmarketing.com/

 

NEW YORK, Nov. 23 /PRNewswire/ — Mixed Martial Arts (MMA), a sport combining boxing and martial arts, is attracting young, well-established, high-tech consumers, according to sports fan research firm Scarborough Sports Marketing. Scarborough examined the shopping patterns, demographics and lifestyles of Mixed Martial Arts fans* and found that these adults are 51 percent more likely than the average American to be ages 18-24; 25 percent more likely to have a household size of three or more people; and 67 percent more likely to be male.

 

In addition to their youthful demographics, MMA fans have sound financials. They are 15 percent more likely than the average American adult to have a household income of $75k+ and 10 percent more likely to own a second home. They are selective investors and six percent more likely to have stocks or stock options in their household, and 33 percent more likely to invest online.

 

“In recent years, MMA, through UFC and Strikeforce, has moved from being an emerging athletic genre to more of a mainstream, established and competitive sport. In doing so, it has developed a young male fan base,” said Howard Goldberg, senior vice president, Scarborough Sports Marketing. “Sports marketing has proven its value through a difficult economic climate, and MMA can help marketers capitalize on their customers’ engagement with sports.”

 

In addition to being young, male and well-established, MMA fans represent a high-tech audience. They are not only well above the national average for current ownership of high-tech household items such as HDTVs, VOD service, video game systems and broadband Internet connections, but they are more likely to plan to upgrade their household wares. (see chart below for further details)

 

Beyond technology, the MMA fan base could also have appeal to automotive marketers. These fans represent 15 percent of all adults planning to buy a new pickup truck for their household during the next year, and are 85 percent more likely than the average adult to plan such a purchase within the next year. Other new vehicle categories appealing to the MMA fan include:

 

•Full-size Cars: MMA fans account for 18 percent of the market for potential new buyers** of full-size cars, and are more than twice as likely as all adults to plan this household vehicle purchase during the next year
•SUVs: MMA fans account for 10 percent of the market for potential new buyers** of SUVs, and are 19 percent more likely to plan this household vehicle purchase during the next year
•Luxury Vehicles: MMA fans account for 15 percent of the market for potential new buyers** of luxury vehicles, and are 84 percent more likely to plan this household vehicle purchase during the next year

 
Their household and personal shopping and buying patterns are also notable beyond technology and vehicles. The MMA fan is 15 percent more likely to live in a household that shopped at a furniture/mattress store during the past year, and 35 percent more likely to live in a household that shopped at a large appliance store during the past year. In the business-to-business category, MMA fans are 62 percent more likely than the average adult to be a corporate decision maker for overnight delivery services, and 37 percent more likely to make office equipment and supplies purchase decisions for their companies.

 

“From technology to automotive and household appliances to corporate delivery services, the MMA fan clearly represents a solid audience for a great diversity of marketers,” said Mr. Goldberg. “Those who begin leveraging this league’s fan base now will have unique opportunities to begin establishing brand loyalty within their ranks.”

 

Household Technology Profile of the Mixed Martial Arts (MMA) Fan

 

Mixed Martial Arts Fans
Mixed Martial Arts Fans who PLAN TO BUY
who CURRENTLY OWN (Index, (Index, 100=National
Household Technology 100= National Average) Average)
——————– ————————- ———————–
Computer 108 176
Digital Camera 118 152
DVR 108 229
DVD Player 114 155
Energy Saving
Appliance 129 151
HDTV 115 168
PDA (Blackberry,
etc.) 149 238
MP3 Player (i.e.
iPod) 144 189
Satellite Radio
Subscription 152 289
Satellite TV
Subscription 112 174
Video Game System 156 258
VoIP 161 226
Broadband 113 NA
——— — —

 

* “Mixed Martial Arts (MMA) Fans” are defined as those adults who watched Mixed Martial Arts on broadcast or cable television during the past year.

