Ged Carroll

Category: consumer behaviour | 消費者行為 | 소비자 행동

Consumer behaviour is central to my role as an account planner and about how I look at the world.

Being from an Irish household growing up in the North West of England, everything was alien. I felt that I was interloping observer who was eternally curious.

The same traits stand today, I just get paid for them. Consumer behaviour and its interactions with the environment and societal structures are fascinating to me.

The hive mind of Wikipedia defines it as

‘the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services.’

It is considered to consist of how the consumer’s emotions, attitudes and preferences affect buying behaviour. Consumer behaviour emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an interdisciplinary social science that blends elements from psychology, sociology, social anthropology, anthropology, ethnography, marketing and economics (especially behavioural economics or nudge theory as its often known).

I tend to store a mix of third party insights and links to research papers here. If you were to read one thing on this blog about consumer behaviour, I would recommend this post I wrote on generations. This points out different ways that consumer behaviour can be misattributed, missed or misinterpreted.

Often the devil is in the context, which goes back to the wide ranging nature of this blog hinted at by the ‘renaissance’ in renaissance chambara. Back then I knew that I needed to have wide interests but hadn’t worked on defining the ‘why’ of having spread such a wide net in terms of subject matter.

  • Geico advertising + more things

    Geico advertising

    What prompted me to write about Geico advertising was a stream of news from marketing services companies about the state of technology company advertising. At the time of writing Stagwell are just the latest marketing services firm after S4, IPG, Omnicom and WPP have pinned declining profits on a reduction in technology company advertising spend. Then this story broke about Geico advertising: Insurer Geico made more money after benching its famous gecko | Quartz – and my first reaction was that the wrong lessons might be taken away from this.

    Geico

    Geico advertising – a primer

    Geico îs an unfamiliar name to most people outside of the US. If you’ve read American magazines chances are there was a print ad or two in there with their iconic Gecko spokesperson. It’s a similar case on American television.

    Geico advertising and their Gecko are as familiar to Americans as the meerkats of Comparethemarket.com are to your average Brits.

    The truth about technology marketers vs. Geico advertising

    Having worked with technology brands on and off for the past three decades, I have enough experience to know that generally, they aren’t great marketing organisations.

    Coinbase’s Super Bowl ad drove traffic to a site that fell over.
    Geico reinforced brand equity in the insurance space and pointed out their 24-hour claims hotline (I imagine that this isn’t an exclusive feature, but you wouldn’t know it from the advert).

    Growth mindset ≠ marketing mindset

    As organisations, they have a growth mindset, but not a marketing mindset. Before the internet, this meant a powerful field sales force organisation and marketing meant a bit of branding / design work coupled with case studies for the sales people. With the internet came constant iterative ‘growth hacking’ on digital channels, that mirrors agile software development rather than the best practices of marketing science.

    There is a good reason why organisations like the Ehrenberg-Bass Institute for Marketing Science are supported by FMCG manufacturers, luxury goods makers, media companies, marketing services firms and pharmaceutical companies, BUT has no technology company sponsors.

    The reasons are cultural in nature:

    • Engineering – if I haven’t heard of it or invented it then it’s not valid and you’re just a suit. At best great product is the marketing – and that’s great if you have a clearly differentiated great product which is self evident. The engineering mindset is also why they trust adtech and marketing automation services which outsource your marketing communications approach to a black box
    • Sales – marketing is just support. Which is the reason why my early clients (like old school Silicon Valley royalty LSI Logic) promoted long serving secretaries and administration staff into marketing roles
    • Even if they had a marketer who knew about Ehrenberg-Bass they wouldn’t be able to get in buy-in from the wider organisation to participate and they’d likely be fighting other dumpster fires elsewhere

    Secondly, their laser focus on data affects their outlook. To paraphrase the comedian Bill Hicks: they know the price of everything, but the value of nothing. Because they are only looking at short term data. Great marketing and advertising also has long term effects that both screws with the short term marketing data focus.

    Marketing and growth hacking are considered synonymous. It would seem ridiculous for me to to claim in any large marketing orientated organisation that sales and marketing are synonymous. The differences and complementary aspects of both would be well known. Yet in technology companies, this isn’t the case.

    By contrast Geico as a brand is an organisation who understood marketing. You make your car or house insurance decision at best once a year (though there is friction in making a change).

