Sporting Goods Industry on the Rebound

According to the Sporting Goods Manufacturers Association's State of the Industry Report (2011), the sporting goods business in 2010 showed its largest one-year revenue growth swing in nearly 20 years.

In 2010, U.S. wholesale sales of sporting goods equipment, sports apparel, licensed merchandise, athletic footwear, and fitness equipment totaled $74.2 billion. That was a 3.5 percent increase over 2009, when sales were $71.6 billion. This boost in sales indicates that the sporting goods industry is "on the rebound" since sales in 2009 were 4.3 percent less than they were in 2008.

The main category in the sports products industry is athletic apparel, which increased 4.8 percent to $29.6 billion. The second largest category is sporting goods equipment at $20.4 billion. Athletic footwear sales were $12.6 billion. Sports licensed merchandise sales amounted to $7.3 billion.

Fitness equipment was also strong in 2010 -- up 4.1 percent to $4.3 billion. The treadmill is still the most popular piece of fitness equipment. In athletic footwear, the running shoe remains the category leader. Golf is the largest category under sporting goods equipment, while shirts/tops represent the top selling item under sports apparel.

"The sporting goods industry has strengthened in the last 12-16 months, despite the challenges which have been presented by a number of issues such as the vagaries of the worldwide economy, federal and state legislation, sourcing and production concerns, regulations by sport governing bodies, and counterfeiting," said SGMA President Tom Cove. "Since 60 percent of SGMA member companies say they need more manufacturing capacity and will increase production by nearly 25 percent, chances are good that 2011 will be a strong year, as well. Our survey also indicates that 88 percent of our member companies expect international sales will increase in 2011."

There are a number of factors which are affecting the overall growth and development of the entire sports, fitness, and recreation industry:

Electronic Communication: Manufacturers and retailers are more creative in how they reach the consumer as Twitter, Facebook, Texting, Shutterfly, RueLaLa, and Groupon are some of the ways in which marketing and advertising messages are being transmitted.

Daily Concerns: Throughout the year, the two biggest concerns by manufacturers about the retail sector will be (1) shifting inventory risk to manufacturers and (2) emphasis on product quality.

Focused Expenditures: More than 60 percent of Americans purchased fitness-related services or fitness equipment in 2010.

School Sports Spending Suffers: According to Up2Us, more than $2 billion was cut from school sports budgets in the 2009-2010 school year.

Budgets and Expenses: In 2010, expenses for sponsorships and player endorsements fell while spending on new product development and advertising rose.

Team Spirit Spending: Wholesale sales of sports licensed products and merchandise rose by 5 percent -- from $6.9 billion in 2009 to $7.3 billion in 2010. That increase is due to "pent-up" demand and consumers' desire to be affiliated with a favorite team or sport.

Digital Interaction: Since 2009, three group exercise activities (group cycling, cardio tennis and high-impact aerobics) have experienced double-digit gains in overall participation. This growth has been driven by the "Generation Y" population (ages 11-30) and its philosophy on social networking as a way to communicate and socialize.

PE Pays Off: For today's children, they are more than three times likely to participate in team sports if they have PE classes in school than if they don't have PE in school.

Trends & Tendencies of Sports Participation

In team sports, there is positive news to report. Many traditional endeavors such as outdoor soccer, indoor soccer, tackle football, baseball, basketball, cheerleading, and court volleyball have experienced small degrees of growth in "overall" participation since 2009 -- reversing a recent trend in the other direction -- and "overall" participation in some "niche" team sports activities has showcased dramatic increases since 2009. Rugby is up 50.7 percent, lacrosse is up 37.7 percent, field hockey is up 21.8 percent, and beach volleyball is up 12.3 percent.

World Cup Effect: With no specific marketing program or effort geared at increasing interest in soccer, outdoor soccer participation rose by almost 3 percent in 2010 -- mainly due to the existence of the World Cup in South Africa and TV coverage of the event.

Trendy Teams: Four team sports have had double-digit percentage increases in "core" participation since 2009. They are lacrosse (13+ times/year (up 33.1 percent), rugby (8+ times/year, up 20.3 percent), ultimate frisbee (13+ times/year, up 19.2 percent), and beach volleyball (13+ times/year, up 18.9 percent).

Road Runners: Nearly 50 million Americans are now running and jogging to stay fit -- up 12.6 percent from 2009.

School vs. Travel: The three most popular team sports in high school are basketball, tackle football, and baseball. The three most popular team sports for travel-sport athletes (age 14-19) are soccer, baseball, and basketball.

Electronic Stimulation: Almost 50 percent of U.S. online customers used some type of fitness technology in the past year -- according to a Consumer Electronics Association study.

Fitness Fanatics: The three cities whose residents are considered the "fittest" in the country are Salt Lake City, San Diego and Austin.

