AS I SEE IT - 6/04/2003:
Marketing 101... the BUSINESS of wrestling and WWE
by: Bob Magee
Well, last week's column certainly got a response. Lots of you agreed with
me... and some didn't.
But I think a lot of you missed the point. Many of those that were upset with me thought all that I was doing was attacking HHH. Some of those who supported me, LIKED what I said because they thought all that I was doing was attacking HHH.
The main idea of that column wasn't to attack Paul Levesque the person (and/or the backstage politician), or HHH the wrestler...
Rather, the purpose of the column was to point out how WWE used one of its major name performers to go after those "smart marks on the Internet" yet again; and how that was directed at each and every one of you reading this column and others like it, or who read your Wrestling Observer or Pro Wrestling Torch.
It's not the first time this has been done by WWE, and by WCW before it, and even ECW. The professional wrestling business has had this love-hate relationship with its
custom... er... fans since the sheets began and since the Internet discovered wrestling. Wrestling preferred to keep its behind-the-scenes
secrets...well... secret. They denounced the "sheets" as no more than gossip rags and looked down on those "smart marks" that read them.
Then, in the mid/late 1990s, wrestling fans discovered the Internet and behind-the-scenes news could be disseminated instantly, as the first wrestling websites and newsgroups went online. Promotions couldn't control what was being said by fans that knew what was going on. Their secrets were no longer secret.
Wrestling promotions love hearing from fans when business is good and when customers are being "loyal". But when times aren't as good, and/or when people are criticizing the
product... or even reporting it with a critical eye, a different tact is taken. This tact was taken on the WWE Byte This of two weeks ago. In essence, the WWE Byte This that aired HHH's comments did this: it told fans that WWE the company, Paul Levesque the human being, and HHH the performer felt that your opinion didn't matter... that those who had been in a ring knew better... and to shut up.
My point in last week's column was that there are few successful businesses that have such an attitude toward their customers, or even toward those who serve as the trade papers of their industry, such as the Observer and
Torch... and the reputable websites that perform the same function.
This isn't just something that's happened recently.
This sort of response toward wrestling websites was occurring even back in July 2001. This was during a period when WWF/E was still posting fairly substantial quarterly profits, but when TV ratings and revenue were beginning to drop from their peak. It was shown when WWF/E CEO Linda McMahon said, during her conference call to discuss fourth quarter earnings and review prospects for the coming fiscal year
that she blamed Internet sites for revealing Smackdown! happenings beforehand and therefore dealing a severe blow to Smackdown's weekly ratings.
Think about that.
The then-WWF.com website itself delivered spoilers for Smackdown at least three times during the beginning of the period of relative ratings downturn. Further, spoilers were being posted by websites when the WWF was popping 6.5's and 7.0's in the ratings. No one in the WWF expressed concern about wrestling websites then.
Wrestling websites aren't now and weren't then a cause for lower ratings. If the product itself is interesting, spoilers (for those who wish to read them) can help to advertise the programming, and actually encourage viewers to watch these
shows... the very reason that WWF.com itself posted spoilers. Most of those same wrestling websites (including most of the ones you read this column on) also give spoiler-free previews for those who wish to be surprised by what they see on Smackdown.
Those, among many other WWE examples that most of you can come up with, show that it's safe to say that WWE doesn't exactly handle marketing challenges (read: issues with buyrates, live attendance or TV ratings) or those who cover its product with anything other than a blind
eye... in the most constructive way.
Let's take a look at how another company handled a major marketing challenge.
Most marketing courses will take a look at one of the worst fiascos in marketing history...the 1985 introduction by Coca-Cola, Inc. of the "new Coke".
In 1983, Coca-Cola, which had been losing market share in the soft-drink market they had dominated since the beginning of the century, made a fateful
decision... began tinkering with the formula of Coke, a change that attempted to make it take more like competitor Pepsi. After marketing surveys that claimed the new formula would increase market
share... on April 23, 1985, the "new Coke" was introduced with a high-powered PR campaign.
Reaction to the "New Coke" was loud and clear. New Coke was described by loyalists as tasting like "sewer water," "furniture polish," "Coke for wimps," and, worst of all, "like two day-old Pepsi".
Groups of customers actually organized to oppose the change in the decades-old formula. A group called The Old Coke Drinkers of America logged 60,000 complaint calls to a hastily formed headquarters dedicated to getting Coke to restore their original formula. Some of the actual comments they received about the change included: "'it was like spitting on the flag'...'Changing Coke is like God making the grass purple or putting toes on our ears or teeth on our knees'...'When they took Old Coke off the market, they violated my freedom of choice. It's as basic as the Magna Charta, the Declaration of Independence'...'There are only two things in my life: God and Coca-Cola. Now you have taken one of those things away from me.'...'Next week, they'll be chiseling Teddy Roosevelt off the side of Mount Rushmore.'"
And you thought WRESTLING fans had strong opinions...
Two months later, on July 11, 1985, Roberto Goizueta, then Chairman of Coca-Cola, announced the return of the original formula saying "We have heard you". The original formula was first sold as "Classic Coke", then gradually just brought back as THE Coke.
Now... why all this about marketing a soft drink in the middle of a wrestling column?
Because, even though Coca-Cola had spent millions on marketing research, millions more in re-tooling its formula, and still more on its PR
campaign... when their customers spoke, Coca-Cola listened.
In a period of similar marketing challenge, WWE isn't listening.
The one comparable marketing blunder over the last 2 1/2 years by WWE to the "New Coke" fiasco that comes to my mind is the "WCW Invasion" and the almost simultaneous "takeover of ECW".
