In one week, the 2017 CrossFit Games will begin at the Alliant Energy Center in Madison, Wisconsin. This will be the 11th annual event and the first one to utilize partnerships with Facebook and CBS to stream the entire event live worldwide. As a fan, I am excited to see the "Fittest on Earth." As a business person, I am in awe of how CrossFit has seized the unique opportunity to monetize its annual competition in a way that no other sport can by turning the CrossFit Games into what essentially amounts to an extended infomercial. In this article, I want to shed light on how CrossFit has targeted marketing more accurately than any other sport, how it has been able to turn all adherents into unwitting and unpaid spokesmen, and how it could potentially put the entire business model at risk.
First though, what exactly is CrossFit? I don’t want to belabor the point too much, but it is officially defined as constantly varied functional movements performed at high intensity. What makes CrossFit so unpredictable is that this description leaves a lot of room for interpretation. Almost any workout can be considered “CrossFit”, provided it abides by these very basic rules. Of course, the eventual goal of any competitive CrossFitter is to make it to the CrossFit Games, which is the annual international competition crowning one man and one woman as the “Fittest on Earth.” What started as a few dedicated athletes doing workouts on an uneven patch of dirt before tapping a keg of beer has morphed into an ESPN-broadcast juggernaut, awarding $2.2M in prize money to athletes in 2016. The path to the CrossFit Games is to first compete in the CrossFit Open, which is open to all athletes and had over 380,000 competitors in 2017. In fact, the CrossFit Open has become de rigeur for CrossFitters, as it is the only standardized way to measure yourself against your fellow athletes. More on that later...
So what does this have to do with marketing? In recent years, traditional advertising (television commercials, magazine ads, etc.) has increasingly been supplanted with native advertising, or advertising that gives the appearance of real editorial content or entertainment, but is in reality a subtle ploy to get you to make a purchase. This transition away from traditional advertising was a response to customers becoming immune to advertising or finding ways to avoid it altogether. Remember when TiVo was first released in 1999 and it was finally possible to easily skip commercials during your favorite shows? The initial response from advertisers was product placement, or embedded marketing, within shows. If you have time and want to laugh, Google “soap opera product placement” and you’ll find numerous examples of gorgeous actors of mediocre faculties extolling the health benefits of Cheerios or Chex Mix in between searches for the ghosts of their ex-lovers’ estranged children or something (full disclosure: I’ve never actually seen a soap opera).
Though product placement never fully went away, in the online space it largely gave way to native advertising. A great example of this is BuzzFeed, which does not use any display advertising but instead relies on “Sponsored Content” in order to generate revenue. More and more websites have begun to utilize this tactic, finding that it increases advertising revenue.
Now, this starts to get interesting. Think about how marketing occurs in most sports. In reality, all sports are a delicate balance of integrating advertising, both traditional and native, into the broadcast as seamlessly as possible without alienating fans, knowing that this will achieve the highest conversion rate. This is why baseball stadiums put banner ads behind home plate. It’s also why NFL coaches are required to use Microsoft Surface tablets during the game. It’s why stadiums have corporate names and replays are sponsored. Soccer actually provides a very interesting example, as it is one of the few sports with no breaks for television commercials during play. This has enabled owners to push the limits of what customers will endure and place large corporate sponsorships on the front of jerseys. CrossFit is no different in that it wants to maximize advertising revenue, but the structure of the Games and the composition of the fan base makes the opportunity very unique.
First, the fan base. Look in the stands at the CrossFit Games and try to find a single person that doesn’t look like they’re in peak physical shape. This is because virtually every single fan of CrossFit as a sport is, at some level, a competitor themselves. You certainly don’t go to an NFL game expecting every fan to have the same physique as Cam Newton (or, if you do, you certainly don’t do it twice). But probably half of the fan base in the stadium at the CrossFit Games looks almost indistinguishable from the athletes on the field.
Second, by its very nature, CrossFit is very functional and less about style: for most exercises, the weight needs to get to a certain place, usually in a very prescribed way. The excitement is more seeing the athletes strain and dig deep to complete exercises rather than the actual exercises themselves. If you’ve seen one Clean and Jerk, you’ve really seen them all. Imagine if this were the case in other sports. What if the NBA didn’t count a layup because the player used his left hand from the right side of the basket? That unpredictability is what makes basketball interesting for fans. From that perspective, the CrossFit Games is unbelievably boring to watch. Really, what makes it intriguing is seeing how far people can push themselves. The type of person drawn to this is typically someone who wants to know how they personally stack up against these athletes.
Third, the structure of the CrossFit Games is unlike most other sports. Whereas a single CrossFit workout is a short burst of high-intensity, the Games are a long slog that takes place over four full days with copious rest breaks for athletes. That’s a lot of time for viewers to change the channel, or for fans at the stadium to go grab a drink and socialize. Everything culminates in the final workouts, often times with placement in the last workout determining the champion.
So quick recap of the CrossFit Games:
- There is a fan base that almost all compete in CrossFit.