    The technology sector approach would be for Geico to bid on search ads and aggregators to acquire customers and then do direct mail or email when it comes to renewal times. But Geico advertising does something different. Geico advertising builds mental framework, so that Geico means car insurance and will be one of the brands that you consider.

    This achieves a few things:

    • You are less likely to move away from Geico, you may not love them, but searching for an alternative might be too much of a hassle.
    • You may be reassured that you have chosen ‘the’ car insurance
    • It helps new customers get over the ‘which car insurance company to choose’ decision
    • It helps with upsell on the products due to the reassurance of the brand

    Technology companies deal with these problems in a slightly different way:

    • Certification of engineering staff. If you are Microsoft certified or Cisco certified, you are less likely to use open source software or Juniper Networks products respectively. It would be against your self interest and the investment in terms of time and money that you have made in your self development
    • Contractual lock-in – self explanatory
    • Technology lock-in. You can put your data or programming code into a particular system, but its much harder and more expensive to move on to another system
    • Owning the entire technology stack. This is the approach that Adobe Systems have taken, gradually acquiring over the years the entire marketing, workflow and creative systems used by ad agencies, media agencies and their clients

    So why was Geico advertising spend cut?

    This is the crux of my point about how the wrong lessons might be taken away from the Geico advertising spend cut, with no ‘apparent’ impact.

    There are a number of good reasons why Geico made the cut in advertising spend:

    • There was a cut in insurance sector advertising overall, so that Geico maintained or even grew its relative share of voice while spending less. This should see it emerge with improved economic performance over time. Procter and Gamble became the behemoth it now is by INCREASING advertising during the great depression of the 1920s. So the idea of relative share of voice and its relationship to market share is older than I am. Further more research by the IPA has found that holding or increasing relative share of voice during a downturn has a positive impact for business performance over a five year period
    • Geico may have managed to make some efficiency gains, this is most likely to occur in brand activating activities

    There is also a bad reason: saving money in the short term. Kraft Heinz cut marketing to the bone under the guise of zero based budgeting (ZBB) – which made a mockery of ZBB as a concept. Kraft Heinz shares massively underperformed and were down 60% in the last 5 years, compared to the S&P 500 having gone up 69%. If Geico is following this route then it bodes ill for the long term performance of the business.

    Without us knowing the real reasons and focusing on the short term measure, it reinforces a growth hacking mindset.

    Beauty

    Beauty hotspots: Why global giants are circling Australian brands | Vogue Business – well developed brands, celebrity and influencer brands have less longevity and are over-priced by comparison

    Trends Shaping the Future of the Skincare Industry | Mintel 

    Farfetch to shut down its beauty business | Vogue Business – interesting e-commerce specific issues

    Business

    A Chinese Electronics Empire – The Wire China  – on Midea

    China

    The China Convergence – by N.S. Lyons – The Upheaval

    Chinese developer’s cancelled share placement fuels property sector woes | Financial Times – this is interesting as Country Garden is one of the country’s better run developers and hasn’t done as many things that could be considered hubristic in nature. And the second shoe drops: China’s Country Garden misses bond payments as turmoil grips property sector | Financial Times

    Anger in China over plan to use cities as ‘moat’ to save Beijing from floods | China | The Guardian

    China’s embassy to Russia criticises treatment of citizens at border | Reuters 

    Weekly news roundup: China’s strides and setbacks in semiconductor self-sufficiency and other top stories – interesting that China is going for self sufficiency across all aspects of semiconductors from raw materials to processes

    Reckoning in China: Behind Xi Jinping’s Firing of Top Beijing Officials | Daily Beast

    White House unveils ban on US investment in Chinese tech sectors | Financial Times 

    Chinese economy falls into deflation as recovery stumbles | Financial Times 

    China’s Plan to Rule the World’s Smart Devices, FCC Urged to Act | Newsweek

    Consumer behaviour

    Invasion of Food Delivery Robots is Driving People to Vandalism and Theft | Futurism – no opportunity is bringing out the worst in some people

    Hard times mean no sustainability premium in North America | WARC | The Feed – every single economic recession this comes around and marketers are surprised. Time to pay attention to what the longitudinal research data says. I really like the work that Gallup have done on macro trends and the American consumer, in particular their work on attitudes to the environment.

