In 1962, Phil Knight flew from Oregon to Japan in order to convince local sneakers manufacturers to export their products into the US market. Though he was very conscious about the effectiveness of his Crazy Idea, as he recounts in his biography called “Shoe Dog”, he never expected Nike, his company that you may have heard of, the 30-billion firm it is today. The Portland-based company, who centeres around the “Just do it” claim, is by far the sportswear leader, thanks to its ability to create a brand identity which is well-recognized all over the world.
However, there are real challengers today. One is adidas, that from its HQ based in Herzogenaurach (Germany) has revitalized its product and sponsorship strategies, giving new life to a company that earned $ 19 billion in revenues during 2015.
The other has its HQ in Baltimore and it’s named Under Armour, whose spirit is perfectly embodied by its Founder and CEO Kevin Plank, a fierce man with clear and ambitious strategies and his Crazy Idea: to overcome Nike.
Although UA is far away from the economic numbers put together by the two rivals (Under Armour finished 2015 with around $ 5 billion in revenues), it was able to overcome adidas in the US market during 2015, in large part due to the football popularity and to the explosion of Stephen Curry, Golden State Warriors’ guard who won two consecutive NBA Most Valuable Player titles.
The Warriors star embodies the full meaning of this eternal competition among the Big Three: the destiny of these great companies lies very often upon the smallest detail, which many times is not under the control of the firm itself. When Nike sports marketing team irritated Dell Curry, for example, leaving a Kevin Durant picture in the pitch aimed at retaining his son Stephen, nobody knew that he would have become the bright star he is today, and he has paved the way to a surge of Under Armour in the basketball business as well.
How marketing plans differ
There are many things to be stressed along the Big Three’s strategies during this very moment. Nike has a big goal in mind: to become a 50-billion company. How to achieve that? They are not stopping at sports marketing initiatives, but they are promoting innovation after innovation. Think about Nike HyperAdapt, the first shoe with a self-lacing technology, or the incredible new flagship store in Soho (NYC), or even the monster digital campaigns they launch, like the “Unlimited” series around the Olympics.
adidas had a phenomenal 2016 (being elected “Sport business of the year” by Yahoo Finance) when it was able to claim back its second place in the US market – going from 4.3% market share to 7.2% - and obtaining substantial growth figures (+20% during Q3). The three-pillar strategy introduced in March 2015 has been paying huge dividends: rethinking the business modeal around the idea of rapidity, along with a closer relationship with celebrities (Kanye West and Pharrell Williams among the others) and a focus on the six most influencing cities in the fashion world (New York, Shanghai, Paris, Tokyo, Los Angeles and London) have proved to be successful decisions.
Under Armour has invested a lot in Big Data (almost a billion, of which 710 million to buy apps like MyFitnessPal) in an effort to produce hyper-connected items that can provide athletes with an overall tracking of their performances. On the other end, it was not a fantastic year for Plank, due to the retail crysis that plagued Sports Authority and to the difficulties faced to sell performance shoes (the “Curry 3”, for instance, recorded number well below expectations). Growing plans are still there, also for the European market, but Under Armour has seen better times and has to defend itself from the surging adidas and Puma, too.
How they approach sponsorships
The most transformative company on the sponsorship side has been adidas. Known as the brand “true to sports”, more inclined to associate itself to teams and events more than to single athletes, the german firm has dismissed relevant deals with properties like Chelsea and NBA to focus on young and rising stars. Even the partnership with IAAF, the International governing body of athletics, has been cut down after doping scandals, allowing Asics to sub in as technical partner.
Nike renewed its contracts with Barcellona (€ 155 million per year, surpassing the previous record by adidas with ManUtd) and signed with Chelsea (£ 60 million per season), while it is said to be ready to step in the foot of Under Armour as Tottenham’s partner, enhancing in presence in the Premier League football. There is much curiosity for the deal with the NBA starting from next season, that will see the swoosh being reproduced on 29 of the 30 teams’ jerseys (Charlotte will have Jordan logo on its one, as MJ is the owner of the franchise).
The slight presence of Under Armour in football (ehm, soccer) will be even reduced next year with the end of the Tottenham sponsorship. The most significant deal signed by Plank in 2016 is the one with UCLA – University of California Los Angeles, one of the most prestigious US college as for sports heritage, that will wear Under Armour from next July, sealing the richest partnership in the sports college history ($ 280 million for 15 years).
Athletes endorsements
It’s been the year of lifetime deals for Nike, as LeBron James and Cristiano Ronaldo, arguably the biggest sports stars in the world, signed 1-billion-worth contracts to make their endorsement with the Portland’s company even stronger. A partnership that deserves to be noticed is the one sealed with Jason Day, N.1 golfer in the PGA rank, that tells how Nike intends to keep up with its golf business even if they have disinvested in the equipment industry, like adidas did too.
Paul Pogba and James Harden are the athletes at the core of adidas recent strategy: phenomenal players on the court, trend-setters off the field, they are a perfect fit to reach a younger audience especially on digital platforms, where you can engage with them thanks to captivating contents. Especially basketball saw a radical shift, wih a surge of investiments on stars-to-be like Porzingis and talented players like Ingram, Murray and even the Italian women sensation, Cecilia Zandalasini.
For Under Armour, 2016 was a huge year thanks to Olympic champions like Michael Phelps, Andy Murray and Simone Biles, who got strong reactions from the media with their achievements in Rio. Phelps was the one who cam eout on top, taking part in very successful campaigns like the one produced before the Games that won the “Best Ad of 2016” by the prestigious AdWeek. Julio Jones and Cam Newton used their talent and personality to help UA in the football industry, while Golden State loss to Cleveland and the failing of Memphis Depay have slowed the brand’s growth in both basketball and football.
Athletes endorsements are a pretty complicated business, because personal relationships matter a lot as much as the kind of people that gravitate around these bright stars. Think about Ben Simmon, NBA’s next big thing, that turned down an offer from adidas tosign with Nike also because of the powerful agent Rich Paul, who is advocating LeBron James.
Sonny Vaccaro is one of the sports marketing’s pioneers. In the 70s, he understood that college sports was a hige asset for brands, and he persuaded Nike into signing deals with coaches around the nation, paying them with sneakers supply for all the team (commercial deals between univertisities and brands were not allowed at the time). This strategy earned him a lot of credit within the basketball business and of course with Phil Knight. When in 1984, Nike approached the 1-billion revenues mark, its Founder called Vaccaro to ask for consultancy: better to invest $ 50.000 on 10 players or $ 500.000 only on one champion? It was the time when Michael Jordan, that preferred adidas according to many sources, came out of North Carolina to enter the NBA. Sonny told Knight to make the Big Bet on MJ, being sure that he would blossom into the basketball legend we all know today.
For a man that flew to Japan, only twenty years after Hiroshima and Nagasaki, to import sneakers into the US market, betting on Jordan was easy. That choice changed the destiny of Knight and his company forever, and had incredible ramifications on the competitors’ strategies that desperately look for ahtletes who can inspire people on and off the court.
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