More teams taking a dynamic approach to the main ticket market

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Airlines, hotels and sportsbooks have long taken a dynamic approach to pricing, but the sports industry has been slower to adopt this practice. While “everyone uses [a dynamic pricing] tool in the secondary market and always have been,” says Lou DePaoli (General Manager, General Sports Worldwide) that many organizations still don’t hyper-dynamically price primary market inventory. In fact, Stuart Halberg (CEO, Logitix) said his company “just spoke to a great sports team, who [manually] changes the prices of their individual games once a week.

DePaoli and Halberg said sports organizations are beginning to recognize this approach is ineffective. “Sometimes by the time the team realizes a game is trending, they’ve already missed the curve [and the revenue opportunity]“, explained DePaoli. Qcue, Event Dynamic, and Logitix are among the SaaS companies that help teams assess primary market inventory based on real-time demand.

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JWS review: It is important to distinguish between variable pricing and dynamic pricing when selling tickets. Most professional sports teams use a variable pricing model which, unlike static models of the past, allocates a different price level to the main ticketing inventory for each game based on its anticipated demand (given the opponent , day of the week, holiday, etc.) .

Dynamic pricing is different. The approach allows a team to take into account real-time changes in demand and modify prices accordingly. “It gives you a chance to grab the benefits [if the demand is better than expected], and if the game is softer, it gives fans a chance to bring the prices down a bit,” DePaoli explained. “In the past, teams set ticket prices more than a year before the start of the game. Many things can happen during this time, good and bad, that impact demand and prices. The recent performance of the home team, weather and injuries are among the variables that can influence market conditions.

The concept of dynamic ticket pricing in the primary market is not new. But it wasn’t until Qcue appeared about a decade and a half ago that it became operationally feasible. “To manually change 1,000 price codes would take one business day,” DePaoli said. “You can’t track real-time volume.” Qcue provided integration with a team’s ticketing system that made it easier to manage ticket price changes.

While more than a decade has passed since Qcue rolled out its first sports partnership (see: San Francisco Giants, 2009), hyper-dynamic pricing has yet to become ubiquitous in the primary market as it did. has been on the secondary market for several reasons. To begin with, the teams were concerned about the reaction of subscribers, group buyers, premium members and other stakeholders (a concern that does not exist among secondary market brokers). The logic was that they might be upset if the person sitting next to them in a game paid less for the seat. Of course, owners had the same fears when variable pricing models were first introduced.

Architectural limitations within teams’ robust primary ticketing systems and Ticketmaster’s reluctance to allow third-party dynamic pricing integrations were also factors (the company has its own pricing tool, Pricemaster).

But times are changing. Several ticketing systems, including Tickets.com and SeatGeek, have made technological advancements in recent years that allow software plugins like Qcue, Event Dynamic, and Logitix to thrive. And Halberg explained that teams are realizing that “the individual buyer market, which used to be made up of primary and secondary, is really the same buyer. So why create two [sales strategies]?”

COVID-19 has also helped spur a change in philosophy. Halberg pointed out that teams have fewer people “working in ticketing operations [now] And because of that, [they are wanting] to outsource individual game strategies, which includes dynamic pricing. »

Several competitors have emerged since Qcue first introduced a dynamic pricing tool for the primary market (there are also teams that have built tools in-house). Event Dynamic” came with [the idea to] use AI and machine learning to change prices as if it were [stock] market in real time. If market demand increases by $1, the ticket price increases by $1,” DePaoli said. The General Sports executive was executive vice president of the New York Mets when the franchise pivoted to a dynamic pricing model, powered by Event Dynamic, in 2019. FWIW, he said there was “no backlash fans”.

To be clear, dynamic pricing doesn’t necessarily mean the fan is going to pay more, at least not for their seat. Event Dynamic CEO Robert Smith said clubs are increasingly maximizing attendance rather than revenue. “They find that if they hit that point of diminishing returns and don’t go over it, with the extra income they get from the caps, they actually make more money.” Sports organizations also recognize that a crowded stadium makes for a better television and in-stadium experience.

Event Dynamic technology manages prizes for teams, in real time, using artificial intelligence, without any human interaction. Smith explained that being fully automated allows clubs to be sure prices move with the market. Otherwise, “if something really amazing happens and the prices [should] pic, someone has to physically go through and approve these changes. The time it takes to do this is a waste of revenue.

While Event Dynamic views its automated approach and constant price changes as a differentiator, Logitix has built its platform for customers who “don’t just want to flip the switch and forget it.” Our [solution] is meant to be more of a user-automated platform,” Halberg said. The CEO added: “We [also] think that no price change is just as good a data point as a price change.

Qcue believes its pricing philosophy is what sets the company apart from the competition. CEO Barry Kahn said his company views primary market pricing as “standard revenue management.” Like an airline or a hotel, teams should have “pricing based on [their] own availability, inventory and demand – without necessarily entering this competitive market which is more like the stock market,” he explained. Helping teams manage secondary market prices, to ensure they are competitive while remaining consistent with the primary market, is part of their secret sauce. It should be noted that less than 5% of primary market price changes initiated using Qcue’s solution are automated. Customers tend to prefer to retain a greater degree of direct control over primary pricing than they do in the secondary market.

It’s hard to say how much sales or increased revenue a team using dynamic pricing technology can expect to achieve. The lift largely depends on the baseline of the organization. But Halberg said a recent A/B test with an arena client indicated the organization sold 2% fewer tickets when using a dynamic pricing approach, but its “ATP was 14 % higher, leading to around 11% [increase in] total primary income.

Teams selling seats on the secondary market seem odd when they could be selling them directly to fans on the club’s website. But the teams want to fish where the fish are. StubHub, SeatGeek, and GameTime do marketing to get fans to visit their respective sites. Teams that don’t register with them (and others) miss the chance to sell to some of the potential audience.

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