    Culture

    Remnants of curry dating back 1,800 years found on stone tools in Southeast Asia is oldest outside India | South China Morning Post 

    Economics

    Risk perceptions and economic activity in the United Kingdom | Bank Underground

    VC Optimism Returning But More Pain Ahead In Their Portfolios | Hunter Walk 

    Energy

    The growth of lithium-ion battery power | The Economist – hitting a natural limit of price / energy provided

    Gadgets

    Apple seeks to bolster expertise in generative AI on mobile devices | Financial Times

    Germany

    Bertelsmann Investments to plough $700mn into Chinese start-ups | Financial Times

    Health

    ‘Pokémon Sleep’ Review: Sleep-Tracking Game Made Me Into Snorlax – gamifying sleep. Pokemon Sleep has surged to 3.2M global downloads and an estimated $130k in daily revenue according to SensorTower data. The app ranked in the top 5 in the U.S. Games charts. It’s even more popular in Japan (the home of Pokemon), where it’s number 1 across the App Store categories

    MSLs drive 1.5x adoption in first six months | Klick Wire – launch tactic

    Hong Kong

    Bruce Lee’s legacy squares up to modern life in Hong Kong | Reuters

    ‘Long-distance’ is the new ‘soft’ | Big Lychee, Various Sectors

    Canadian Case Exposes Hong Kong Developer’s Corporate Ties to Chinese Criminal Underworld – OCCRP 

    How to

    INFER Public | The Pub Blog – Using AI to improve your forecast rationale 

    Japan

    FEATURE: Samurai and Son – The Oral History of SHOGUN ASSASSIN! – Tokyoscope has the inside track on the American version of Lone Wolf & Cub part two

    Luxury

    Bentley’s global sales drop 4pc in first half of 2023 | Luxury Daily 

    Marketing

    Using attention to scale creative excellence at Mars | WARC – Sales, distinctive assets, and attention to advertising are the go-to metrics to guide marketing decisions at Mars. Mars use Attention as a pre-testing tool, to inform creative choices in digital and also proxy in TV. Mars believe that an execution with a better attention score will travel across media channels better and will be a safer bet for you when you need to make a choice. Measuring Attention is a key element in helping us improve the creative hit rate. Advertisers should question how they measure consumer responses and focus on measures of real consumer behavior.

    Thinkerbell co-founders on life after PwC – by Tim Burrowes 

    Materials

    Musk still mulling massive Tesla plant for Indonesia | Asia Times – Indonesia is one of the biggest supplies of Nickel in the world and have been focused on exploiting it in a way that maximises the economic benefit to Indonesians

    Media

    Advertising has reached a new low in the age of podcasts | Financial Times and WPP & Spotify announce first-of-its-kind global partnership | WPP 

    Influencer Marketing on Instagram: Empirical Research on Social Media Engagement with Sponsored Posts and Sponsored posts and microinfluencers deliver greater engagement on Instagram | WARC – Sponsored posts of social media influencers (SMIs) outperformed their non-sponsored posts in terms of generating more comments and “likes” than NSPs. The average number of engagements for sponsored posts was 1,559.2, beating a comparative figure of 1,157.4 for non-sponsored posts. Median engagement totals for sponsored posts came in at 747, while the median engagement for NSPs stood at 401.

    Online

    China proposes tighter limits on children’s use of tech | Financial Times

    How effective is Russian propaganda? | Financial Times 

    LinkedIn Workplace Halts Services in China Starting Today – Pandaily – I was a bit surprised as I thought Linkedn had left a few years ago

    Security

    UK defence group BAE Systems lifts profit forecast as military spending soars | Financial Times and Britain’s investors shy away from UK defence companies | Financial Times 

    The untold history of today’s Russian-speaking hackers | Financial Times 

    Former U.S. Officials Urge New Export Alliance on China – EE Times 

    Microsoft downplays damaging report on Chinese hacking its own engineers vetted – this could go bad for Microsoft: US senator victim-blames Microsoft for Chinese hack 

    Five Eyes nations list 12 most exploited vulnerabilities • The Register – Fortinet products are coming off very badly in this list

    Fortinet’s security issues have aligned with a reluctance for customers to upgrade their business with the company

    Exclusive: North Korean hackers breached top Russian missile maker | Reuters

    On publicizing Chinese hacking success – by Graham Webster – really interesting observations here

    Drug-related killings add to instability in Syria’s south | Asia Times 

    Software

    Should an AI bot making $1mn really be the next Turing test? | Financial Times – also what does it say about being human?

