A Closer Look Into One of the NHL’s Best Marketing Strategies

If you live in or around Pittsburgh, it’s likely you’ve heard of the Pittsburgh Penguins, but have you ever thought about the marketing strategy behind the Penguins organization? Does a sports team in Pittsburgh even really need a marketing strategy? Well, they do. To keep growing its fan base, the Penguins have had to continually evolve their marketing campaigns.

In 2007, the Penguins began targeting their fans through mobile technology when they worked in collaboration with Vibe Marketing Group. Both parties worked to create the Pens Mobile Club(1), which has, since 2010, expanded into the Pens App. The creation and promotion of the Pens Mobile Club increased the membership of their club from approximately 14,000 members to 74,000 members(1). The Pens App has many features, including updates throughout the game and Game Day Previews. Videos and articles fill the home page of the app covering topics from “Verizon Coach’s Corner” to “Pet Calendar Shoot.” Through the app, fans can also sign up for the Pens Pass Last Minute Ticket Club. Once signed up, fans receive a text message when last minute tickets, including playoff games, are available in the FedEx Level or the Giant Eagle/Snapple Level. App users also have access to podcasts, Fan Central, and players’ stats throughout the season. The app is free and available to download for iPhone and Android users by searching “Pittsburgh Penguins” in the app store.

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Fast forward to 2010, the Penguins organization teamed up with Gatesman, Marmion, Drake, and Dave, Inc. to restructure its marketing campaigns(2). Coming out of the 2009-10 season, the Penguins finished fourth place in the Eastern Conference. This was an upsetting outcome based on the Penguins winning the 2008-09 Stanley Cup. To continue to incorporate the fans and continue to build upon their foundation, the Penguins presented their newest slogan “Destiny Has A New Home”(2).  An additional tie-in to this slogan, the Penguins were finding a new home in the Consol Energy Center (now PPG Paints Arena) at the beginning of the 2010 season. This move into a more modern arena from Mellon Arena (also known as the Igloo)  aided the Penguins in being able to be more technological when it came to marketing strategies and fan engagement. The marketing slogan helped to bring focus to this change, but also show the fans the continued commitment to excellence they came to expect of the Penguins.

The Penguins marketing team seems to identify early on what moves will be needed to keep up with current marketing strategies. Since 2010, and especially in the last three years, there has been an increase in the Penguins social media content becoming more geared towards fan interactions. No longer are its posts strictly related to the score of the game or other game-related information. The organization tends to focus on off-ice accomplishments and interactions more so in their social media – which helps grow that connection between fans and the organization. A prime example where the organization builds on previous posts made – last season the Penguins posted about the players’ love of Mario Kart. This season, the Penguins posted a video of Jake Guentzel and Patric Hornqvist playing a live-action game of Mario Kart. Matt Murray also announced yesterday that he will be making a $30 donation for every save he makes during the season as part of his “Saves MATTer” charity program(3). If this program would have been implemented last season, he would have donated over $38,000 to youth organizations(3). If you talk to fans, they feel like part of the Penguin’s family. Players are called by their first names and nicknames in casual conversation (i.e. Sid the Kid, Geno) and if you didn’t know better, you would think these fans were neighbors with the players. The Penguins really do a fantastic job of creating that connection between fans and players and having it be a positive experience for all involved.

penguins

Even with the major overhaul in 2010, the Penguins continue to improve their interactions with their fans going into the 2018-19 season. This season, the Penguins are doing away with PensPoints and looking to launch a new program in November, the Pens Instant Win Program. Very little is known about this program because the organization is not relaying any information to the public at the moment.  

The Penguins are also active on multiple social media platforms, including Pinterest and Facebook. Although their Pinterest account hasn’t been updated for the 2018-19 season, fans can still follow many boards that include#PensValentines, Wedding on Ice, and Holiday HapPENings. The Penguins also have a fan interaction board for pets.

 

While creating content on multiple platforms, the Penguins seem to post the most content on their Twitter profile. The Penguins use this platform to interact with fans, as well as give game updates, practice updates, etc., which are typically in real time, as well as posting off-ice content. For example, I tweeted the Penguins and in less than 30 minutes, they had responded. You can also find many of the Penguins staff tweeting about behind the scenes information, like a sneak peek at Matt Murray’s mask before the preseason started (which garnered 619 Retweets and 4,070 likes) and their take on current happenings in the hockey community.  Two of the best examples for incorporating off-ice accomplishments into the Penguins marketing are posts about an article on Jake Guentzel’s rise to fame and Bryan Domoulin’s “hat trick of summers.” Plus, to no one’s surprise, a big “Happy Birthday” to Sidney Crosby and Evgeni Malkin together received 6,412 Retweets and 21,246 Likes. Their most recent high impact tweet was their reaction to the new Philadelphia Flyers mascot, Gritty, with over 15,000 Likes. The Penguins Snapchat and Instagram stories are great for behind the scenes look at warm-ups, practices, and time with the players – on and off the ice.