(Source: SportsOneSource Media, 05/19/11)

Instead of Buying a Home, Many Americans Opting to Rent

A growing number of Americans can't afford a home or don't want to own one, a trend that's spawning a generation of renters and a rise in apartment construction.

Many of the new renters are former owners who lost homes to foreclosure or bankruptcy. For others who could afford one, a home now feels too costly, too risky or unlikely to appreciate enough to make it a worthwhile investment.

The proportion of U.S. households that own homes is at its lowest point since 1998. When the housing bubble burst four years ago, 31.6 percent of households were renters. Now, it's at 33.6 percent and rising. Since the housing meltdown, nearly 3 million households have become renters. At least 3 million more are expected by 2015, according to census data analyzed by Harvard's Joint Center for Housing Studies and The Associated Press.

All told, nearly 38 million households are renters.

Among the signs of a rising rental market:

-- The pace of apartment construction has surged 115 percent from its October 2009 low. It's still well below a healthy level. But permits for apartments, a gauge of future construction, hit a two-year peak in March. By contrast, permits for single-family homes are on pace for their lowest annual level on records dating to 1960.

-- The number of completed apartments averaged about 250,000 a year before the boom. They fell to 54,000 last year and will probably number around the same this year. But then the number will likely double to about 100,000 in 2012 and hit 250,000 by 2013 or 2014, according to the CoStar Group, a research firm. The lag is due to the time it takes for an apartment building to be completed: an average of 14 months.

-- Demand is driving up rents. The median price of advertised rents rose 4.1 percent between the end of 2009 and the end of 2010, census data shows. Few expect the higher prices to stem the flood of renters, though. One reason: Younger adults don't value homeownership as earlier generations did and many prefer to rent, studies show.

-- Rental housing is giving builders more work just as construction of single-family homes has dried up. Still, that economic lift won't make up for all the single-family houses not being built. Apartments account for only about one-fourth of homes. And renters are outspent roughly 2-to-1 by homeowners, who pay for items from lawn care to remodeling and help drive the economy.

Before the housing bust, mortgage rates were so low it was often cheaper to buy than rent. That was true a decade ago in more than half the 54 biggest metro areas, according to Moody's Analytics. Today, by contrast, it's cheaper to rent in about 72 percent of metro areas.

Consider Mason Hamilton, 26, an energy consultant who rents an apartment with his wife for $1,100 a month in Alexandria, Va., outside Washington. He'd like something bigger. But he says he doesn't plan to buy even though he could afford to.

"My parents always told me, 'You need to buy a place; you need to buy property,'" he says. "But the housing market is insane."

Many younger Americans see owning as risky. It hardly seems the best way to build wealth, especially when prices are falling.

"There's been this idea for years, a part of the American dream, that owning a home improves and strengthens communities," said John McIlwain, a senior fellow at the nonprofit Urban Land Institute. "But what we've learned over the past few years is that many people simply are not ready to own a home."

From the 1940s until 2007, homes appreciated an average of nearly 5 percent a year, adjusted for inflation. In the past four years, the median price of a single-family home has sunk 37 percent, by $57,500, to its lowest since 2002. Yet in some areas, owning is still too expensive for many.

"It's becoming so difficult for most Americans to afford a home, with larger down payments and tighter credit, that it is creating a renter's nation," says Robert Shiller, a Yale economist and co-creator of the Case-Shiller home price index. "The home is no longer an investment; it's a burden."

Homeownership bestows its own financial advantages, of course. Each loan payment builds equity. Loan interest and property taxes provide tax deductions. And in normal housing markets, home values rise over time.

But for now, renting is more attractive. Hamilton, the energy consultant, says his father, a 58-year-old teacher in Richmond, Va., still owes nearly as much on his mortgage as his house is worth.

"He's stuck in that house," Hamilton says. "After telling me to buy for all of those years, he'd love to rent like me."

(Source: The Associated Press, 05/24/11)

Publishers Turn to Digital Business Services to Offset Declining Ad Revenue

Publishers Turn to Digital Business Services to Offset Declining Ad Revenue

News publishers have had to develop a number of new digital capabilities in recent years, such as online advertising, social media, search-engine optimization, email marketing, video production, Web design and mobile app development.

After making those investments, most find their, most find their online sales comparatively meager compared to print ad revenue, which is still declining. In search of other income, some are using their new online skills and staff to provide paid client services.

These companies are finding that as businesses large and small discover the importance of their online presence -- such as developing an effective presence on Facebook or Twitter, or optimizing their sites to appear higher in search results -- demand for those services is booming. Media companies who have developed their own expertise in those areas can fill that need with new business-to-business products.

For example, Conde Nast, whose publications include Glamour and The New Yorker, is launching a marketing services division called "Ideactive." It will offer services such as mobile app development, Web design and social media consulting in an effort to build revenue beyond traditional advertising.