    Zoom wants to train its AI on content from all user calls | Quartz – combine the legal overreach with concerns about Zoom’s connections with the Chinese government and you can see how bad this is likely to get

    Style

    Yeezy drops are still boosting Adidas profits | Vogue Business 

    Technology

    AMD Q2 – Building Momentum? | Digits to Dollars 

    Radar Trends to Watch: August 2023 – O’Reilly 

    White House unveils ban on US investment in Chinese tech sectors | Financial Times 

    Web of no web

    Taiwan’s satellite supply chain empowering international market entry

  • 25 years

    March 1998 – 25 years ago

    My consumer internet usage goes back 25 years as a celebratory email reminded me in my Yahoo! account earlier this year.

    Yahooversary
    25th Yahooversary

    had started using the internet back in early 1994. I had access to email whilst working as a research technician for Corning in their optical fibre manufacturing business. The account was for solely for professional reasons (for the most part).

    After Corning, I went to college and had access to the web for the first time. At that time, people in my year and the year above me mostly didn’t bother with the internet. I had found it useful for getting Mac software and researching material for college essays.

    I set up an Excite.com webmail account before leaving college, but it wasn’t that reliable. In the immediate aftermath of leaving college I worked long hours for the first few months in the call centre at MBNA the credit card company. So a rare day off was spent catching up on sleep or catching a video from the local Blockbuster store.

    Coffee, cake and email

    Over time, I got a temporary role in their marketing department. I was writing sales scripts for payment protection insurance and keeping a tally on salesperson performance. This meant that I moved to a role that was more 9 to 5 and I could start looking for my first career role. I even got to go shopping for sports cars that we were given away to the top performing sales person.

    (Aside: The Lotus Espirit Turbo and TVR Griffith were unpleasant driving experiences; the Toyota Celica GT-Four ST205 and fourth generation Toyota Supra were great cars to drive.)

    Yahoo in 1998
    What Yahoo! looked like in early 1998, about the time when I set up my email account.

    So one wet Saturday morning in March I set up a Yahoo! account in a cyber cafe around the corner from James Street station in Liverpool. I had found the address for Café Internet on North John Street in the Yellow Pages directory – there were only a couple of cyber cafes at the time in the Merseyside area and this one was the easiest to get to. Of course that would all change a year later with the launch of the easy group’s easyInternetCafe chain.

    (Aside: in the process of writing this article I found out that Café Internet was the first cybercafe in the North West of England, originally opened in 1995.)

    The connection that I enjoyed at Cafe Internet was slow and expensive.

    I had a weekly ritual of working during the week and then heading over to Liverpool on Saturday morning to do a bit of record shopping, check my email and apply to jobs with some of the best coffee and carrot cake available at the time. I used to bring my emails that I needed to send, pre-written up a floppy disk as plain text files, along with a copy of CV to send as an attachment for jobs.

    Eventually, I got my friend Andy online with his first email account and showed him the basics of web browsing. I don’t drink and we got accustomed to doing a spot of web surfing with good coffee and carrot cake prior to going window shopping in Liverpool city centre while chatting about everything and nothing. While we were online this was 25 years ago, so there was no UK e-commerce beyond shareware software on Tucows, so going shopping was not ironic.

    My front door to the web

    Yahoo! and other web portals like Lycos and Excite borrowed design cues from a newspaper page with their multiple columns of news snippets, horoscopes and weather forecasts. But it lacked the salacious content and gaslighting of the modern web.

    Yahoo in 1998

    My job search weekly cycle

    Week day evening: Monday looking at The Guardian for marketing jobs. At the time The Guardian was a good source of entry level agency roles. Thursday meant going through Campaign and PRWeek. By going through, I mean looking at their print copies.

    The library had a network that allowed PCs to do printing to a laser printer. In addition there were terminals that the librarians used to arrange inter-library deliveries. This ran on a command line interface connecting to a common database shared by all Wirral libraries. So my job search was analogue.

    Saturday morning: over to Liverpool to check for email responses and send new applications in.

    Given that most people applying for the jobs would be sending applications through via post, using email even on a weekly provided me with an advantage as a job seeker.

    The internet in print

    Given that it was expensive to get online. I spent more time reading MacWorld, Byte magazine and Wired magazine talking about online life than I spent online at the time. I noted down websites to check out next time I visited the cyber cafe, after I had sent my emails.

    My internet consumption mirrored a wider consumer patten 25 years ago, many people were excited by the idea of the internet before they had managed to get online. Getting online would follow a year or two later, partly due to the heavy direct mail campaign by early ISPs including AOL and CompuServe who sent CD-ROM discs to my parents every six weeks.

