In-Venue Giveaways Fan Impact Provides Lessons Learned For Partnership Strategy

BY ADAM GROSSMAN

COVID-19’s impact on the sports industry has caused many partners, properties, and rights holders to be focused on digital partnership activations in large part because of the lack of fan attendance. A recent study in the Journal of Sport Management featured in Sportico, shows how physical fan giveaways have a tangible impact on increasing revenues and engagement.

Associate Principal at Charles Rivers Associates Jeffrey Cisyk led the study focused on Major League Baseball (MLB) teams. He found that fan giveaways drove increases in ticket sales generally and with bobbleheads specifically having a strong impact on attendance.

Cisyk’s analysis contains many interesting findings but two that are particularly applicable to partnerships. The first is that different promotions work differently for different teams. For example, one key question that Cisyk examined was availability of promotions during games in two conditions: High-availability which refers to providing a giveaway to a larger number of fans versus low-availability which refers to providing a giveaway to fewer fans. 

Essentially, Cisyk wanted to determine if it was better to increase supply (high-availability) or increase demand (low-availability). When looking at bobblehead giveaways, Cisyk found that both conditions drove an increase of 6%. However, different teams benefitted from different approaches that were optimized for their specific situations.

For example, the San Francisco Giants and St. Louis Cardinals “are among those successfully using the high-availability approach.” However, “low-availability teams see an 11% increase on those days” with bobblehead giveaways “[And] high-availability teams need to give out 16 bobbleheads just to get one additional ticket sold. The low-availability teams only need to give out six.” Yet, low-availability teams need to be careful not to provide too few of the giveaways because “some fans go home disappointed.”

The second application this study had for partnerships is how top of funnel marketing metrics can impact bottom of funnel / performance metrics. In particular, how does an increase in fan engagement through increased brand perception lead to increases in lifetime customer value.

The study rightfully points out that one issue with fan giveaways is the cost. Bobbleheads, for example, cost $3 to $5 to produce. That is a significant expense for teams that need to produce thousands of bobbleheads even for the low-availability approach. The study found, however, that bobblehead promotions increased ticket sales on the days of the promotions, increased spend on concessions because fans wanted to show up earlier for the games, and did not cannibalize sales for other, non-promotional games. 

The last item is particularly important as it demonstrates the halo effect of these promotions. Cisky’s thesis for his giveaways findings is that “It has to do with the idea that [the team] is building a long-term relationship with its fans [by ensuring they go home happy].” This is borne out in that promotions drive incremental revenue growth without cannibalization on other days (i.e. fans are not just spending money on different days but spending more money overall).

This finding alone that giveaways drive attendance in demonstrable ways should cause companies and teams to consider them as part of their partnership strategy. However, the two findings we highlighted in our analysis have larger applicability for both buyers and sellers and sports sponsorship.

Our Corporate Asset Valuation Model (CAV) highlights how to apply both findings in more detail. First, the CAV examines how specific companies generate specific value from specific activations. The primary reason we employ this approach is that different companies have different revenue and brand goals. Partnerships should be optimized to help these companies achieve their specific goals.

The efficacy of this approach is highlighted in part from this study in the high and low availability condition. Different teams use different approaches to maximize fan attendance and in person revenue via how they employ high or low availability promotions. The same strategy can and should be applied more generally to partnership activations.

CAV also shows how increases in brand perception can lead to increases in customer value. In Cisky’s study, having fans that “go home happy” results in increased ticket sales. B6A’s research has found that an increase in brand sentiment has a strong and statistically significant correlation to revenue growth. In other words, customers that are “happy” tend to generate more revenue.

The study’s seeming focus on MLB teams and bobbleheads requires the caveat that the larger applicability of its findings may require further analysis. However, the lessons learned from the from a ticket sales study like this do have direct applicability to maximizing partnership value.