The Pittsburgh Penguins marketing strategy is much like its team; it has evolved through the years. It has found new ways to bring fans into the sport, just as it has brought new team members to the club. Yet it has maintained its loyal following, just as it has managed to maintain some of its key players, such as Mario Lemieux. It is easy to see how the Penguins tap into modern culture, while still looking back on great athletes that have passed through the organization, to include multiple generations of fans in the organization.

To date, the Penguins have a strong social media following and a solid fan base to lean on. However, to continue to bring new fans to the organization, the Penguins will have to maintain its current level of fan interaction through social media, as well as stay one step ahead of the current trends. When attempting to build the fan base, the mindset of listening to fans important, but the follow through with related actions is what will keep the Penguins at the forefront of many hockey fans’ minds. The KeyBank Challenge videos posted throughout the season seem to be a major selling point to fans who want to feel like they are getting to know the players more personally. This personal connection will not only help maintain the current fan base, but will continue to bring in more fans as the Penguins progress through the 2018-19 season.

 

 

  1. https://www.prnewswire.com/news-releases/pittsburgh-penguins-score-on-marketing-power-play-with-vibes-media-103434534.html
  2. https://www.nhl.com/penguins/news/pens-launch-new-marketing-campaign/c-537777
  3. https://www.nhl.com/penguins/news/matt-murray-charity-program/c-300581156

Apple, Amazon, and other soon-to-be Trillion Dollar Babies

The summer of 2018 has been populated by speculation on the future of the tech industry and tempestuous debate on the direction of our economy. We have discussed the scandals of the likes of Facebook and Twitter but, this time, we are looking on the bright side of the tech industry with the frontrunners of innovation, Amazon and Apple. The recent highlight? Apple reached the inconceivable $1 Trillion valuation crux for a company… Amazon quickly followed suit.

The only way to aptly start this article is to awe over what ‘Trillion’ means and looks like. To begin, find the nearest ruler or roughly picture one foot in your head. Now, you need to visualize the distance between the earth and the moon. That distance is roughly 1.3 Billion feet long and in order to reach one trillion, take 770 trips to the moon or take a trip to Mars. Let that sink in. Comparing the companies to countries, per 2017 GDP data, both Apple and Amazon would find themselves beating all but 16 countries.

A year ago, Apple’s total Market Capitalization (total firm market value) sat at $830 Billion while Amazon’s fell short at $460 Billion. With Apple’s colossal popularity, we expected the firm to hit the milestone sooner or later. On the other hand, Amazon burgeoned from a new way to order textbooks to capturing 49% of the e-commerce market and now, potentially, a soon-to-be healthcare provider, all within the past decade.

Now that 2 of the 5 FAANG giants (Facebook, Amazon, Apple, Netflix, and Alphabet/‘Google’) have soared to a trillion dollar valuation, and with Alphabet flirting with $900 Billion after a strong Q2 earnings report was released, which company will join the podium? The tech industry has seen a jet-fueled growth due to strong quarterly reports, technological and e-commerce needs, and the continued expansion of the US economy. While Wall Street analysts expect to see the largest growth from a $530 Billion valued Berkshire Hathaway, the race boils down to two true contenders: Microsoft and Alphabet, yet two more tech companies.

In the case of Alphabet, despite a $5 Billion fine in Q2 from the European Union, the company still managed to have a strong quarterly performance. However, ever since the earnings report brought Alphabet’s peak, the firm has been in decline; Google’s absence at the congressional hearing did not help. With ensuing claims of shadow banning via Twitter, Facebook, and Google, the US Senate looks to further regulate the industry. Unlike Alphabet, Microsoft did not have to make an appearance at the September 5th congressional hearing. Much like Alphabet, they and many other tech stocks took a hit, with Microsoft falling 3%. The industry took a massive drop but this could just be the start of a drawn out regulatory battle.

