Live commerce promise vs reality
How brands are dropping the ball on tying top-of-funnel to outcome
File this one under the “How have we not solved for this yet?” tag. If you’re a tennis fan, you probably spent a few hours watching the finals of the second Grand Slam this year: the French Open, or, as the French will tell you, Roland Garros. The ladies’ final between Anastasia Pavlyuchenkova and Barbora Krejcikova featured two first-time finalists, a fantastic match, and – perhaps predictably – brand sponsors that dropped the ball like it’s pre-ecommerce times. Let us explain.
Top-tier tennis athletes usually, at a bare minimum, have clothing and equipment sponsors, which, for the upper echelon of the sport – the kinds of folks who play in the latter stages of Grand Slams – tend to each top millions of dollars per year. Core sponsorships are frequently augmented by other sponsorships: Watches, other luxury gear, cars, and companies from the athlete’s home market(s) are all popular choices. Athletes in their prime can generate ample brand awareness, and once you’ve locked in someone, often while they’re still on the junior circuit, brand loyalty remains high. And yet in spite of this investment, when Ms. Pavlyuchenkova – ranked the world’s 19th best tennis player – stepped on court to play in the French Open final in a fantastic pair of tennis shoes, viewers worldwide were left to wonder which Nike shoe model she was wearing. If you also happened to be in market for tennis shoes and wanted to buy a pair, you wouldn’t get any help from Ms. Pavlyuchenkova’s shoe sponsor, the tournament, or Ms. Pavlyuchenkova’s own social media presence. (She has north of 200,000 followers across Instagram and Twitter.) Her opponent, Ms. Krejcikova, won both the singles and doubles titles at the French Open. Ms. Krejcikova, who is ranked 15th in the world in singles and first in doubles, plays with a Head racquet, yet her page on Head’s website lacks her bio and hasn’t been updated to reflect her French Open titles. Most importantly, there’s no link to the racquet she uses nor any information about how fans might buy one for themselves.
Meanwhile, on the other end of the commerce spectrum, live shopping is all the rage. The format exploded in China over the past five years; famous influencers who command a high level of trust – such as Austin Li, the king of lipstick sales – can earn tens of millions of dollars per year. The format itself isn’t new: In the West, TV shopping has been a reliable channel for product placement for decades. The direct-to-consumer (DTC) ecommerce era, in parallel with the rise of streaming, has removed the constraints imposed by linear TV: There was a fixed number of hours per day, and shopping-TV channel operators optimized for the products and on-air personalities who they thought would sell. When everyone with a smartphone can livestream their shopping haul or an unboxing, there’s no limit to what can be sold this way (at least in theory, but increasingly so in the ever-growing GMV numbers shared by commerce platforms in press releases and earnings calls).
On the one hand, we have a live event with massive global viewership: Some estimate a Grand Slam like the French Open commands as many as 3 billion viewers worldwide throughout the course of the tournament. Brands have spent millions of dollars in research to identify that an audience of Grand Slam tennis viewers is exactly who they want to target – only to stop short of giving the audience easy ways to buy. Why does this disconnect between global brands and their commerce capabilities still exist?
The answers and root causes are somewhat predictable:
For most companies with traditional distribution through retailers, regional partners, and authorized resellers, direct digital commerce is at best a separate silo and more commonly an afterthought. Instead of taking advantage of DTC opportunities, many traditional companies instead focus on improving and digitizing the ordering process for their distributors and retail partners: a B2B use case rather than a B2C one.
Global brands often have to contend with different product lineups in different regions. As a result, they frequently have very well-developed country- or region-specific strategies but aren’t ready to address and connect the dots on a truly global marketing activation campaign required for high-profile sporting events. In that sense it’s easier to default to inertia, especially as any short-term revenue gained from adding commerce is likely to pale in comparison to the money sunk into sponsorships. Best not to rock the boat or saddle yourself with new KPIs when no one internally will be questioning your old ones. This is an interesting myopia: Consumers see their relationships with the global brand, not the brand’s local outpost/retailer/reseller.