The Ideactive team will have six dedicated staffers, including two new hires, Advertising Age reports, and it will pull in resources from the rest of the company as needed.

The Ad Age article about Conde Nast described this trend well:

"Publishers have been increasingly trying to position themselves as partners to marketers, not only as vendors of ad space, and diversify their businesses in the process. Last year Hearst bought the search specialist iCrossing, for example, while Meredith bought the mobile agency Hyperfactory. A year ago a Conde Nast digital creative services unit said it would accept assignments from clients whether or not the ads were slated for Conde properties, creating ads for Kenneth Cole that appeared on YouTube and Facebook. Source Interlink Media, whose titles include Hot Rod and Snowboarder, acquired the digital-marketing and visual-effects studio Mind Over Eye."

Even a small newspaper, such as the 20,000-circulation Grand Island Independent in central Nebraska, is getting into this game. It created a service called giNetwork in which local businesses pay for the Independent's Web editor to set up their Facebook pages and Twitter accounts. Their posts are aggregated on the Independent's home page and on a dedicated giNetwork page.

The arrangement includes social media consulting and a regular email newsletter for the clients with tips and success stories, said Stephanie Romanski, Web editor and social media coordinator for the Independent.

Since launching in March 2010, the program now has about 40 clients that pay $99 a month for the service, Romanski said. That means the paper is collecting roughly $48,000 a year with very little overhead. The paper hopes to get 100 clients eventually, she said.

The program has been especially effective for local retailers and restaurants, Romanski said, because they offer discounts through their social media channels that drive customers to them.

Large publishers, such as Great Britain's Trinity Mirror, also are capitalizing on this opportunity. The company that publishes the Daily Mirror and about 240 regional papers in the U.K. will offer advertisers online marketing services such as Web design, SEO, social media strategy and online public relations.

The Guardian talked with Trinity Mirror CEO Sly Bailey about the initiative:

"If a company wants help with email marketing and a print ad in the Newcastle Chronicle then we should be able to offer that," she said. "It is very much the future of local media. Clients are demanding it and we want to be able to develop expertise in those areas."

Bailey said that several years ago Trinity Mirror acquired an agency based in Liverpool called Ripple Effect which offers services including digital design and build, search engine optimisation, email marketing, social media, online PR and Web analytics.

She said that excluding display advertising, the typical trade customer spends about £200 on ads online and in print but many of those customers spent £12,000 to £15,000 on a variety of other services through Ripple Effect.

The main lesson for any news company is to examine what digital skills you have built up to a point of excellence and to talk to business partners about their needs. If you have or can create the digital expertise they want, this could be a promising path to new revenue.

Such new approaches to revenue may even be better than the advertising model, said Steve Buttry, who's argued that newspapers should be developing a number of new services and products. (Disclosure: Buttry was my boss at TBD, where we worked on community engagement.)

"The truth is that advertising was always an imperfect solution for businesses: paying for mass audience when most of those customers would never use their products or services," Buttry, now director of community engagement and social media for Journal Register Co., told me in an email. "Digital technology lets us help businesses in more meaningful ways, such as direct sales, search, lead generation and precise targeting."

But John Morton, a newspaper industry analyst, was less optimistic about how much financial impact these new services can have.

"I doubt that offering this expertise for sale will be able to offset much of the secular shift of advertising away from newspapers, but of course every little bit helps," Morton told me in an email. "Newspapers still will have to find ways to capture a larger share of Internet advertising, for advertising is where the money is."

(Source: Jeff Sonderman, published in Poynter.org, 05/26/11)

Digital Overload

According to The Digital Lifestyle survey by Magnify.net in April, consumers and web surfers are facing a torrent of data growing faster than ever before. 78% of respondents were Technologists, Journalists, Entrepreneurs, Executives, and Professionals, with 48.5% saying that they were connected to the web "from the moment I wake up until the moment I go to bed."

64.2% said that the information coming at them today had grown by more than 50% compared with last year. 72.7% described their data stream as "a roaring river," "a flood," or a "massive tidal wave."

People are missing important news, information, and appointments; friendships and family suffer, says the report.

• 76.7% read email and respond evenings and weekends
• 43.2% answer texts or emails on dates/social occasions
• 57.4% never turn off their phones
• 33.0% check email in the middle of the night
• 35.2% answer work emails while with children
• 46.9% are unable to answer all emails
• 41.4% miss important news
• 39.9% ignore family and friends
• 16.9% miss appointments
• 62.5% wish they could filter out the flood of data

Steven Rosenbaum, author of Curation Nation, concludes that "... (since) the volume of raw data coming at us has increased more than 50% in the past 12 months...(and) as more digital devices and software services proliferate... data and speed of increase will grow exponentially... (and) will be unsustainable... "

He goes on to suggest that "... algorithmic solutions, better spam filters, smarter search, and more connected devices will fact-expand the problem... (while) human data management, shared and community filtering, and personal recommendations will allow 'content' consumers... (to) consume curated content... (and) surf less... "

(Source: The Center For Media Research, 04/26/11)

'Emerging Affluent' Are Key Digital Consumers

As a consumer's affluence increases, so do factors such as early adoption of new digital devices, consumption of digital content and usage of mobile devices, according to a study conducted by Publicis/Vivaki agency Digitas in partnership with research company Ipsos Mendelsohn.

