Navigate Research

Industry Insights

As the industry leader in evaluating and measuring marketing investments, Navigate has a wealth of knowledge in the sponsorship and marketing space. This blog shares our knowledge and insights on current events in the sports business, marketing and sponsorship worlds.

Sharing is Not Caring: The Future of Cable TV

Navigate Research - Monday, March 21, 2016

Written by Matt Balvanz

If you’ve been paying attention to the news surrounding the future of cable TV, you’ve probably already concluded that the industry’s days are numbered. With all of the programming options available online for monthly fees well below cable TV packages, why would anyone not cut the cord at this point? Industry experts believe the only valuable aspect of the cable TV bundle is the access to live sports. But, according to a 10K filing from Disney in November of 2015, ESPN’s subscriber base has dropped from 99 million in 2006 to 92 million, a loss of 7 million subscribers. So, it appears live sports isn’t even immune to the cord-cutting phenomenon.

Are sports fans really deciding that traditional cable TV packages are so expensive that they aren’t tuning in to live sports anymore? Should sports content providers be worried that their games aren’t as valuable as they used to be? Should cable distributors be worried that their coveted bundle packages are priced too high? Or, is there another force working behind the scenes that is driving this behavior? I believe one major driver that nobody is talking about is password sharing.

According to a consumer survey of 10,000 US broadband households conducted in Q3 2014, 6% of respondents claimed to use a password from a friend or relative to access non-cable programming, which equates to about 6 million subscribers. Keep in mind that this 6% is just the people who were willing to admit to borderline illegal activity in a survey, so the results are likely conservative.

So, we’ve got 7 million people who cut the cord, and 6 million people (conservatively) that are using other people’s passwords to access cable TV. It seems to me that people are still very interested in watching sports and other quality programming, but they would just rather not pay for it. The obvious question here is why are cable companies and other over-the-top networks like Netflix and HBO allowing all of this password sharing. Executives claim that they are fine with the password sharing for now, since it gives potential customers a way to access their content, and the current environment is all about gaining subscribers, so it’s best not to risk the negative PR. But, at what point do the subscriber losses reach a level where these companies start to crack down on password sharing? And when they do, will people really stop viewing cable programming for good, or look for ways to pay for the content again?

Nobody can predict the future, but my best guess is that when the 6 million+ people who are paying $0 per month for cable are no longer allowed that pricing luxury, they will look at the options available, and re-subscribe to cable TV. Of course, the viewer experience of cable TV will look a lot different, as there likely won’t be cable boxes or actual cable cords running through living rooms, and consumers will be watching on TVs, phones and tablets. But ultimately, I think sports fans who have been cord-cutters will come running back once they can’t use a friend’s or family member’s password.

I know this goes against nearly everything else you will read. Right now the conventional wisdom is to forecast a doomsday scenario for cable TV in the age of cord-cutters and cord-nevers. But most of the rumors surrounding over-the-top options (Apple TV, YouTube, and Amazon most prominently) claim that they are trying to piece together subscription packages with around 12 channels costing consumers $40 per month. Compare this to current cable TV packages offered by Time Warner Cable and Comcast that offer 70+ channels for the same monthly cost, and if someone is forced back into making a purchase decision, why would they pay the same amount for fewer channels? Unless over-the-top options can offer equal or more content at a value that’s the same or better, I think cable TV will see some degree of resurgence once password sharing becomes more difficult.

The only question then will be what we will call the cord-cutters that re-subscribe to cable. Cord-menders? Cord-fasteners? At Navigate, we plan to call them “Cord-comebacks” if and when this day comes.

Beyond the Valuation

Navigate Research - Tuesday, February 23, 2016
Written by: Dan Kozlak

Sponsorship valuations have become an increasingly important and valuable tool. The significant growth in sponsorship investment levels corporate partners allocate from their marketing budgets to achieve advertising and business initiatives, as well as the dependence properties place on sponsorship revenue streams to operate at the highest level possible, have necessitated their use.  Valuations serve as a credible source for determining an appropriate price for a partnership, as well as demonstrating the return on investment a partner has received from the exposure generated by properties’ assets.  

