Translation to English from the original article “Virtuelle Werbung: Auf der Zielgeraden”, by Sponsors – written by Nils Lehnebach
FOOTBALL | BUNDESLIGA
The industry is experiencing new momentum in virtual advertising. What specific plans are there for the introduction into the German football league? And where are the individual suppliers?
In the first half of the 2016/17 season, the German Football League (DFL) took a big step towards the introduction of virtual advertising in the Bundesliga. Numerous industry participants, such as Thomas Röttgermann, are anticipating an introduction in 2018.
This opinion is shared by is Philipp Hasenbein, Managing Director of Lagardère Sports Germany. “There will be a commercial solution for the Bundesliga in 2018.” And the DFL expects an introduction in the coming year will be “increasingly likely”.
Supponor have been active in La Liga for several seasons and made considerable progress. FC Barcelona and Real Madrid operate with static boards but in recent years, the technology has advanced. Working together with ADI, LED boards have been produced.
The LED product from Supponor was presented towards the end of the 2016/17 season as part of a roadshow with Lagardère Sports at more than ten Bundesliga locations. In mid-May, a live, but non- broadcasted test followed in the Bundesliga game between Eintracht Frankfurt and VfL Wolfsburg.
The test was so successful that on the technical side for a regular use in the Bundesliga no K.O.-criteria were recognizable and only minor issues were found. For instance, the real boards were falsely visible in Frankfurt for a few seconds. You had to look very carefully, however, to spot this. The problem occurred when the ball flew against the band – and thus apparently the infrared light of the tech failed for a few seconds. A tiny thing.
RÖTTGERMANN: “VERY QUICKLY REFINANCED”
The introduction of virtual advertising in the football league next year is becoming increasingly likely. In the SPONSORS interview Thomas Röttgermann, former CEO of Sportfive and VfL Wolfsburg, talks about the business model behind the technology.
In the face of the progress of the development, there is an ever-increasing question of how the technology can be commercialized in a more concrete manner and the losses it may bring to the Bundesliga clubs. While Thomas Röttgermann already has a relatively clear and positive picture in the SPONSORs interview, other market players are more restrained. Axel Hellmann, Marketing Manager of Eintracht Frankfurt, said: “We are very keen to find out quickly which business model we can support.”
Defining a business model, including that of Eintracht Frankfurt, is the responsibility of Lagardère Sports. The marketer has signed a strategic partnership with Supponor for the German football market with the details kept confidential for now.
The Hamburg based company is confident it has found the right partner. Managing Director Hasenbein says: “Supponor offers the only solution on the market that works and with which the DFL is now in the final test run.” Hasenbein’s attitude is certainly comprehensible. Supponor is using a so-called intrusive solution, which means that it is used in the form of boards and camera technology in the regular transmission process of a game. Moreover, the technology can only be used with a selection of partners like ADI. And the costs are clearly more than other systems.
Supponor’s changed boards approach
This is why non-intrusive solutions for virtual advertising are considered to be more future-oriented. These mainly rely on software, and adjustments to the stadium are not necessary. However, there is currently no market-ready non-intrusive solution yet. Ulrik Ruhnau, Executive Vice President of Stadiums & Arenas at Lagardère Sports, says: “We are not a technology company. We need readily usable applications that we can commercialize for our partners. What the future brings is hard to say. The system is market-ready. When it will be the case with other systems, is hard to predict. “Furthermore, according to Ruhnau, the cost of the ADI boards is only a” smaller component of the total cost structure” of the technology.
This issue will be resolved in the near future. As Charlie Marshall, COO of Supponor, told SPONSORS, the company is about to end the exclusive collaboration with ADI. In the coming months further cooperation with other gproviders is to be concluded.
ADI is supporting this approach, since founder and CEO Geraint Williams is also an investor and board member of Supponor. Both have recognized that the market is too fragmented to obtain an adequate market penetration with an exclusive collaboration. A significant change in the strategic approach, which is likely to result in improvement in distribution and the market position of Supponor, assuming that deals with board providers are achieved.
“BVB and FC Bayern together generate about 50 percent of the international media contacts of the Bundesliga.”
Ulrik Ruhnau, Executive Vice President of Stadiums & Arenas at Lagardère Sports
In addition, Lagardère is committed to defining the business model behind the technology. What is clear in this context is that comprehensive and lasting use is not implemented for all Bundesliga rights holders. Ruhnau says: “BVB and FC Bayern together generate about 50 percent of the international media contacts of the Bundesliga. Their games are crucial to our product design. ”
Considering Ruhnau’s statement further, this could mean in practice that the majority of the home games are marketed by Borussia Dortmund. In addition, the home games of the clubs in the Lagardère portfolio (Bayer 04 Leverkusen, Eintracht Frankfurt, FC Augsburg, Hertha BSC, Hamburger SV, Hannover 96) against BVB and FC Bayern. Further stakes are likely to depend heavily on which games are broadcasted live in the major foreign markets and at what times these transmissions take place locally. Both factors ultimately have a decisive influence on the marketing-relevance.
In addition, it is conceivable that Lagardère will structure deals on a commission basis for individual games with clubs outside the portfolio if they play against BVB or FC Bayern. Supponor will also be negotiating individually with the clubs on the provision of technology, thus competing with Lagardère.
The cooperation between Supponor and Lagardère is not exclusive either but as Supponor are a pure technology service provider, the marketing would be taken over by the clubs themselves.
