Nick Maywald got the idea for his company Sporting Pulse while playing social basketball. But as he explains to AMITA TANDUKAR, the company is now repositioning itself to take advantage of potentially huge revenue streams from online media and social netw
By Amita Tandukar
Nick Maywald got the idea for his company Sporting Pulse while playing social basketball. The company is now repositioning itself to take advantage of potentially huge revenue streams from online media and social networking.
Back in 1999, Nick Maywald came across the idea for Sporting Pulse sports websites while taking time out from his day job as an IT systems integrator to play basketball.
Top sporting bodies like the AFL and major media companies had built sophisticated websites to deliver fixtures and instant results, but grassroots sports had been forgotten.
“A lot of leagues were in the dark ages,” Maywald says. “If you were lucky you could look up results in the local paper.”
Today the Sporting Pulse network of websites provides administration support to 30,000 sporting organisations with two million members and is challenging for the top position in Neilsen/NetRatings Australian sport rankings.
But Maywald says keeping up with the pace of change in the internet space remains a constant challenge. After being forced to abandon plans to float the company seven years ago, the company has been forced to make some significant changes in the last few years to adapt to new forms of online marketing and capture the associated revenue.
Creating a network
Maywald used his own savings to start the company in 1999, envisaging the administration technology and web hosting would be funded by advertising. Sporting Pulse was all set to grow rapidly – then along came the 2001 dot-com crash.
At the time of the crash in April 2001, the company was two months away from an initial public offering on the Australian Stock Exchange. It was a big decision whether or not to go ahead with a $12 million capital raising with an advertiser-based model.
Maywald decided to play it safe, abandoning the float and shifting to a model based on software licensing. “We were not receiving corporate fees though – we took whatever they could afford, recognising that we were building a large online network.”
Off-the-shelf software could not perform the type of tasks required by sporting administrators, so Sporting Pulse developed its own software. From just two people the development team has grown in less than a decade to 11 people, with further work outsourced.
An important development was a social networking portal, MySport, which allows users to import fixtures and results from its various sports websites and add content such as photos and blog entries.
Sporting Pulse increased its client base to 30,000 organisations at the club, league, national and international level by focusing on key sports. “By getting it right for basketball in Australia, it attracted the [International Basketball Federation]. And by getting it right for basketball, we attracted baseball.”
A third important client is the Oceania National Olympic Committees, the regional branch of the International Olympic Committee.
Soccer is the next target. Maywald says the company is already making in-roads with work for the Oceania Football Confederation and leagues in New South Wales, a state that boasts 200,000 players, or half of all Australian football players.
Converting users into audiences
The Sporting Pulse board made a big call in 2007. It decided the online environment had evolved to support an advertiser-based business model. The company is currently in a transition phase, renegotiating contracts with associations and leagues to offer free software and bandwidth in exchange for rights to commercialise internet traffic. Under the model about $5 million worth of products and services will be provided to sports at no cost.
Sporting Pulse is winning over sporting organisations by offering a 50% share of the advertising revenue. Maywald says the model is about being fair to all parties. “Exclusive content is being provided by the local sport, so rewarding the sport for it rounds out the picture.”
Maywald says it was a natural evolution for the narrowcast network, which has detailed information about users. This gives Sporting Pulse a clear advantage over big media companies when courting advertisers. For example, the only thing known about a Fox Sports website user is that they like watching sport.
Geographic information about users is particularly valuable. A recent example was a Bakers Delight campaign, which wanted to only target certain areas. Sporting Pulse was the only media that could deliver the spread, according to Maywald. In addition, the narrow audience meant that the cost per thousand impressions (CPM) could be charged at a higher rate than other media.
Revenue sharing is an additional incentive for advertisers. Maywald says: “The feel-good or corporate social responsibility factor is quite strong. That brand can make a lot of noise and activate their marketing spend about supporting grassroots sport.”
Drink company Powerade and clothing brand Skins are the first major brands to sign significant agreements with the network. Three more brands will be announced shortly for 2009. Maywald says the deals will deliver $2 million in payments to grassroots sport in Australia during 2009 and $3.5 million in 2010.
Green light for traffic
Trust and loyalty are difficult to cultivate in the online environment, but Sporting Pulse’s partnership with local sports clubs provides a strong bond. Maywald says less than 4% of traffic comes directly from the Sporting Pulse website – essentially there are 30,000 different entry points and potentially four million users.
The difference between Sporting Pulse sites and other social networking sites is that membership acts as a passport for users to communicate with the sports administrators through, for example, an email to say training is washed out or the ability to register for a tournament.
Currently there are one million unique users and 90% of traffic is related to administration. But Maywald expects the 10% of traffic related to networking to rise as clubs require more of the four million players to register to receive communication.
To support the transition, Sporting Pulse needs to educate users on the benefits of an online community. Maywald says the Gen-Y players need no convincing to ditch photocopies of fixtures, but sports administrators need incentives. A successful campaign for the regional competition Basketball Geelong concentrated on environmental benefits, such as an estimated 10,000 reams of paper used to print fixtures and ladders each season.
The Sporting Pulse board is reluctant to reveal revenue forecasts under the new model. SmartCompany estimates the annual revenue for 2009 may be up to $4 million. Maywald confirms that the company is generating interest from existing media companies, but the board would only consider an investor that was committed to supporting grassroots sport.
So far Prime Television is one of the only traditional media players to set up sports social networking sites in competition.
Maywald says the last 10 years have put the company in a strong position with the sports community. “Social networking is just one part of our solution – and we recognise it isn’t for everyone,” he says.
“It is the fact that the entire solution is integrated, works and drives real value in terms of cost savings, efficiencies and new revenue streams to sport that really sets us apart.”
Maywald’s tips on how to monetise social networking:
- Solve a user problem by creating tools that assist an existing social activity.
- Partner with established social groups to gain instant loyalty.
- Advertisers prefer a narrowcast model that delivers lifestyle information on users.
- Remember to reward users for exclusive content.
- Appeal to the need for advertisers to demonstrate a commitment to communities.
- Highlight environmental benefits of new technology.