    Even by pre-internet standards that was a direct mail campaign of unprecedented scale.

  • Switching off + more things

    Switching off

    Switching off as a choice is a relatively new phenomenon. A few blogposts ago I talked about how consumer internet usage started for me 25 years ago. Back then going online was an active choice. In my case I would have to travel to an internet café. Later I would have to dial-in to an ISP or log into a wi-fi network.

    Confluence of always-on elements

    Wireless home broadband allowed seamless connectivity around the house or the workplace. The next thing that changed was laptop battery battery life improved to the point that one could realistically work for a 8 hours on writing or emailing at a conference or coffee shop without a power cable. Social media became a thing, first it was a positive influence, but gradually it had a more complex social impact.

    Finally there was smartphones. Nokia, BlackBerry, Palm and Microsoft smartphone attempts gave way to a duopoly of Apple and Alphabet’s respective eco-systems. I went back to an old presentation that I did a number of years ago. Here’s a chart from it, that I pulled together of publicly available active user numbers by time from December 1997 to April 2016.

    Yahoo! Mail, Hotmail and Gmail users over time

    The dramatic take off in Gmail email accounts in 2011 and beyond is down to the rise of the Android operating system. By 2013, smartphone users were engaged by a series of compelling always-on applications to counter switching off.

    Strategising for a winning mobile social formula at IMM Conference, Hong Kong
    Ged Carroll for IMM Conference, Hong Kong (August 2013)
    Strategising for a winning mobile social formula at IMM Conference, Hong Kong
    Strategising for a winning mobile social formula at IMM Conference, Hong Kong
    Strategising for a winning mobile social formula at IMM Conference, Hong Kong

    Switching off became important. ‘Crackberry‘ – a light hearted take on smartphone addiction and an ability to turn off peaked as a thing as far back as September 2009 according to Google Trends. 12 months later the Crackberry book advised us on how to put down our smartphones. Four years later, the self-help books became more strident in their exhortations: Put Down Your Damn Phone Already: A (loving) rant about your obnoxious cellphone use being a case in point.

    The biggest concerns now, seems to be about two things where correlation if not causality supports beliefs about:

    From a professional perspective and increasingly a personal perspective, consumers have become smartphone human cyborgs.

    Class as a determinant of switching off

    Switching off is also about culture and behaviour. A discussion that I had with a friend about phones being turned off and put in a box before a night at the opera, reminded me of how ‘class’ in its widest sense can be one of the biggest determinants of switching off. You see it in homes that put phones away before a family dinner, or cinema-goers who are happy to turn their phone off before the main feature starts.

    The bulk of people may have the devices as always-on pacifiers. This quietens children and is seen as a continued source of confidence and validation rather than switching off.

    Secondly, we’re also seeing a small proportion of people choosing to use feature phones as a way of disconnecting. This might happen all the time or at the weekend, when they don’t want to be bothered by Microsoft Teams and WhatsApp messages.

    How not to influence behaviour

    EE Phonesmart – how not to design a PSA website

    China

    Politics crippling innovation: China notes, July ’23: on technological momentum | Dan Wang

    Culture

    Jamie Morgan on the next-gen of Buffalo kids – The Face – Buffalo will never die

    Economics

    How Saudi Arabia is buying the world – New Statesman – the unlikely links of Saudi Arabia and DC’s fictional country of Wakanda

    Energy

    Will there be enough cables for the clean energy transition? | Financial Times

    FMCG

    Why Rajiv Jain is betting on an Indian yoga televangelist | Financial Times – plans on growing market share rather than margin share for Patanjali Foods could put pricing pressure on Hindustan Unilever and Nestlė India

    Bubble tea, probably the biggest FMCG breakout in the past decade and its convoluted origin.

    How to

    Gwern on ‘How to search’ – how to make Google work harder for you

    Japan

    In France, Japonisme has turned into Japanmania – The Japan Times 

    In America, “Barbenheimer” is a success. In Japan, it’s a scandal.

    How homogeneous is Japan really? (repost) – by Noah Smith

    Korea

    Tech cold war: South Korea pivots from China to US | Financial Times

    Luxury

    Aspirational shoppers are cutting back. What next? | Vogue Business – also notable for a new acronym that I hadn’t heard before HENRYs (high earning, not rich yet)

    Media

    Streaming and podcasts are the most popular audio media formats | WARC 

    Online

    The world’s last internet cafes – Rest of World – Internet cafes were more than just places to log on. They emerged in the waning years of the 20th century — a post-Cold War moment full of techno-optimism. Sharing a global resource like the internet “was going to bring different people in different cultures together in mutual understanding,” historian and author Margaret O’Mara told Rest of World. It was an era in which, both physically and digitally, “people were moving across borders that before were very difficult, if not impossible, to cross.” 