By educating both properties and corporate partners about the appropriate value for partnerships, it can help generate an efficient market place where both sides can feel confident executing such partnerships.  However, determining the total fair market value price of a sponsorship is just one advantage valuations provide.  As anyone who has been involved in sponsorship negotiations can attest to, establishing an appropriate price for a partnership is just the initial step.  

There are a few other key components a valuation can satisfy beyond determining a fair price.
In instances where the sponsorship in question is new, dramatically expanded, or does not have a renewing partners, valuations can serve as a prospecting guide.  Establishing a fair market price for a partnership enables properties to focus their efforts towards prospective sponsors that can afford such investments and who have historically purchased sponsorships at a similar level.  Instead of simply targeting all potential corporations, setting a desired price allows properties to save time and resources by exploring only feasible partners.  And if it is unknown whether a potential partners would be willing to make such an investment, providing a broad price range during initial conversations can help prospects determine if they would like to further discuss the opportunity or not.  Establishing this pricing level can help save a great deal of time and resources from a partnership development standpoint.

Demonstrating the overall value of a partnership does help to establish the ultimate price it is sold for.  However, a valuation can serve as an asset package management guide.  Almost all sponsors have specific objectives they would like to fulfill from their sponsorship investments. A valuation of each asset can ensure an agreeable portion of the package’s value is being driven by assets that achieve those objectives.  Based on a sponsor’s desired “key performance indicators” (K.P.I.’s), a sponsor and property can work together to ensure the right mix of assets is utilized to deliver against those metrics.  This comes from a combination of the sponsor sharing these objectives and marketing goals (i.e. driving awareness, differentiation from the competition, building brand affinity, product promotion, etc.) and a property supplying and activating appropriate assets to achieve these goals.  However, this is only possible through a full asset package valuation.

Corporations engage in sponsorships with the ultimate goal of garnering a return on investment to their company’s bottom line.  Valuations provide a more accurate means of measuring their generated return against what the sponsorship has proven to be worth.  Measuring this observed fair market value of an existing sponsorship can help a sponsor to determine whether they should renew existing partnerships, optimize their asset mix, expand their partnership, or step away from a partnership.  Properties can also utilize the assessed fair market value to demonstrate to existing or future partners the return they can expect when partnership with their organization.  No matter which side of the partnership the return is measured on, a valuation will provide the most accurate performance gauge possible.

In negotiations, confidently knowing what a partnership should be worth in the marketplace can be very valuable.  Valuations can aid prospective sponsors by indicating whether the price they are being pitched appropriately aligns with the assets they are being charged. Valuations also aid properties by determining where they can establish pricing at knowing they can confidently walk away from a low-pitching prospect to pursue an offer they know they can command in the market place.  Having this information provides either side with an upper hand during negotiations.  By establishing the fair price of a sponsorship, partners can make appropriate decisions in their best financial interests.

While it is important to understand the best price to place on a given sponsorship, there are many other additional advantages to conducting valuation.  Valuations can assist in prospect targeting, asset package management, accurately gauging return on investment, and negotiation strategies.  Given the increasing amount of cost associated with sponsorships, executing valuations can be well worth their investments.

Navigate Research wins national award for second year in a row

Navigate Research - Tuesday, December 15, 2015
Navigate Research, an industry leader in evaluating and measuring marketing investments in sports and entertainment, announced today that they have won the 2015 National "Best and Brightest Companies to work for®” award from the National Association for Business Resources (NABR). 

Navigate is also a proud winner of the 2015 Chicago’s Best and Brightest Companies to work for, 2014 National Best and Brightest Companies to work for, 2014 Chicago’s Best and Brightest companies to work for, 2015 SportsBusiness Journal Forty Under 40 (AJ Maestas) and Forbes’ 10 Best Organizations to Work For in Sports. 

About Navigate Research
Navigate Research specializes in the evaluation and measurement of marketing investments, primarily in the sports and entertainment industry.  We help our clients determine the value of their partnerships and understand how they're performing.  We work with a variety of brands and agencies, as well as professional teams and leagues.  Some of our clients include ESPN, NFL, Anheuser-Busch, Southwest Airlines, The Los Angeles Lakers, The Ohio State University and The National Rugby League. 