 

** Automotive “potential new buyers” are adults who plan to buy a vehicle within the next year

 

SOURCE: Scarborough Sports Marketing, Scarborough USA+ Study, Release 1 2009 (6 months)

 

About Scarborough Sports Marketing

 

Scarborough Sports Marketing (www.scarboroughsportsmarketing.com, www.scarborough.com, sports@scarborough.com) measures local and national consumer and lifestyle information by interviewing over 221,000 adults (18+) in 81 Top-Tier Markets, including all professional sports markets. Scarborough sports measurements include fan avidity; multi-media measures including sports viewing and listening; corporate sponsorship information including fans’ shopping and product/service usage; and leisure activities. Scarborough delivers twice-yearly updates of its local market reports to a diverse client base, spanning all major media, advertisers and their agencies. Scarborough Sports Marketing is a division of Scarborough Research, which is a joint venture between Arbitron Inc. and The Nielsen Company.

 

SOURCE Scarborough Sports Marketing

Payout Perspective:

The study helps to re-affirm some of the results previously brought to light by other studies, but goes further by suggesting that the MMA demographic, in addition to being quite youthful, is also typically more affluent than average. It follows then, that an interest in high technology and automobiles is also fairly high.

Sports Business Daily adds the following about the study:

Below are select demos for MMA fans. For example, 32% of MMA fans are between the ages of 18-29, while 8% of MMA fans have bought sports logo apparel on the Internet during the past 12 months ( Scarborough Sports Marketing ).

 

DEMOGRAPHIC	MMA FANS
AGE
18-29	32%
30-39	25%
40-49	22%
50-59	13%
60-69	6%
SPORTS EVENT/TEAM TICKETS INTERESTED IN BUYING NEXT 12 MONTHS
Full season tickets	5%
Individual game tickets	48%
Partial season tickets	7%
Not interested	47%
INTERNET USE PAST 30 DAYS
Cable TV network site	9%
Download/play video games	15%
Download/watch movies	13%
Download/watch TV programs	13%
Download/watch/listen to podcasts	5%
Fantasy sports	11%
Sports scores/updates	37%
ITEMS BOUGHT ON INTERNET PAST 12 MONTHS
Sporting event tickets	10%
Sports logo apparel	8%

What does this mean for MMA? The sport may be on the verge of a second wave of high profile sponsors within the next few years - everything from electronics to automotive companies - they ought to be looking at the sport as a way to reach concentrated numbers of young, wealthy individuals.

However, it needs to be said that sponsorship is a two-way street. In order to attract these sponsors, the sport and its promotions need to do more than just offer up a demographic – it’s all about reciprocity. MMA’s various properties will need to work hand-in-hand with these clients to add material value and deliver ROI. Specifically that means the following:

• Reaching out to potential sponsors to see what they need (target demographics, value-added metrics, and ROI)
• Finding creative ways to better link the sponsorship product with the property medium (i.e., improve the linkage between MMA and whatever product that’s actually sponsoring)

MMAPayout MMA Payout, advertising, marketing

The Sports Business Journal released its highly anticipated “High Tech, High Stakes” issue this week, and there were a couple of very interesting pieces that caught the attention of MMAPayout.com.

In one of his articles, Eric Fischer looked at the potential for motion tracking technology to gain further acceptance and prevalence in sports television.

Motion tracking in sports in and of itself is not a new thing. Various forms of motion tracking — which draws its heritage at least in part from missile-tracking technology — have existed for years, and one specific version of it in sports, the Pitch f/x system from Sportvision and MLB Advanced Media, is now in its fourth year of active deployment. But thanks to sharply heightened investment in the space among several media and technology outfits and ever-increasing computing power, the wealth of data derived from digital tracking of player and ball movement is now mushrooming exponentially.

Jon Snow also documented some of the advancements in chroma key or “green screen” technology that allow sports properties to manipulate the playing surface or surrounding environment with advertisements.

“Eventually you’ll be able to get hyper-local,” such as targeting individual demographics within a certain market, said Sam McCleery, senior vice president of sales and marketing for PVI Virtual Media Services.

 

The main barrier to growth of the technology in the United States is gaining acceptance among leagues, teams and fans. McCleery expects virtual advertising will continue to affect the international market more than the domestic market.

