4. Television Ratings & Advertising Fellowship
One of fundamental issues that WWE has grappled with for years is that while they can get decent-to-high ratings, they continue to receive low advertising rates. The value of a television show, such as Raw, is essentially two pieces: (a) the value of the advertising that a network can get while the program is being aired and (b) the "halo effect" of the bringing viewers to your station. That "halo effect" can either be generated through raising the profile of the channel (i.e. when Raw moved to TNN - later SpikeTV - it raised the visibility of Viacom's TV network through the millions of viewers that came over) or through advertising other programming on your station (Spike's "The Ultimate Fighter" got a huge boost when it airing immediately following Raw). However, in the past, the "halo effect" from wrestling fans watching other network shows has been frustratingly weak. WWE's television rights fees will be driven by bidding up from the various networks. If the networks perceive that that they can improve the "CPMs" (advertising rates) for WWE programming, they'll bid more. Advertising during WWE isn't beer commercials and luxury cars. Instead, you'll see video-games, horror movies and fast food chains. Why? One reason is that the household income of the WWE viewer is low - even when you compare it to other 'Combat Sports'.
Market research from Scarsbourgh, published last year in the Sports Business Journal, found that almost 30% of adult WWE fans earn less than $25,000 as compared to 22% for Boxing fans and 18% for UFC fans (and 16.5% was considered "typical sports fan"). Almost two-thirds of WWE fans never attended college. The median income of a WWE fan is only 70% of the median income of a typical sports fan. WWE can compare itself to "live sports" but the simple fact is that while investors seem to buy the argument,
media conglomerates may see through the ploy. At one time, WWE had their own sales force based in New York, Chicago and Toronto. And advertising was a major part of WWE's revenue. Between April 1998 and January 2004, WWE generated more money selling advertising ($389.1M) than they did through television Rights fees ($199.3M). However, everything changed when WWE left Viacom's Spike TV and moved back to NBCUniversal's USA Network in October 2005. A lack of bidders (Spike dropped out when they knew they were losing) resulted in an uneven deal for WWE. This agreement ceased WWE's domestic advertising for Raw. WWE's internal sales forces were shuttered. WWE was left with smaller "in-show" advertising - things like "Slam of the Week" or PPV sponsorships. This is one of the main reasons that WWE pushed the move to PG programming. They wanted to make themselves more commercially appealing to blue-chip advertisers. This is also why
Stephanie McMahon moved to become a "Chief Brand Officer". WWE wants her to be an "ambassador" to mothers to try and improve WWE's stature. Ultimately, the key to unlocking large television contracts for WWE will be understanding, selling and shaping the narrative around the television audience. If WWE created positions that promoted and conducted market research, Nielsen fellowships, and advertising internships, they might be able to attract some really smart thinkers who can help the company reshape it's media and advertising image. If WWE was funding scholarships at schools for these positions, they would likely have first crack at scooping up young talent in these areas.