But digital marketers might want to keep a special eye on those not yet affluent, but headed there -- dubbed the "emerging affluent" and "universally digital."

Digitas pointed to a changing "affluent landscape" in America. It found that what used to be called the "mass affluent" market -- with annual household incomes between $100,000 and $199,000 -- "has disappeared." These households, Digitas said, have lost their leveraged spending power, been forced to live on income alone, and mostly consider themselves middle-class.

They've given way to two groups with spending power: the truly affluent and the up-and-coming affluent. The former, the "class affluent," earns between $200,000 and $1 million annually, with most considering themselves upper-middle class.

The latter is the "emerging affluent." Members of this group earn the same income as the mass affluent group did, but they are under 35 years of age. Plus, they have "intensely digital media behavior."

Emerging affluent consumers, Digitas said, work in careers that will eventually deliver affluence (i.e., financial services, legal services, engineering). They consider themselves opinion leaders, follow trends, love to travel, are passionate about food and dining, and purchase both stylish youth-oriented brands like Scion, Diesel, and Samsung and true luxury brands, such as H. Stern, Tiffany, St. Ives and D&G.

Most importantly, they "use mobile devices for communicating, consuming content, enjoying music, and gaming. They use social networks and blogs, and they prefer apps to 411 to research restaurants, recommend products, or get deals from marketers."

Geographically, the highest concentration of the emerging affluent group was found to be in the Midwest.

The primary quantitative source for the study, titled "Affluence in America: The New Consumer Landscape," was the Mendelsohn Affluence Survey conducted in March. Digitas said it then sought signs of affluence, based on a range of lifestyle behaviors, and proceeded to identify the tiers of affluence.

Once the affluence hierarchy was established, Digitas said it mined the data further for source of income, attitudes, purchasing patterns and media usage.

(Source: Online Media Daily, 05/25/11)

Be the Ball...

Just like Chevy Chase giving advice to be the ball in the classic movie, Caddyshack, we need to "Be Digital."

Sales managers and salespeople need to use digital products to a point where they are totally comfortable with them. When we are comfortable and able to discuss the subject on the level of many of our digital clients we will sell more digital. Use a smartphone; show presentations on your tablet; put up Facebook, Twitter and LinkedIn pages; create a personal webpage; subscribe to texts; download apps; post Flickr photos and YouTube videos; and browse the web to see what your advertisers and competitors are doing.
I know. There's never enough time. But if we don't make time to use and learn digital, we won't be able to keep up, let alone get ahead in sales.

Follow Canada's Lead to Reduce Federal Debt

In 1996 Canada's debt to gross domestic product (GDP) ratio was approximately 67 percent -- just slightly higher than the United States' current ratio of approximately 62 percent.  Canada's Liberal Party was in charge of the federal government at the time and set out on a determined course to cut Canada's federal deficit and reduce the federal debt as a percent of the economy's GDP.  The plan was hugely successful, and when Finance Minister Paul Martin became prime minister in 2003, he continued the policy of spending restraint until he left office in 2006.  Martin's successor, current Prime Minister Stephen Harper, continued that policy for the next two years.  The result: by fiscal year (FY) 2009, the federal debt had fallen to 29 percent of GDP, say David R. Henderson, an associate professor of economics, and Jerrod Anderson, a second-year master's fellow, at the Naval Postgraduate School.

• The federal government achieved these reductions in debt not with large tax increases, but with substantial cuts in government spending.
• While Martin's 1995 budget did increase some taxes, the budget called for six to seven dollars in expenditure cuts for every dollar of increased taxes.
• Between FY 1995 and FY 1998, federal government program expenditure (government spending minus interest payments on the federal debt) decreased from C$123.2 billion to C$111.3 billion, a decrease of C$11.9 billion.

Lessons for the United States:

• Starting in 2013, raise the age eligibility for Medicare in incremental steps (for example, two months every year) until it equals the Social Security age.
• Starting in 2014, allow doctors to "balance bill" under Medicare instead of having the so-called doc fix under which payments to doctors would be increased.
• Begin making Medicaid payments to states via block grants.

Source: David R. Henderson and Jerrod Anderson, "Canada's Reversed Fiscal Crisis," Mercatus Center, May 2011.