 

“It will grow earlier overseas,” he said. “Will it grow bigger? I don’t know. But you will be allowed to do it over there before you will be allowed to do it here.”

Note: The Sports Business Journal is a subscription service. If you’ve got any kind of interest in sports business, it’s definitely worth the money.

Payout Perspective:

The potential for both technologies to add value to MMA broadcasts is quite high.

The motion tracking technology, pending further advancement, could be used to help analyze the velocity and power behind strike attempts. It might also enable an organization to re-create 3D models of certain exchanges between fighters in order to give the audience a glimpse into what truly transpired. Imagine the possibilities for this technology as a teaching tool and means for MMA to better engage the audience.

In fact, FightersOnline.com – a start-up company currently evaluating the potential of an online-based matchmaking and auctioning system – has already obtained a patent for optical measurement technology that would allow it to determine the velocity and power behind strikes.

However, it’s necessary to provide a caution: the technology still has a ways to go before it’s technically and financially feasible for an organization to adopt and implement with any sort of added value to the broadcast.

The chroma key or “green screen” technology is also very intriguing, because it could be used to customize in-ring or in-cage sponsorships ads. It would allow an organization like the UFC to provide greater value for its partners and sponsors by providing targeted advertisements through geographical segmentation. For example, someone watching Paul Daley vs. Mike Swick in the UK would see a different cage mat logo than someone watching the same fight in the US.

That’s a powerful marketing capability.

Furthermore, the idea that an MMA organization can segment its advertising audiences based upon geography could also be leveraged to aid the broadband content business model. It would allow for multiple versions of branded content, in which the UFC or another organization could sell advertising rights to online events on a regional or national basis.

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Bill Gorman of TVbytheNumbers talks about the confusion that the NY Times is likely to create with a recent article stating that DVR playback is actually helping (and not hurting) commercial ad viewership.

Everyone is used to program ratings increases from “DVR viewing” being defined as the increase from Live+SD program ratings (which is available the day after a show airs) to Live+7 day program ratings (available about two weeks after a show airs), so people will point to this article by Carter and claim “See that increase from DVR viewing really *does* boost commercial viewing, it must be helping my show!” Sadly, that’s mostly wrong.

 

In fact there is almost no increase in commercial ratings after the Live+SD period.

 

In a recent conversation with a researcher at a broadcast network, I asked him “Given the fact that the public (and us) sees only Live+SD and Live+7 program ratings on a regular basis, how much of the increase between those two numbers could be assumed to benefit C+3 commercial ratings?”

 

His answer? 10%

 

So that 40% increase in program ratings from Live+SD to Live+7 for Dollhouse? It helped advertising revenue by 4%.

 

Not exactly time to break out the champagne.

 

Don’t be confused that additional DVR viewing beyond the Live+SD period is going to be a big help to your show, because it isn’t.

Payout Perspective:

It’s probably best that you run over to TVbytheNumbers and check out the article for yourself (including the Times article) to really get a feeling for how TV ratings are measured.

If you don’t have the time, I’ll try my best to synthesize everything, and then relate it all to why this is relevant to MMA:

• There are two types of ratings in the television world: commercial and program.
• Commercial ratings are used to buy and sell commercial advertising spots, but not often published.
• Commercial ratings are referred to in the C+3 format: live commercial viewership plus 3-day playback
• Program ratings are disclosed to the public in the form of Live + Same Day or Live + 7-day playback
• Live + SD is the live rating of the show plus any DVR playback until 3am of the following morning
• Live + 7  is the live rating plus any DVR playback over the next seven days.
• Generally, Live + SD is used as a proxy to gauge the undisclosed C+3 rating.

The problem - or source of confusion – seems to be that network PR people are touting an increase in the Live + 7 over just the Live ratings (when, in fact, the public hardly ever sees the Live ratings; they see the larger Live + SD). If the networks were to compare the Live + 7 increase over the more standard Live + SD, there’d be less of an increase. Therefore, as Live + SD is a proxy of C+3, it stands to reason that there’s also very little change in commercial ratings after the initial same day period (what amounts to by some estimates as only 10%).