About "Best and Brightest Companies to Work For®"
The "Best and Brightest Companies to Work For®", a program of the National Association for Business Resources is presented annually in several markets: Detroit, Chicago, Atlanta, San Francisco, Milwaukee, Houston, Grand Rapids and Nationally.  

The Evaluation Process included representatives from the Best and Brightest team working with the over 450 companies to identify their strengths and opportunities through an in-depth evaluation.

Participants' practices were bench-marked against other participants in their region and across the nation. This multifaceted approach created a rich assessment that provided opportunities for expert analysis reports, competitive comparisons overall assessment of other factors including Return on Investment.

Exercising Your Willpower

Navigate Research - Monday, December 14, 2015

Written by: Kelli Williams

For many the holiday seasons is synonymous with overindulging and overspending. So it should not come as a surprise that eating less and saving more are among our top New Year’s resolutions…every year. According to Nielsen, in January 2015 the top resolutions were: 
  • stay fit and healthy (37%)
  • lose weight (32%)
  • enjoy life to the fullest (28%) 
  • spend less, save more (25%)

While the majority of Americans set resolutions for themselves on January 1st, most are broken before the month is over. Tremendous willpower is required for each new resolution committed to. More than likely it’s an amount the brain just can’t handle, especially when five of them are set at once.

Willpower is powered by cells in the prefrontal cortex area of the brain, right behind the forehead. The prefrontal cortex is also charged with helping solve abstract problems, maintaining focus and controlling short-term memory. Like any other muscle the prefrontal cortex needs to be trained and it needs to happen gradually. Just like one can’t expect to go from lifting a 5 lb. dumbbell to dead lifting their body weight overnight, we can’t go from a diet of fast food to eating only homemade, organic meals starting January 2nd.

The reason most resolutions fail is that they are intangible, making it really hard for the poor, overworked prefrontal cortex to really grab hold and focus on them. But, luckily we can ‘trick’ our brains into getting better at this by developing (tiny) ‘habits’ instead of resolutions. For example, instead of saying that you will “eat healthier” (a vague resolution) you can start by developing a habit, like “try one new healthy recipe every Sunday” (a concrete habit). Or, instead of “get organized” you can start by simply making your bed every morning.

Author Gretchen Rubin has researched the process of creating and keeping habits and shares a variety of strategies in her book, “Better than Before: Mastering the Habits of Our Ordinary Lives”. 

Two of the key takeaways are:

  • Stop Making Decisions. Every time you have to make a decision (should I go to the gym?) you tax your willpower. Instead, create fixed habits by having a plan that does not require a decision and is easy to execute. Doing something every day and having it on your schedule (gym every day at 7 a.m.) is often easier – and more powerful - than doing something every once in a while or when the mood strikes.  
  • Know Yourself. Rubin believes that people likely fall into one of four buckets when it comes to habits, based on how we manage internal and external expectations. The four archetypes are: Upholder (someone who tends to meet both outer and inner expectations), Questioner (someone who resists outer expectations but tends to meet inner ones), Obliger (struggles with inner expectations but tends to meet external ones) and Rebel (resists both outer and inner expectations). You can find out which one you are, here. She suggests that we do not try to change our tendency but instead design our habits in ways that will work for us.

At Navigate, we have gotten a head start on building good habits for the New Year with a company-wide workout challenge. We have committed to working out 4+ times a week through the end of the year, with all the workouts being publicly tracked. This challenge aligns with both of the takeaways above – 1.) The decision on what to do (workout for 30+ minutes) and how often (4+ times a week) was made for us (saving some precious willpower) and 2.) The public tracking is a great way to add external expectations – especially powerful for those Upholders and Obligers among us.

We will soon be overwhelmed with articles on how to best keep our resolutions. These are just a couple of ways that it’s working for us. Best of luck in creating and keeping your resolutions this year – just remember to make it easy for (or trick) your brain - it is a muscle that needs time to adjust, just like any other!