For sports startups and investors, one prevailing question remains: when will major brands begin spending substantial marketing dollars on new and innovative digital platforms?
A year ago, the Sports Business Journal wrote an article titled, "High School Sports Market Becoming A More Viable Option for Brands." While the claim is accurate, it isn't an entirely new concept. In fact, a decade earlier, heralded New York Times media columnist, Stuart Elliott wrote about a similar trend in his piece, "Marketers Are Joining the Varsity." Large brands have been actively marketing to high school teams and athletes for decades. But one major aspect of those marketing efforts has lagged, and that is digital.
Digital marketing is difficult, as it's relatively new and subject to frequent change. Just think, when Elliott penned his 2007 article, social networking was still in its infancy. Mobile apps were almost nonexistent. But today most big brands still haven't dedicated themselves to it and allowed adequate risk-taking. Sure they advertise on Facebook and create some unique content. However, they are often buying impressions instead of truly authentic communication that resonates deeply with consumers.
Charlie Denson, former Nike Brand President said it best in 2012, "To engage youth today, we must speak to them in their language - through digital. We need to support the sports they love and the dreams they have...Our consumer is the 17-year-old athlete. They are online ALL THE TIME...Today's youth won't accept to be 'spoken at.' They will only engage when listened to. It has to be a two-way conversation. We have to create relationships that are authentic and personal and deliver experiences young athletes want to have with our brands."
One of the principal challenges for brands is finding the right platforms for their digital marketing efforts, in hopes of engaging the roughly 8 million high school athletes and 40 million total youth athletes in the U.S. alone. But executives at several major advertising agencies have expressed in-confidence that brands turn to them because "they simply don't get digital" and know it's an area where they must improve.
Richard Smith, who previously worked in business development for First Round Capital and recently helped organize the inaugural tech summit for the National Basketball Players Association, has met with a wide range of brands and startups focused on this topic. He said, "There's no question that brands are going to spend more on digital, with a strong focus on the high school athlete. It's where their core customers are. While many brands have been timid, they will need to get more involved or risk being passed by their competition."
For the purchasing power of youth athletes (and their parents) is gargantuan. It's not just an important demographic to the apparel sector but also to other major categories like consumer goods, insurance, automotive, telecom, and fast food that represent billions of dollars in marketing spend. And the beauty of digital marketing is the level of intelligent targeting and segmentation that it affords; the right message can reach the right recipient at the right time, making marketing less wasteful to brands and less annoying to consumers.
Recognizing the opportunity, high school sports marketing is trending in a good direction. More established companies, like MaxPreps and STACK, have created sizable audiences over the years and have commanded sponsorship revenue. Meanwhile, Nike has established a deep integration with the high school video platform, Hudl, and Under Armour has gone so far as to purchase several digital companies. Most recently, Gatorade entered into a sponsorship agreement with Snapchat and a lesser known high school sports app called Scorestream.
I've had hundreds of meetings with sports brands, startups, and investors over the past decade, and the impending growth of digital marketing is a pervasive theme. Savvy brands are looking for truly authentic, integrated experiences rather than simply buying eyeballs. Now a demographic that was once highly fragmented has become streamlined. As marketing dollars flow onto digital platforms, subsequent revenue growth for startups will cultivate much more significant enterprises.
One of the premier sports investment bankers, choosing to remain anonymous, told me, "I get weekly calls from private equity shops targeting youth sports. Professional sports are saturated and the prices are too high. The same is true with college sports, especially when you look at the likes of IMG and Learfield. Dollars are focused on the level below, and high school is the next frontier."