Why is this relevant to MMA? A small increase in commercial ratings as a result of the DVR playback isn’t going to positively influence the price that networks are going to receive for ad spots during television shows like The Ultimate Fighter and CBS’s Strikeforce on Primetime card.

Furthermore, the idea that 46% of those watching DVR playbacks still watch commercials is a bit misleading according Robert Seidman of TVbytheNumbers.com.

The actual hard data I have seen is that around 75 percent of the commercials get skipped. But 100% of the people don’t skip 75% of the commercials 100% of the time, so you can still wind up with PR spin like ~50% of the people watch commercials during playback. That doesn’t mean that 50% watch 100% of the commercials though, and again, the actual hard data I’ve seen (mostly from TiVo) is that regardless of the percentage of viewers who wind up watching SOME commercials, around 75 percent of all commercials still get skipped/fast-forwarded through.

In other words, don’t believe the hype or PR spin.

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Loretta Hunt of Sherdog.com is reporting that commercial ad slots have sold out for Fedor vs. Rogers on CBS:

“I’d say this was probably a quicker sellout than the EliteXC shows,” said Kahl, who added that the addition of top-ranked heavyweight Fedor Emelianenko has piqued interest in “premium advertisers” from the auto, movies, and video gaming genres.

 

Aside from ratings, advertising sales are a second way that networks can gauge interest in its programming. Kahl said that other sporting events on CBS usually complete their advertising sales a day or two before air date if that.

 

Among those scheduled around the live broadcast, EA Sports will unveil a preview of its MMA game due out in 2010.

 Payout Perspective:

Hunt’s reports on the status of CBS ad sales have proved quite complementary to MMAPayout.com’s discussion about the role that MMA content can play in helping networks attract desired demographic for their advertising clients.

The household average for the CBS show isn’t likely to be stellar, but as CBS’s Kahl points out in her conversation with Hunt, it’s the M18-34 and M18-49 ratings that are of the utmost importance. The ratings battle will be won not by overall viewership, but by the perceived quality of that viewership.

CBS and Showtime have done well to promote the fight in many capacities – although they’ve left room for improvement – and that should reflect on Saturday night’s results.

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Ronald Grover of BusinessWeek.com reports that CBS will bring in more advertising dollars than any of the other big four networks in 2009:

Everywhere you look these days, network TV executives seem to be shredding their playbooks and experimenting with their programming. The prevailing sentiment seems to be: We’ll do whatever it takes to cut costs and keep viewers tuning in. Exhibit A: Jay Leno, who has stepped out from behind his late-night desk to yuck it up on NBC during prime time.

 

Then there’s CBS, where it’s same old, same old. Yes, the Tiffany Network has added a Los Angeles spin-off to its military crime show NCIS, and launched The Good Wife, a ripped-from-the-headlines drama about the lawyer wife of a philandering politician. But mostly CBS is relying on sitcoms and police procedurals–the very definition of Old Media.

 

How is that working out for CBS? Pretty well, it seems. Three weeks into the fall season, it’s on a roll. With 12 shows in Nielsen’s top 20, including the top-rated comedy, Two and a Half Men, and its most popular drama, NCIS, CBS draws an average of 12.4 million prime-time viewers, 2.4 million more than runner-up ABC. Meanwhile, the stock has been handily outperforming those of its peers. “They’ve proven anyone wrong who thought that no matter what a network did, their audiences would continue to erode,” says Andrew Donchin, who works for the media buying agency Carat North America and helps buy ad time on CBS for such companies as Pfizer, Black & Decker, and Papa John’s International.

 

….

 

Fox can still charge advertisers a hefty premium for shows like Family Guy that have built huge followings among young viewers. But CBS’s large audiences have helped it to an additional 10% or more for 30-second ads compared to earlier this year. As a result, estimates industry analyst SNL Kagan, CBS will generate $4.7 billion in advertising revenues this year, allowing it to sneak past NBC (table).