Chinese fans of Borussia Dortmund
In addition to selecting the games, it is necessary to define how many markets will receive regionalized virtual advertising. A separate TV feed must then be used for each defined market, which is associated with additional costs. Managing Director Hasenbein says: “Four markets are set: China is very interesting, in addition to Southeast Asia and the Middle East, even if the political situation is not easy. In addition, there is a total of ‘Americas’, where the Bundesliga is currently the largest player of the Media contacts. ”
Lagardère’s overseas route is strongly geared to profitability. While Thomas Röttgermann in the interview encourages the clubs to invest with a quick funding option, Lagardère is different. Hasenbein summarized: “The objective is not to maximize the number of feeds. The goal is to implement the best concept economically. We will look very closely at how many TKPs per country and how many minutes we have to sell per feed. ”
In the calculation of a business model for virtual advertising, it must also be taken into account that the number of minutes to be marketed will be reduced. While 90 minutes and possibly even stoppage time is sold in the classic television market, the number of minutes using virtually enabled boards are lower. This is due to cost so only the images of the main camera are overlaid.
Only 60 minutes to market
Joel Speier, Business Development Director at Infront Sports & Media said: “At first, the market still wanted a crossover for all cameras. Now, its requirements have focused on the most important camera, camera 1, since the low additional visibility of the other cameras is not a positive aspect of the additional costs. ”
Currently camera 1 is used in a Bundesliga transmission for about two-thirds of the playing time. Accordingly, the number of minutes to be marketed for foreign feeds is reduced to about 60 minutes.
While Lagardère is already thinking about the finalised marketing, a large number of virtual advertising providers are still in the development phase. This includes AIM, which is closely linked to Audi and FC Bayern, but will not be involved in the Audi Cup at the beginning of August (is this out of date?) unlike last year. Also the Swiss company Virtual Ads is in conversations with the DFL-officials and has also recently conducted a first test in the DKB Handball-Bundesliga (HBL).
DFL wants supplier diversity
The DFL wants to maintain the diversity of providers and continue its test series with other service providers, even if the Supponor technology is already market-ready. Even if long-term concentration on a vendor is likely to offer production-technological and financial advantages, in the medium term, a compromise to a single vendor is now no longer a priority goal, also not to be too dependent on a provider.
The Zurich Company Vizrt is also in the running, having signed a partnership with Infront in October 2015. So far, the duo, like many other market participants, had been rather cautious in their communication.
At the beginning of May, however, Vizrt and Infront were invited to Zurich to talk about the latest developments. Half a dozen staff attended the SPONSORS-Redakteur. Vizrt has its office in the Zurich Technopark, where the Swiss Federal Institute of Technology Zurich (ETH) are also located. Many Vizrt employees have an ETH past. The core business of Vizrt is to provide real-time 3D graphics for TV stations, the company serves 600 customers in over 100 countries.
The virtual graphics used by Vizrt form part of the new VizEclipse product for virtual advertising. The product is non-intrusive. Neutral experts in the industry speak of a “next generation product”.
Stephan Würmlin Stadler, Chief Product Officer of Vizrt commented:
“With the workflow of our software solution, we beat everything in the competition, which always has to operate at the stadium.”
Sven Biner, Head of Sports Services at Infront, says, “Our product offers significant advantages over hardware solutions: we do not have to make any adjustments to the technology in the stadium, the boards and the cameras. This also minimizes the risk to other stakeholders, such as the national TV partners. In addition, our ‘Operations’ team can work independently and flexibly.”
And Stephan Würmlin Stadler, Vizrt’s Chief Product Officer, added: “With the workflow of our software solution, we are winning the race, which competitors always have to operate at the stadium.” There’s one thing, though: the product is not yet marketable.
For the season 2017/18 the solution can be used according to the agency – however only for static boards. A decisive limitation: the Bundesliga is currently animated by almost all gamma images – the LED boards were finally invented. Considering this background, it will probably require negotiation and convincing at Infront, in order to persuade their partners to operate only with static advertising messages. This will be necessary, otherwise other tests in the Bundesliga will not be successful.
Vizrt plans a permanent test set-up in the Bundesliga
According to SPONSORs information, Infront and Vizrt are strengthening their test focus and are negotiating to install a permanent test set-up at least in one Bundesliga club in the coming season. Infront did not want to comment on this, but confirmed the information indirectly with the statement that the Swiss agency “will provide details on this at the time.”
With this planned test set-up, Infront is looking to ensure that the set-up timing can be in place for the 2018/19 season. The technology will also be able to overlay animated images. Remo Ziegler, Head of Research Switzerland at Vizrt, says: “The development from early 2015 to early 2017 was above all experimental. The speed of development was difficult to predict. Developing the current technology for animated images is for us only pure engineering, so it can be planned very well. ”
But how realistic is the start of 2018/19 for a market launch? Infront and Vizrt had also announced a market entry for the 2016/17 season at the beginning of their partnership. Can they achieve this launch date? From a neutral point of view, timing simply cannot be predicted. After all, the industry has been discussing virtual advertising for 15 years, and often it has been said that the technology was more or less market-ready.
From the point of view of the clubs, every market-ready provider is always welcomed. After all, technology is the optimal tool to exploit the internationalization of the commercial efforts of the clubs. Internationalization is one of the greatest growth opportunities in the entire league. The foundation for this was laid at the end of last season. Now there’s work to be done to the smaller details.