According to Goldman Sachs Chief US Equity Strategist, David Kostin, we may see pressing regulation and even potential reclassification. Kostin speculates that this could separate the more “social” tech firms, such as Facebook and Google, to be redefined with a new industry description. Could they fall into a subdivision of tech or something new? Furthermore, Kostin mentions that the remaining ‘tech’ firms would be deemed “legacy” tech. By splitting the mammoth tech industry into two categories, investors will have a stabler, hopefully regulation-averse, positions that separate the hazy futures of the likes of Facebook, Twitter, and Google while maintaining the sincere domination of true tech firms. Since Alphabet is a conglomerate that has branched into social media with Google Plus, they have a large representation of information tech thanks to the Google Pixel and Chromebooks, technological research, and so much more. Seriously, click here to learn more. Goldman Sachs’s Kostin is trying to categorize a giant with arms in multiple industries; Facebook and Microsoft have far simpler distinctions. This is where I draw my conclusion and shift my focus back to the question at hand, who’s the next trillion dollar baby?

Separating the non-information technology firms from the social media-esque firms will allow investors to capture the growth of the tech industry without having to deal with as much of its regulation and spotlight. On September 5th, the only companies that were scheduled to appear at the congressional hearing were Facebook, Google, and Twitter, and the largest of the three did not even show. Despite the hysteria of regulation focusing on Kostin’s “Communications Services” firms, Microsoft and other major tech “legacies” took huge hits. Goldman Sachs’s reasoning? The massive presence of contemporary tech positions in ETFs (exchange-traded funds). The split would tighten the current industry and shift the focus of investors to their respective sides. It would also reduce the overall volume of holdings and trades of tech companies that are included in the same indexes, but only because they are in the tech industry with the likes of Facebook. The chief US equity strategist states that the legacy firms will grow at a slower pace than the new communications services sector, despite including the burgeoning Amazon and Apple.

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Goldman Sachs’ David Kostin
With that being said, we’ve come to our answer. And the winner is… it depends. If Alphabet continues to face ensuing regulation, do not expect the company to reach $1 Trillion next. Unless the firm quickly survives the tumultuous sentiment of the public spotlight, expect Microsoft to take the crown.

Although we have crowned a winner- well two tentative winners- what if neither company hits the landmark soon? With all of the discussion surrounding continuously increasing market caps within the current tech industry, analysts often poke at the idea of potential overvaluation; and your local Pitt Business Review Analyst will quickly do the same. So, what is the major difference between the dotcom bubble and our hypothetical tech bubble? Well for starters, some of our major tech firms have lived through the bubble already, but the prime reason is that they were backed by tangible goods and technological advancements. FAANG is comprised of five leading tech corporations frontrunning advancements and differentiation in the tech industry, however, two of the firms generate their profits through intangible services: Netflix leading as the largest video streaming service (double that of YouTube) and  Facebook managing 2.5 Billion active individuals (with even more accounts) on its four media platforms. The companies’ values come from their massive user bases.

Nowadays, you cannot simply slap on a .com and see an immediate rise in stock price. If you’re looking for potential bubble speculation, I am sure you have read up on some of the ICO (independent coin offerings) names thanks to the crypto craze. Back in late 2017 and early 2018, with names including coin or blockchain, your stock could rise 200%; just ask the new and improved Long Island Iced Tea, which changed its name to Long Blockchain Corp. Or, maybe you have heard of DogeCoin, the coin named after an internet meme? While I will not touch upon cryptocurrency any further, focusing on the more qualitative side, name changing serves as a strong example of a potential bubble. Furthermore, many of our contemporary tech giants felt the wrath of the dotcom bubble and survived. Amazon in particular, now valued in the $1900 per share range, eclipsed at $107 and dropped to less than $7 per share during the crash. Companies like Amazon have already passed the hurdle by diversifying their companies internally to be more than just part of a new fad or craze. To add another point to the argument, strong consumer sentiment and economic expansion have driven every major index to new highs in 2018. With economic expansion comes an increase in equity and an increase in equity drives investor sentiment; just ask the roaring 20’s. As the FED moves closer to raising interest rates 4 times this year, thanks to continued growth, it is tough to ignore the paralleled growth of the S&P 500 and the Dow Jones Industrial Average specifically. Keep in mind that this is a quick qualitative analysis on a potential bubble and there is far more digging that can be done; I encourage you all to dig further yourselves. Lastly, in 1999, the Capital Markets were on a completely new level, with 468 firms seeing an initial public offering (IPO) in the US markets, while in 2017, we saw 174 IPOs. The US markets have learned their lesson on the maturity of firms and their readiness to see the public markets. The last questions remain, what does the future hold for the tech industry? Will we see a slip in tech market caps?

Within the tech sector, homing in on the “Communications Services” group, the major performers that come to mind will be the obvious Alphabet (depending on its distinction) and Facebook. However, most of the industry, in terms of frequency, are made of positions on the smaller, large-cap side. Can you guess one of the most infamous or, in better words, disappointing tech positions? Here is a clue, they opened up with a market cap of ~$28 Billion, hit its high the next day, and dropped 55% since its initial offering, which occurred a year and a half ago. If you guessed Snap Inc (or Snapchat) you have earned a pat on the back. Another security historically performing poorly, Twitter. Social media-esque firms have been criticized for their necessity to be a social ‘requirement’ and develop their revenue streams constantly.