 

For years, CBS CEO Leslie Moonves has called advertisers’ fixation on young viewers simplistic. Now, with 18- to 49-year-old Americans among the hardest-hit casualties of the Great Recession, his theory makes more sense. As Moonves told BusinessWeek in an interview: “Someone needs to show me where an 18-year-old consumer buys more than a 50-year-old.” The question for CBS is whether big audiences of graying Americans will jazz advertisers once the economy recovers.

 

GROSS AD REVENUES

(BILLIONS)*

CBS $4.7

NBC 4.6

ABC 3.8

Fox 2.8

*2009 estimate

Data: SNL Kagan

Payout Perspective:

CBS may be taking some flack for sticking close to home where the scripted television is concerned, but “The Tiffany Network” is currently the only one of the major four to bet on MMA (twice) in primetime.

I did find it strange that CBS CEO Les Moonves was so dismissive of the younger demographic. While, I concede that a 50 year-old is likely to purchase more, in aggregate, than an 18 year-old, this viewpoint fails to consider the difference in expected lifetime value between a newly acquired 18 year-old customer and 50 year-old customer. It also ignores the potential difference in product margins between the average purchase of someone who is 18 and someone that’s 50.

—

It’s been estimated that the upfront advertising market is down nearly 10% this year from last year. However, the figures tell us little about how much each respective network has dropped over that time period.

The most important thing to glean from the news is the size of the overall market and the relative competitive strength that CBS has in relation to the other networks. CBS’s success thus far is particularly interesting, because many thought the network was going to have a very difficult time not only in the ratings department, but financially.

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A convenient follow-up to Monday’s thirty second ad spot prices article, Loretta Hunt and Sherdog.com spoke with CBS in regards to the state of their advertising spots for the up-coming November 7th show featuring Fedor Emelianenko:

Kelly Kahl, executive vice president for primetime programming, said the addition of Fedor Emelianenko has certainly sweetened the deal in advertiser interest for Strikeforce “Fedor vs. Rogers” on Nov. 7, the network’s first live MMA event telecast in over a year.

 

“I think (Fedor) made it a lot easier for our sales guys and our sales are going very, very well for this fight,” said Kahl. “To be able walk in with a presentation and show Fedor shows a credibility and it speaks volumes to have a world-class fighter and maybe the best in the world. I think it certainly made it an easier sell than maybe we’ve had in the past.”

 

Kahl said movies studios, automobile purveyors, and video game companies are among those that have bought commercial slots.

 

“EA Sports is unveiling a preview of their MMA game in this fight exclusively,” said Kahl. “In terms of getting mainstream sports reporters interested, Fedor gives us the credibility that maybe we didn’t have before. It alerts a lot of people who maybe didn’t know who Kimbo Slice is, but they certainly know who Fedor is.”

Payout Perspective:

It’s interesting that Kahl seems to believe that Fedor is a bigger name that Kimbo Slice in terms of mainstream awareness. There’s a strong case to be made for the opposite.

Though, regardless of your position on the marketability of Fedor and Kimbo , the hype behind Fedor as the best heavyweight in the world is probably what’s bringing people to the table. Nothing stirs up the fight crowd like a dominant heavyweight; add in the mystery and intrigue surrounding Fedor, and he does have a degree of potential that many companies are likely looking to capitalize on.

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Robert Seidman of TVbytheNumbers reports on the latest estimated costs of 30 second commercial for the 2009-2010 network television that were recently published by Ad Age:

Now there are estimates on the rest, but be warned.  It seems these estimates were largely gathered from the upfronts (and other sources) and they don’t appear to have been adjusted based on early results.  They have Two and a Half Men making more than The Big Bang Theory (even though TBBT has outperformed it in terms of adults 18-49 ratings) and my guess is they have not adjusted for the beast that is NCIS.

 

“Ad Age calculated ad prices for each show by using the upfront prices agreed to by as many as seven different media-buying agencies and other sources. According to our survey, TV prices seem to be on the decline. In the 2008-2009 season, NBC’s “Sunday Night Football” commanded an average of $434,792 for a 30-second commercial, compared with this season’s average of $339,700. ABC’s “Grey’s” brought in an average of $326,685, compared with this season’s $240,462.”

