Editor's note: This post was part of an assignment for my Sports Marketing course.
When reading “The (Longer) Long Tail” by Chris Anderson, my eyes were opened to a new way to view items that I touch daily; online music (iTunes, Spotify), online stores (Amazon.com – where I purchased his book), and even online event ticket sales. In the past I have looked at these sites as more of a convenience, not as a store with unlimited potential and inventory. As I went deeper into the rabbit hole, I began to explore Anderson’s (Chris’, not mine) theory on my own. I looked to Spotify for recommendations on music that I may never have listened to or purchased using their new radio app. I also explored more on a secondary ticket sales aggregator, SeatGeek.com, to research how our NASCAR tickets were being priced on the secondary market.
In the book, Anderson lists the three main forces that make “the Tail” what it is, a never ending variety of niche items available to the consumer, thus additional revenue for businesses. His first theme, democratizing the tools of production, references one’s ability, mainly due to the advent of the modern PC and internet, to produce and post music, writing, photos, etc. Artists can now record their work in the format of their choosing and make it available to the world with a few clicks of the left-mouse button for free or for a fee. The second force is cutting costs of consumption by democratizing distribution. The internet gives sellers an unlimited and unparalleled format to distribute their material goods. Low overhead costs due to near-zero shelf space needs, significantly reduced staff and almost costless distribution help these businesses offer lower prices on goods while maximizing revenues. The third force isconnecting supply and demand; no longer does demand rise as supply falls. In the digital world, supply never falls; in fact supply is constantly on the rise. The perfect example of this, consistently used by Anderson, is with music. Sure, there are still hits in the traditional sense, Justin Bieber (gag) has plenty of them and they sell hundreds of thousands if not millions of digital copies. Lower Case Blues, a small local Delaware rock band that recently played Firefly Music Festival, on the other hand has released one 8 song album that before this weekend was enjoyed by its niche local following and potentially a few other fans that follow the same niche music scene. Never-the-less, there is another musician or band out there with one song that ten people have taken the time to listen to and tomorrow there will be three more just like it. Bieber, unfortunately, will still be there to give his fans the hits they scream, cry and beg for while others will plug away at their craft, most likely never to see great success, but still finding that loyal group, or person, that follows their every move.
For the consumer, the ability to access personal favorites will always remain a constant driving force in the purchasing mind, however; today consumers seem to be more and more interested in finding or trying something new, something different. Folks want to be challenged to break the mold they have lived in and be different in some way. Conventional wisdom is not what it used to be; consumers are now consuming on reputation. What that means is that consumers are now consuming items based on what their friends share or like with them. First items were discussed around the water-cooler at the office, leading to slower adoption and sharing. With the advent of the PC, email and internet, sharing and liking has grown more quickly. First shares and likes occurred via email, then via blog posts and finally, when a little internet site started by a then-Harvard student called (The) Facebook was launched, likes and shares became instantaneous. Smart-phones have only increased the ability to like and share faster with their on-the-go, always connected web and mobile apps. One can only imagine what Google’s “Project Glass” will do to the consumer marketplace when the sheer site of an item and blink of an eye could trigger instantaneous liking, sharing and potentially purchasing.
Within the world of sport, the Tail presents some issues, yet still has merit. My initial reaction was to think in terms of ticket sales, suite sales and sponsorship signage sales. The problem is that inventory in these areas is not limitless, although new and more creative inventory is being created every day. In terms of ticket sales, I think the Tail can be seen in the secondary market, and more-so with dynamic pricing. While the issue of limited inventory still exists, the fact is that the price of inventory can be more flexible. Dynamic pricing is a philosophy that uses sophisticated algorithms (designed by someone much smarter than I) to determine the price of a seat based on a number of factors. Factors can include prices paid by other fans on the same seat at different games, match-ups (teams, players), weather, day of the week, current sales trends in the primary and secondary market and so on. Dynamic pricing means that there is rarely a specific number of seats set a $30 per game, $20 per game, etc. Some fans may be willing to pay a higher rate for the best seat in the house, in music industry terms this would be “the hit,” while many other fans want to attend but are price sensitive. Dynamically pricing a facility allows for fans to find a seat in their price range. For the team, one seat might sell for $30 on Monday, but a change in the factors looked at in the algorithm on Wednesday could lead to selling the seats next to those for $32. For a baseball team selling a seat at $2 extra per game for an entire season is $162 in incremental revenue. While that pales in comparison to the millions of dollars these teams earn in gate revenue each year, when that $162 is multiplied out over 1/3 of a 35,000 seat stadium (11,550 seats) a team can generate $1,871,100 in incremental revenue for a given season!
Now, throw in the dynamic of the secondary market, where seats that have been sold by the team are again available to consumers. The secondary market can be an avenue controlled by the team, (Ticketmaster’s TicketExchange), controlled by a third party (StubHub, eBay), or controlled by both (ScoreBig). A consumer now has the option to shop for the best seat at the best game at the best price. The ability to resell the same seat multiple times also increases the potential shelf-life and revenue generating possibility that one seat can possess.
Another area I believe the Tail exists for sport, and more notably, for Dover International Speedway, is the sharing of [digital] content. Leagues, teams and venues have all done a good job of adapting to today’s digital world with branded & league/team/venue driven websites, Facebook, Twitter and YouTube pages, yet this just touches the surface of channels of distribution that are available today. And hiding in these other, more niche avenues are consumers and potential fans of your league/sport/team that have yet to be touched because their world has been overlooked. While websites, Facebook, Twitter and YouTube pages are “the hits” in today’s online world (I could argue that websites are fourth in that list), newcomers such as Pinterest, Tumblr, Google+, SocialCam, and Viddy gain popularity and the niche fan followings of LinkedIn, StumbleUpon, Digg and delicious continue to look for new and fresh content. By bringing a variety of content, driven by both the league/team/venue and by fans, across all of these platforms (and potentially more), you increase your ability to market to individuals that may be tuned out to your other messaging. In Dover, for example, we significantly dialed back our outdoor advertising in 2012 and focused that revenue on Facebook ads and other web-based advertisements and retargeting campaigns. I believe this will be a continuing trend for us as we become more aware and knowledgeable about our available advertising avenues.
Retargeting was an unbelievable concept that was presented to us in 2010. By placing a “cookie” a simple piece of code, on someone’s computer when they visited our website (everyone does it), our digital ads were able to “follow” that fan to other sites where Google owned ad space (they own it everywhere). The constant, yet subtle, reminder of our facility should have (ps, it did) led fans back to our site to make a purchase. This meant that we have advertisements on virtually every website imaginable and the impressions we were purchasing were meaningful to the individual we were impressing upon. For us, the Tail was more evident in where the ads appeared, “the hit” being NASCAR.com and the tail being a very long list of obscure websites that generated one or two impressions during the campaign.
Without question, Chris Anderson’s book has changed my opinion on how we as a venue need to view inventory and how we go to market to sell that inventory. While my thoughts are yet in the infantile stages, I believe that the concept of the Tail is one that will begin to be incorporated in businesses with limited inventory as well. Not every industry can be like the industries of music and literature. Some must have “store fronts” or “facilities,” so brick and mortar costs will be there. Limited inventory, however, does not mean limited inventory at a specific price or a limited form of communicating the availability of that inventory. It is my belief that the concepts expressed in this book can be used across all sales industries, to a varying degree, and these concepts will become the new foundation for which marketers can fulfill the needs and wants of the consumer.