    Security

    City investors putting UK security at risk over ESG, ministers warn | Financial Times – the capitalists won’t even buy the rope to hang themselves

    Software

    Bloomberg on ethics in technology companies and artificial intelligence.

    Technology

    SK Hynix and Samsung’s early bet on AI memory chips pays off | Financial Times

    Intel’s AI bullishness shows its anxiety on catching Nvidia | Quartz

    Telecoms

    Software engineers dedication to getting Taylor Swift Tickets – Blind – judicious use of VPN connection

  • The politics of Prada + more stuff

    The Politics of Prada

    The politics of Prada challenged what I knew about the luxury brand. I knew that Prada started off as a handbag company that then pivoted into apparel. I also realised that some Prada items probably borrowed from military clothing design and fabric technology, such as Prada’s iconic black Pocono fabric backpacks.

    prada

    This is pretty common across Italian design with Stone Island CP Company being prime examples. If you would have asked me about the politics of Prada, I would have expected it to be part of the wider anarcho-far left hatred of all prestige brands.

    I didn’t realise that Miuccia Prada’s clothing designs reflected her own left wing, pro-feminist politics. The connections of Prada with yachting has less to do with the politics of Prada and more to do with the passion of her husband and business partner Patrizio Bertelli.

    One forgets how politics in Italy, had elements of the far left with the Communist Party and the Red Brigades pitted against reactionary right including the Propaganda Due (P2) masonic lodge and the Bologna central station bombing on August 2, 1980. The politics of Prada is by its nature Italian. More related content here.

    Aimé Leon Dore x DJ Stretch Armstrong

    Aimé Leon Dore got Stretch Armstrong in for a set playing sublime vintage soul 45s.

    Scott Galloway on the intersection of economics and technology

    Professor Scott Galloway on the intersection of economics, social trends, consumer trends and technology.

    Iran-Contra affair

    The Iran-Contra affair was how the president Reagan administration, specifically ‘rogue’ elements within it like Oliver North and John Poindexter, came to swap heavy weaponry with the terrorist sponsoring government of Iran in exchange for the release of American hostages, and how money from these deals came to be diverted to a secret and illegal war in Central America.

    Sean Munger provided one of the best accounts of it that I have seen outside of the Congressional report.

    The most Hong Kong thing I saw all week

    HKIB News – a cable and online TV news channel featured a news story about the first trip of local bus company KMB’s electric double decker bus. At the bus stop was a mix of young and middle aged (mostly) male business enthusiasts. In Hong Kong, bus enthusiasts is much more mainstream in the UK. There are shops that sell die-cast scale models of buses in different liveries, so you can get an exact period-correct bus. Bus enthusiasm and the continued popularity of radio controlled car builds as mainstream hobbies were two distinctive aspects of Hong Kong culture for me.

    Much of this is down to the limited size of Hong Kong and the public transport infrastructure. Generations of small children have enjoyed some of their happiest memories starting and ending with a bus trip. Buses are the first line of public transport. Hong Kong, (and Singapore) have a good number of young men and women for which it is the dream career. Which is remarkable given that these are part of the developed world and have a good education system.

    Instead in the UK, you have a job that pays minimum wage that no one dreams doing.

  • Soccer team acquisitions

    One of the biggest things that have impacted many British people has been overseas money that has resulted in soccer team acquisitions. There is a certain irony in someone like myself who isn’t that emotionally invested in sport writing about the impact of soccer team acquisions – but maybe my view from the outside in may get somewhere closer to the truth.

    I worked on lacrosse brand Warrior’s foray into soccer and helped relaunch the New Balance offering in football. (It had previously made football boots in the 1980s and had English football team captain Bryan Robson as their spokesperson.)

    I have visited major football stadiums in Ireland, the UK and Spain – but still don’t have an emotional connection to the game.

    Changing landscape

    Over my life I have seen football change as a pass time. Football was a decidedly working class sport with concrete floors on terraced stands with railings to lean on, clubs could pack in their fan base to watch a game standing up.

