World Cup Soccer: 770 Billion Minutes of Attention
FIFA stands to generate $23 billion
in revenue from World Cup soccer over the next few weeks. Clearly the
organization understands "Attention Economics," says marketing expert
Thales Teixeira.
The 2014 FIFA World Cup in Brazil is
expected to attract the attention of 3.2 billion people worldwide. During one
month, 32 teams will vie for the trophy of best football (a.k.a. soccer) team
in the world. With 64 matches and assuming that 3.2 billion people watch one
entire game, the whole tournament will garner 770 billion minutes of attention.
The fact that most will view the
matches as they are played makes the tournament even more valuable to
advertisers—a key principle of "Attention Economics," which focuses
on what has become a scarce commodity in an age of information overload. Using
a standard cost of $25 per thousand viewers, which is generally charged by
broadcast companies for a 30 second ad on primetime television in the United
States (a value cheaper than Japan and more expensive than Brazil) FIFA has the
potential to generate $23 billion in revenues from TV ads, billboards, and
sponsorships in a month.
In other words, this would make FIFA
the seventh largest business in the world, after Britain's BP and before
Japan's Toyota, when compared on an annual basis.
The business of football has a
well-established global audience. In this playing field, aggregating the
attention of fans and selling a portion to advertisers and sponsors is where
the real riches lie. The ticket sales are a mere fraction of the total profits.
For instance, the 1.6 million tickets sold at the World Cup will likely
generate only around $160 million dollars, at the average price of $100 per
ticket.
If one were to compare potential
profits, FIFA would likely come out even better than BP or Toyota. Some of its
costs and capital expenditures, such as the $4 billion invested in stadiums,
are borne by national and local governments. In terms of human capital costs,
FIFA itself employs only 400 people, according to the organization's website.
Even if each of its 209 country members employs another 50, that adds up to a
total of 10,850 employees worldwide, a mere 3 percent of Toyota's 333,000
global workforce.
“FIFA has the potential to generate $23 billion in revenue
in a month”
Most of the attention-getting
opportunities the World Cup offers both on and off the field are sold to
advertisers, either directly via sponsorships or indirectly via national media
companies that buy the right to retransmit the games and sell ad space to their
local advertisers.
Another key principle of the
Economics of Attention is that attention is valued in a "superlinear"
manner, which means that advertisers place twice as much value on the attention
of 100 million viewers as they do on 50 million viewers. So FIFA drives up the
value of those eyeballs by selling exclusive broadcasting rights to only one
broadcaster per country rather than splintering attention among multiple
outlets. In Brazil for example, the broadcaster has always been TV Globo, which
captures more than a 50 percent share of the television sets turned on at any
given night in that country.
The
price of attention
Attention is becoming a scarce
resource. Due to consumer behaviors such as multitasking and shorter attention
spans, the quality of viewer attention has eroded over the past two-and-a-half
decades. For instance, in the United States broadcast sector, the cost of
consumer attention has increased five- to seven-fold for the same period even
after controlling for inflation. A third principle of Attention Economics is
that attention associated with emotion has more value due to its "sticking
power" in people's minds. In other words, the passion of football fans
further increases the value of their attention for advertisers.
And it's not only advertisers who
are after this scare resource. The Brazilian government has been a voracious
consumer of attention, communicating heavily through TV and other media in the
months leading up to the World Cup. A portion of the population has seen the
value of protesting in front of a TV camera in an effort to get the attention
of other segments of the population or the government. As we all know,
attention is power and concentrated attention is power concentrated.
Football's ability to emotionally
connect with audiences in huge numbers in real time has made it a lucrative
business in the market for attention. Ironically, the very value created by
FIFA and a handful of others who dominate the business of football may come
back to haunt them as advertisers become frustrated by the lack of innovation
and specter of corruption that can prevail in a monopoly. As a result, they may
be getting unwanted attention from government and legal authorities. But for
the fans, when the ball hits the field, attention will shift to the game, and
they will forget the powerful machine that controls the most popular sport in
the world.
by Thales Teixeira
http://hbswk.hbs.edu/item/7556.html
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