A 2011 Aalto University research study discussed, in the abstract, what MySpace could do to keep up with the fast-paced growth of the social media realm. As abundantly clear now, MySpace is virtually non-existent. They have gone through different remodelings and ownerships but the platform is painfully on the verge of extinction. For this reason, if social media were the main a driver of the tech industry, there would be a much more concerning question about bubble potential. However, the only social media-esque firm in FAANG is Facebook and the strongest performers in the tech industry fall under the “legacy” category anyway.

Ultimately, the growth of the legacy group is not in question, especially if separated from the communications services sector. Citing Kostin, “The Zuckerberg hearing revealed to many government officials the scale of personal data that FB users had agreed to allow the firm to gather, raising regulatory risks.” And now under fire for allegations of improper shadow banning, there is a grim uncertainty for firms connected to Facebook, which focus mainly on Alphabet but further extend to the rest of the FAANG group. Companies connected with Facebook on Goldman Sachs’s radar have underperformed the industry.

With ensuing regulation, Alphabet’s strong connection with Facebook, and no apparent tech bubble, the future shines brightest for Microsoft, taking its third place spot on the trillion-dollar pedestal. I will be checking back in once we see a company approach quadrillion!

 

Sources:

{1}http://fortune.com/2017/03/06/apple-iphone-use-worldwide/

{2}https://www.marketwatch.com/story/this-is-how-much-money-exists-in-the-entire-world-in-one-chart-2015-12-18

{3}https://www.nytimes.com/2018/09/04/technology/amazon-stock-price-1-trillion-value.html

{4}https://ycharts.com/companies/GOOGL/market_cap

{5}https://abc.xyz/investor/

{6}https://abc.xyz/investor/pdf/2018Q2_alphabet_earnings_release.pdf

{7}https://www.watchlistnews.com/q3-2018-eps-estimates-for-alphabet-inc-class-a-reduced-by-analyst-googl/2329901.html

{8}https://www.cnbc.com/2018/08/03/these-are-the-next-companies-poised-to-hit-1-trillion.html

{9}https://www.investopedia.com/terms/f/faang-stocks.asp

{10}https://ca.finance.yahoo.com/news/goldman-regulation-hit-big-tech-134500977.html

{11}https://9to5google.com/2018/07/23/alphabet-q2-2018-earnings/

{12}https://www.cnbc.com/2018/07/10/eu-hits-alphabet-google-with-android-antitrust-fine.html

{13}http://www.proactiveinvestors.com/companies/news/204268/faang-report-google-snubs-us-senate-hearing-on-election-meddling-j-crew-sets-up-shop-in-amazoncom-204268.html

{14}https://ycharts.com/companies/MSFT/market_cap

{15}https://www.cnbc.com/2018/01/31/microsoft-earnings-q2-2018.html

{16}https://ycharts.com/companies/SNAP/market_cap

{17}https://seekingalpha.com/article/4079526-tech-stocks-overvalued-market

{18}https://seekingalpha.com/article/4079735-overbought-overvalued-top-tech-stocks-much-might-think

{19}https://www.bbc.com/news/technology-33862367

{20}https://www.cnbc.com/2018/07/18/microsoft-earnings-q4-2018.html

{21}http://epub.lib.aalto.fi/en/ethesis/pdf/12544/hse_ethesis_12544.pdf

{22}https://www.geekwire.com/2016/study-amazon-video-now-third-largest-streaming-service-behind-netflix-youtube/

{23}https://www.lombardiletter.com/companies-that-died-and-survived-the-dotcom-bubble/9106/

{24}https://www.nasdaq.com/article/the-number-of-2018-us-tech-ipos-will-double-over-the-next-10-days-cm949716

{25}http://www.historyofdomainnames.com/dotcom-bubble/

{26}https://www.cnbc.com/2017/12/21/long-island-iced-tea-micro-cap-adds-blockchain-to-name-and-stock-soars.html

{27}https://www.fxstreet.com/news/fed-on-its-way-to-raise-rates-four-times-this-year-uob-201809100642

{28}https://www.marketwatch.com/story/ipos-shatter-records-in-1999

{29}https://www.statista.com/statistics/270290/number-of-ipos-in-the-us-since-1999/

{30}https://www.ey.com/Publication/vwLUAssets/ey-global-ipo-market-climbs-to-10-year-high-in-2017/$FILE/ey-global-ipo-market-climbs-to-10-year-high-in-2017.pdf