    Roy of the Rovers

    The sport was lionised in comics, notably football player Roy Race aka Roy of The Rovers, which ran from 1954 – 1993. It has been rebooted a couple of times, most recently by Rebellion, publisher of 2000AD and Judge Dredd.

    https://flic.kr/p/2oHEYiX
    Roy of the Rovers from 1977

    It is no coincidence that most of the UK’s most prestigious clubs were in historic large working class population centres: Liverpool, Manchester, Nottingham, Leeds and Leicester.

    John Moores to Delia Smith

    For working class entrepreneurs, soccer team acquisitions and team ownership were a way of demonstrating their position at the acme of their community. John Moores – the scion of the Moores family who founded the Littlewoods empire based on the working class love of betting on football match outcomes. Moores then went on to set up a mail order retail company also called Littlewoods, which mixed a wide product range with payment by instalments.

    From mail order Moores rolled out a network of value orientated department stores that catered to working class communities. To give you an idea of how ubiquitous Littlewoods was, everyone I knew at school had school shirts, trousers, jumpers and blazers from Littlewoods.

    In 1960, Moores become a director and then sealed his place in Liverpool society by becoming chairman of Everton Football Club. From this achievement he became a freeman of the city of Liverpool in 1980 and received a knighthood ten years later.

    Delia ovelooks my trifle creation
    via Wendy House

    Delia Smith is as famous in the UK for her cookery as she is for her ownership of Norwich City Football Club. A school leaver without qualifications, Smith built up a reputation for cooking after the austerity of the post-war years when cooking had no longer been passed down from mother to daughter due to food rationing. This eventually garnered being published in newspapers and magazines, her own TV series, books, a sponsorship deal with Sainsbury’s and an online cooking portal.

    Smith and her husband were not from Norwich, but had chosen to make their home there. They cemented their place in the community when Smith bought into the club in 1996, where she has a reputation as an impassioned owner.

    “This is a message for possibly the best supporters in the world. We need a 12th man. Where are you? Where are you?”

    Delia Smith broadcast on BBC Radio Norfolk during a match against Manchester City

    Smith like Moores was never going to make a fortune from football.

    Football is our religion

    In their push for viewer subscriptions, British satellite pay TV provider Sky Sports ran an anthem advert that got to the core of the British relationships with their football team.

    In the advert, actor Sean Bean reads a manifesto written by Leeds United fan, who also wrote, directed and produced the film.

    Life

    It can be difficult

    You know that

    We all need someone to rely on

    Someone who’s going to be there

    Someone who’s going to make you feel like you belong

    Someone constant

    It’s ectasy, anguish, joy and despair
    Part of our history
    Part of our country
    And it will be part of our future
    It’s theatre, art, war and love
    It should be predictable … but never is
    It’s a feeling that can’t be explained but we spend our lives explaining it
    It’s our religion
    We do not apologise for it
    We do not deny it
    They’re our team, our family and our life.

    Barry Skolnick

    If the football match is their service, then the football stadium is their church and their bible is the history of teams and and their gospel chapters individual player biographies. In Britain weddings, funerals and baptisms may happen in a church – but that’s about the limit of religious activities for many people.

    Catalysts

    Catalysts were in place for new types of soccer team acquisitions.

    How to become a millionaire?

    The perceived wisdom about owning a football team was encapsulated in a British joke:

    How to become a millionaire? Be a billionaire and then buy yourself a football team

    But that isn’t always the case. In America there was a class of investors who realised that owning sports teams with substantial media rights didn’t give regular dividends but did offer the opportunity of a big payout when exiting and selling the business on. People like the Glaser family and their experience with the Tampa Bay Buccaneers took their expertise to English Premier League football. Acquiring undervalued teams, maximising the value and selling them on. This hasn’t been without controversy with fans being openly hostile to the owners.

    A new type of British entrepreneur tried the same thing, the exemplar being Mike Ashley at Newcastle United.

    Hot media property

    Remember when I said about owning substantial media rights? The media rights themselves were a catalyst to changing the business and driving soccer team acquisitions. 1991 was a seminal year in English football with the founding of the Premier League. It was a break top flight football needed. At the time stadiums were in need of refurbishment and fans facilities were in a poor state. There were security issues at matches due to organised crowd violence. The English were only recently allowed back into European inter-league competitions after bans due to hooliganism.