Think about it... A chance for what amounted to interpromotional matches, the kinds of matches that wrestling fans thought would only exist in the
fictitious "dream matches" of the Apter mags and other kayfabe publications. Dedicated ECW fans that only saw the promotion on TNN, PPV or through tape trading would now get the chance to see their favorites on TV and live on a bigger stage.
And WWE blew it.
On the level of the "New Coke" debacle.
They blew it because they wouldn't bring in the major names of the WCW roster from the beginning. Many of those names, including Eric Bischoff and Goldberg, were brought
in... but only 2 years later after the Invasion angle had already failed.
They blew it because they wouldn't permit what WCW talent they did sign to get over on WWF talent to further long-term "interpromotional" feuds that would draw buyrates, house show attendance, and TV viewers. WWE had to be proven to be superior, to "have won the war".
They blew it by "installing" Stephanie McMahon as the "owner" of ECW, insuring that they'd lose potential ECW fans that might have tuned in to RAW and Smackdown to see former ECW
talent... ECW fans who'd never buy into a McMahon running ECW, even in a storyline.
So... here's a marketing challenge. WWE created a set of storylines that were proven not to be ones that fans wanted to
see... and didn't give them certain storylines that they DID want to see. As a result, fans turned off their TV sets in large numbers with 45-50% of the wrestling audience viewing back in early 2001 disappearing.
Obviously, mistakes are always made by companies, as seen in the "new Coke" example above. The issue is how a company reacts to them. How did WWE react? What are the major differences between the way Coke handled things and the way WWE handled their challenge?
For one, WWE had no competition. When the "new Coke" debacle occurred, Coke obviously still had Pepsi as a competitor (among others) to force it to make changes in order to keep its market share.
Vince McMahon felt that his customers had no competition to go to, and acted accordingly.
When wrestling newsletters and websites pointed out what was happening, and pointed out that fans weren't happy with what they were getting; WWE responded by cutting off contact with them, and actually printed a statement on its website that any information published by wrestling websites and in wrestling newsletters that is not officially issued from the WWF/E offices was automatically somehow less than true, or was rumor and should be regarding as such by WWF/E fans.
What would have happened if Coke had taken such an approach? What if Coke had told those people who were upset that a soft drink that had been a part of Americana had been
altered... that they should just be quiet? What if they threatened the The Old Coke Drinkers of America with a lawsuit for illegally using their copyrighted Coke name?
What if Coke had just relied on the far superior market position they had in vending machines, in being the vendor for many fast-food restaurants...believing that customers would just learn to deal with it?
After all, that's exactly what WWE is doing now, believing that they're the only game in
town... and in each of those situations mentioned above, these are things that WWE has done in the past:
- WWE has, with the HHH interview, told critical fans to "be quiet".
- WWE has sued websites that have used the WWE/WWF name that were clearly fan based sites... sites that were not otherwise violating copyright laws by cybersquatting or illegally using copyrighted photographs (as often happens with websites that steal diva photographs, an action they have every right to do).
- WWE is now relying on a superior position in the marketplace to get by.
If Coke did any or all of the above, the odds are that stockholders would have revolted, the public
would have revolted, and that those in charge in Coke wouldn't be there.
That's not going to happen with WWE, obviously. The McMahon family has retained the majority of available stock in WWE from the beginning.
Further, if you remove the settlement of a legal situation with the William Morris Agency, and the write-off due to the closing of WWE New York, WWE is still a profit making company, and has been for the last several quarters. There is over $400 million in available cash or other liquid assets in the company's coffers.
So for those investors who merely look at the bottom line... they may not see a problem. The customers of WWE, however, disagree.
Fans do, however, have the option of trying out other "brands", contrary to what WWE thinks. There
isn't only one brand in many towns... there are other "brands"; most notably NWA-TNA's weekly PPVs, and local independent promotions around the United States and elsewhere. If people knew what was available to them, and responded in sufficient numbers by taking advantage of these alternatives instead of WWE, even Vince McMahon would eventually be forced to respond.
The problem is that there is a high cost in getting a company known to a wide audience, translated as the high cost of TV. Without people being aware of alternatives, they don't take advantage of them and give up on wrestling altogether.
Witness... in one of the hottest wrestling markets of North America,
Philadelphia... the situation of several promotions dropping their TV from WGTW Channel 48, the only station carrying wrestling in Philadelphia. At one point only months ago, the station featured wrestling on Monday nights with XPW, Tuesday nights with ROH, Thursday nights with CZW, and Friday nights with PWF and NWA-Wildside.
As of today, only CZW and NWA Wildside remain from the above. WWE programming is filling in the other nights.
The major factor in the departures is a lack of cost-effectiveness. NWA-TNA was interested in adding its syndicated Explosion program to WGTW's lineup, but was unwilling to pay the price WGTW was charging for time, and was not willing to air it as programming. NWA-TNA is limited to airing its TV in Philadelphia on a public access not available on the local Comcast systems.
This problem with television costs and the unwillingness of TV stations to carry wrestling as programming creates a Catch-22 situation. Those independents that aren't established yet NEED to get TV to establish themselves, and to compete in the market. Those promotions that already are established, such as WWE and a handful of major indies with enough money to finance their TV, already ARE on TV. Thus, in many markets, fans don't know what's out there, and assume that WWE is the only game in town.
This situation reinforces the perception by WWE that they don't need to change, that they can continue to rely on a superior position in the marketplace to get by, and that they can dismiss fans that criticize the product.
So that's some thoughts on the state of the business end of things within wrestling... about how the BUSINESS called wrestling treats its customers (aka fans), and the effect that it has on their business.
Until next time...
(If you have comments or questions, I can be reached by
e-mail at email@example.com)