- These fans are dying to see how they compare to the top athletes in the world in a way that is objective and measurable.
- The gaps in action are so great that traditional ads, at least on television, would receive very little exposure.
- The duration of the competition is such that very few will watch the entire CrossFit Games, but almost everyone watches the final workout.
It hasn’t taken CrossFit long to figure out how to monetize the Games: make sure that new, incredibly expensive equipment is integral to the competition (in particular, the final workout). Remember the CrossFit motto of “constantly varied functional movements performed at high intensity?” Well, by introducing new equipment, CrossFit can claim this is a logical extension of the creed of remaining “constantly varied” and continue to add new equipment and movements every year. Lather, rinse, repeat, monetize.
How does this work in practice? New equipment is introduced at the CrossFit Games. CrossFit then indicates to the participants and gym-owners that this equipment will begin to be programmed as part of what is officially considered “CrossFit.” Often times, this new equipment will be made a part of the CrossFit Open, the preliminary round of the CrossFit Games open to all athletes. Athletes know that the CrossFit Open is the one standardized, judged event in which most CrossFitters will compete; in other words, if you have a friend in another state that says he or she does CrossFit, this may be the only way to know who is the better athlete. This turns every adherent into an unwitting Mary Kay salesman, as they push you into spending more money under the guise of being friendly. The pressure then builds on gyms to stock this new equipment, since any gym that does not facilitate its customers participating in the CrossFit Open is not viewed as a “real” CrossFit gym. The gyms eventually comply, and the increased investment is partially absorbed by the gym’s owners and partially passed on to customers in the form of increased fees.
Think about it: CrossFit has taken an opportunity that no other sport in the world has available. The NBA can make the players wear special jerseys for a single game and then sell those jerseys, but very few people would consider it an iron-clad prerequisite to being a fan of the NBA that you buy every single jersey ever seen on the floor. With CrossFit, in order to continue to be a CrossFitter, you MUST use the equipment that is promoted at the Games. It’s all or nothing: purchase these products or find another workout regimen. The concept is more akin to the NBA changing the size of the ball every year and claiming that anything without the officially-sized ball is no longer considered basketball. You laugh (or maybe you didn’t), but it’s true. The CrossFit Games doesn’t need ads because it is an ad.
And not only is it an ad, it is one that performs extremely well. The most effective advertisement is one that has a very high conversion rate per a given number of impressions. This means that you want to only show your advertisement to people who have at least some propensity to make a purchase, but you want that propensity to be very high for people who do see it. By integrating native advertising into the CrossFit Games, CrossFit has been able to almost exclusively target individuals that are part of the market for CrossFit equipment. Furthermore, it has ensured that each of these individuals, either directly or indirectly, is virtually obligated to make a purchase in order to continue their current fitness program. With a program that relies so much on a sense of camaraderie and community, there are extremely high switching costs. This means conversion rates are extraordinarily high.
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| RogueFitness.com, showing 50 lb dumbbells sold out soon after the announcement of use in the CrossFit Open |
I’ve seen first-hand how this has affected the equipment in CrossFit gyms in recent years. After the 2015 CrossFit Games, every gym started to buy an Assault AirBike, a then-$1000 stationary bicycle that had featured prominently in the final event. After the 2016 Games, the equipment purchases du jour were a SkiErg (currently $950 with a stand) and a pegboard (up to $350) after these were in the final two events. In the 2017 Open, one workout employed 50-pound dumbbells for the first time, which instantly sold out everywhere. All this from a regimen designed by a founder who once said “If you only had a bar and a place to do pull-ups you could do an acceptable variant of the CrossFit Program.” None of this would be possible it not for the marketing arm of CrossFit, the CrossFit Games.
The CrossFit Games has essentially become the September issue of Vogue: people eagerly awaiting the opportunity to pay for something that is almost entirely advertisements. This opportunity is not available to every business. CrossFit had to spend over a decade building up credibility before having this kind of market power. It is similar to how Facebook began to monetize its customer base with targeted advertising in the news feed only after nearly a decade in existence. By waiting that long, Facebook was able to build up a formidable network effect that made substitutes very difficult to find. With CrossFit, the brand and network are unbelievably important because everything else is very easily imitable. In fact, there is nothing stopping someone from opening up a gym that is 99% identical to CrossFit, but without the name (in fact, many have done this already). What stops these from expanding is the brand, the widespread international community, and the fact that everyone wants to say that they do “CrossFit” and not some obvious imitation workout. But this is not without risk. If CrossFit continues to forcefully push this advertising on its customers, there could be a tipping point where adherents will leave in droves.
What do you think? Is CrossFit risking its long-term viability by so tightly integrating native advertising into its premiere competition? Are other sports missing out on similar opportunities? The 2017 CrossFit Games are coming up soon. If you’re like me, you’re excited to see if Matt Fraser can continue the dominant run started last year, intrigued by the potential comeback after a disappointing 2016 by former champion Camille LeBlanc-Bazinet, and keeping your credit card handy to be the first to purchase whatever new equipment is in the spotlight for the final event.
