Friday, June 20, 2014

BUSINESS/ FOOTBALL SPECIAL................. World Cup Soccer: 770 Billion Minutes of Attention


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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