 

As you can see, from the above a lot of shows took hits this year versus last.  

Payout Perspective:

We’ve been following the upfront commercial market over the last few months, and this is the first solid information we’ve seen regarding the actual prices being paid. Any surprise that Sunday Night Football is raking in the most per 30 second spot?

An ESPN Sports Poll recently divulged that NFL Football is the national leader when it comes to drawing the coveted male 18-34 year-old demographic that so many of these advertisers are looking to target. MMA, however, was second on that poll, and that poses a set of interesting questions:

1.) What might MMA on primetime be able to garner for a network in terms of a 30 second commercial spot?

2.) What is SpikeTV currently getting on a commercial spot for a UFC product such as the TUF series or Ultimate Fight Night?

3.) Lastly, what might CBS be able to get for Fedor vs. Rogers on November 7th?

If executives at the major networks are currently cringing at the decline of commercial ad spot prices, they might want to further consider MMA’s ability to draw in high-revenue advertisers. November 7th could be the type of proper trial run that MMA really needs on major network television – especially now with the way the market is going.

Additionally, the cost effectiveness of live sports like MMA – or reality programming, in general – is another plus for any network looking to pick up the sport.

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Ariel Helwani over at MMA Fanhouse is reporting that Showtime will be airing its hour long ‘Fight Camp 360′ program featuring both Fedor and Rogers in the week leading up to their scheduled November 7th tilt at the Sears Centre in Chicago.

Despite the fact that the Brett Rogers vs. Fedor Emelianenko fight will not be airing on Showtime, the premium cable network obviously still has a lot invested in the heavyweight bout, and it is putting it’s promotional muscle behind it.

 

On this week’s edition of The MMA Hour, which will be presented later this week at MMA FanHouse, Rogers mentioned that an episode of Showtime’s new Fight Camp 360 series is being produced about the fight, and it will air around a week before the CBS telecast on Nov. 7. When contacted by FanHouse, Showtime officials would only say that an announcement regarding the show’s air date would be coming soon.

Payout Perspective:

While Showtime hasn’t exactly put all of their eggs into one basket with Fedor – to be fair, in Strikeforce, they’ve diversified far more than they did with EliteXC – they’re still banking on Fedor’s potential to make the Strikeforce partnership a bonafide success.

It makes sense, then, that if there’s anything they can do to help his success, they will.

Note: It’s interesting that after all that chatter we heard between the Rogers and Fedor camps in early September, it all kind of dissipated at the beginning of the month. We hadn’t heard much at all until the CBS promo popped up last week.

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Dana White recently sat down with Bloomberg TV to discuss the financial progress of the UFC over the last few years. Some interesting things came out the interview:

• The Fertittas and White (holding 90% and 10% of Zuffa, respecitvely) are open to selling a 10-15% silent stake in the company.

• White estimates that anywhere between 35-45% of the UFC audience.

Payout Perspective:

I’m not sure that this should come as an absolute shock to anybody given the financing decisions that Zuffa has made in the past 18 months. White and the Fertittas have been using loans to issue dividend disbursements in order to realize some of the gains they’ve made in holding the company through its tremendous growth.

Selling a 10-15% silent stake in the company would further allow the ownership to realize their return; and, may I add, at an undisclosed price that they feel represents fair market value.

The real question here is, what do Lorenzo, Frank, and Dana believe Zuffa to be worth? You can bet the answer isn’t founded upon pessimistic projections of future growth and earnings.

Anybody looking to grab a 10% stake in the company is going to have to pay over $100 million at this point.

—-

Perhaps the bigger shock was White’s estimate of the female contingent that attends live UFC events: approximately 35-45%.

If I’m an advertising partner, I want to know the following: what do they do, what do they like, and what will they buy?

The UFC will no doubt be doing a lot of research into this segment of their audience, because the potential to leverage the F18-49 demographic into another consistent advertising revenue stream is there.

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