For scaled traditional brands with established distribution channels, the organization often lacks a functional area that’s explicitly tasked with improving the customer experience. Historically, this is because a brand’s main customers weren’t actual customers but rather the buyers at their retail partners. When a functional area, even one as important as CX, doesn’t have a clear internal champion and owner, there’s little incentive to try to improve it. Marketing teams remain content to pour money into high-profile sponsorships and trust that somewhere further down the spreadsheet this type of investment will continue to make sense because consumers will keep buying. Therein lies the rub: Consumers are increasingly shifting their spending habits to brands that prioritize easy and (frequent) direct buying. Nike is a great example here. Following consistent DTC investment, direct orders now represent 30% of all revenue – a marker the company didn’t expect to hit until 2023. Yet, even Nike misses: In its consumer app throughout the duration of the tournament there was no easy way to discover what was worn at the French Open, in spite of Nike being the clothing sponsor of ~43% of the top women pros and ~23% of the top men, and featuring several exclusive athlete brand lines and capsule collections. It was as if this major sporting event wasn’t really happening.
Another paralyzing factor to solving this disconnect is that it feels like it would require a Big Project or massive levels of organizational realignment to execute. The solutions can be rather simple and require less fancy, cutting-edge technology and more customer understanding and willingness to rapidly prototype various options. Anyone in the brand, league, tournament, or individual player value chain could have done something about this. For example, the player could post a Linktree list across their social channels with links to their main sponsors and gear; a few years from now, maybe we’ll start seeing clauses for players to receive a percentage of merchandise sales in sponsorship contracts. The brands could have created tournament-specific landing pages to tie the live event to their regular lineup of products. Perhaps they could have launched a quick Shopify store with a limited inventory run of the products customers would most likely search for. It seems like such an obvious opportunity that we’re tempted to hotwire something like this ourselves ahead of Wimbledon as a test.
One doesn’t have to go far for ideas or implementation examples. Pushed by the pandemic, supermarket staple Heinz famously launched a direct-to-consumer site in the UK in mere days.
In more digitally native land, Netflix recently created a merch line that hits all the right spots: a small number of creators, with content about their individual inspiration, design process, and similar areas of interest, along with – most importantly – a frictionless checkout experience courtesy of Shopify. While this early foray into shopping created an entirely new collection, it’s easy to see other opportunities. Knowing how much care goes into selecting clothes and furniture for shows and movies, wouldn’t it be nice if you could also peruse and one-click buy Anya Taylor-Joy’s wardrobe from “The Queen’s Gambit”?
While we wait patiently for more traditional brands to get their acts together on linking marketing to commerce efforts, shopper behavior continues to evolve toward easy ordering, discovery channels that offer product feedback (as shopping livestreams do), and simple payments (from one-click checkout to buy-now-pay-later twists on retailer-specific credit cards). The short-term advantage rests with the challengers; the incumbents will surely at some point have to evaluate live commerce and wonder how to connect the dots between their current setup and distribution and the more consumer-friendly approaches we’ve outlined.
… And if anyone knows which shoes Ms. Pavlyuchenkova was wearing during the French Open, please tell Ana so she can stop fruitlessly googling.
Given that most traditional brands continue to have a disconnect between high-ticket above-the-line efforts like sports sponsorships and global direct commerce capabilities, would redirecting some of those funds to BTL activities in key markets yield better ROI and revenue lift than what can currently be attributed?
Programming note: Sparrow One is on a summer schedule during June, July, and August. You can expect a monthly cadence likely alternating between pieces that are company specific and that examine industry connective tissue and context, which we so love to explore. We may also throw in an ad-hoc issue here or there, but mainly we want to make sure that our stellar little team has some more open bandwidth over the summer on top of client work and non-work pursuits. And if you happen to be reading One on a beach somewhere, please do send in photos of said beach.
Thanks for reading,
Ana, Maja, and the Sparrow team
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