    The Premier League allowed clubs to tap into funds to help rebuild stadiums and make nicer facilities. Knock on effects of this included a pivot towards middle class customers and corporate entertainment which affected the atmosphere in the stadiums, but made the matches more media friendly. This meant football clubs became more brand friendly and opened new commercial doors for sponsorships.

    The world is watching

    The rise of the Premier League also saw the rise of international media rights. Matches were broadcast around the world. Clubs suddenly found that they had a fan base half way around the world. English football tended to be more exciting to watch due to its playing style versus European clubs. It also attracted sports betting. One of the things that most surprised me travelling in Asia was running into fans not only of Liverpool or Manchester United but also lower profile clubs like Blackburn.

    The renovation of stadiums meant that clubs were ready for tourism and their merchandise sold around the world. A Manchester United football shirt appeared in even more cities than an ‘Irish’ pub. The clubs became global brands, which attracted the interest of American investors who realised the opportunity that English soccer clubs offered.

    Second wave buyers

    Skilful investors in English clubs don’t make money in soccer team acquisitions and running the clubs, but in selling their team. The next tranche of investors to shake up English football were foreigners resident in the UK and looking to enmesh themselves in British society some of them like Alexander Lebedev managed to buy the Evening Standard newspaper, which instantly gave him influence. However there are more opportunities to own a top flight football team due to media consolidation, AND, you probably have more chance of making more money on exiting the investment.

    Roman Abramovich

    Roman Abramovich - Chelsea - Sheraton Porto - 22/02/07

    The exemplar for this second wave would be Russian business man Roman Abramovich who had made is money in the post-Soviet era from energy and aluminium processing. He went on to buy Chelsea Football Club, one of the most high profile soccer team acquisitions of the early 2000s, if not the past quarter century. Under his ownership the club went under the kind of development that American owners had looked to achieve, but on a world stage. His ability to spend also distorted the transfer market for football players.

    By the end of the decade, a Europe wide set of regulations were brought into effect to try and reduce the distortion that second wave buyers and their soccer team acquisitions could bring to club competition called the UEFA Financial Fair Play Regulations.

    Even as a high profile member of British society, Chelsea couldn’t provide the shield that Mr Abramovich needed to stave off suspension of his tier one visa allowing entry at will to the UK in 2018. It also didn’t stop the sanctions deployed against him, amongst other Kremlin-connected business people after the 2022 invasion of Ukraine.

    Third wave of soccer team acquisitions

    The third wave of soccer team acquisitions are from Gulf Cooperation Council member states:

    • Bahrain – Bahrain is unlikely to be doing any large soccer team acquisitions, though it has bought into second tier side Paris FC. It is a regional tourist destination for people in the Middle East and has built up a finance services sector that has a regional footprint. However it has relied on financial help from the Kingdom of Saudi Arabia
    • Kingdom of Saudi Arabia
    • Kuwait
    • Oman
    • Qatar

    Their motivations are multi-pronged in nature:

    • Diversification of national wealth out of extracting oil and gas into assets that will continue to deliver returns after the oil runs out. In this respect they are no different to the sovereign funds of countries like Norway or Singapore
    • Media ambitions, Qatar already hosts the main service provider showing life professional football across the Middle East. Soccer team acquisitions could be thought of as vertical integration. For other countries, it could be seen as hedging against Qatar’s sports media hegemony
    • Increasing their soft power to improve their security status. This is also why Qatar hosted FIFA World Cup in 2022
    • Societal influence. The House of Saud have been the guardians of some of Islam’s holiest sites for about a century. Now they are the guardians of St James’ Park through their majority ownership via the Saudi government Public Investment Fund. This may give them a contingent to draw upon during difficult times in their relationship with the UK, particularly as Saudi oil becomes less important as an energy source. (Saudi oil will still be important as a chemical feedstock for every aspect of modern life including Tesla batteries, but hydrogen and electric power via alternative energy sources will reduce the impact of an oil embargo considerably.)

    The outlier

    Ryan Reynolds purchase of Wrexham is an anomaly. Soccer team acquisitions to build a media juggernaut are hard to do and Reynolds has shown he is uniquely creative with Aviation Vodka and Mint Mobile. He has managed to create a media property out of a lower league football team and bring pride back to a small North Wales town that hasn’t had much going for it since I was a child.

    The club was community owned and has had a modest 2 million pounds invested in it since 2011. But it made great reality television in a healthy way. How long the halo of Hollywood lasts is a bigger question, but any attention given to the former steel making and coal mining town has got to be welcome.