Marketing Campaign Case Studies

Monday, January 28, 2008

RUNNERS. YEAH, WE’RE DIFFERENT - CAMPAIGN

OVERVIEW
German sporting-goods company adidas-Salomon AG returned from near death in the mid-1990s with a new focus and global strategy. No longer content to allow competitors, especially the seemingly invincible Nike, to dominate the sporting-goods category, adidas launched a full-scale offensive designed to increase awareness of the brand, enhance its image, and elevate sales. The company moved production facilities to Asia to cut manufacturing costs, formed high-visibility alliances with sports organizations and athletes (including a sponsorship of the New York Yankees baseball team beginning in 1997), purchased the French company Salomon SA (a manufacturer of golf, ski, and bike equipment) in 1997, and pumped additional funds into its modest marketing budget. Hoping to increase the sales of its running accessories in the United States, adidas America, Inc., the U.S. headquarters for adidas, released a provocative campaign titled ‘‘Runners. Yeah, We’re Different.’’ The San Francisco office of advertising agency Leagas Delaney released the branding campaign with an estimated $1 million. To prove that the company understood the sport of running, the ‘‘Runners. Yeah, We’re Different’’ campaign, which began in 1998, targeted the serious runner, a relatively small and anonymous audience. With full-page and two-page ads in specialty magazines such as Runner’s World and Running Times and with some executions in the general-interest Sports Illustrated, the series of print ads celebrated the rather unusual but relatively common habits of dedicated runners, such as smearing Vaseline on the inner thighs and under the arms to prevent chafing. Sean Ehringer, Leagas Delaney’s creative director, explained, ‘‘[adidas] wanted to do a brand focus campaign that gave them some running credentials, and the way we decided to do that was to let runners know that we understand them . . . Runners have their own kind of weird way of doing things, so there’s a lot of things to talk about there.’’ The campaign ended in 2000.
According to the ad-industry publication Campaign, ‘‘Runners. Yeah, We’re Different’’ was the third most awarded series of print ads in the world for 2000. It helped adidas’s brand awareness in the United States reach record highs and was eventually expanded globally.

HISTORICAL CONTEXT
Adolf Dassler, known as Adi, began making athletic shoes in 1920 in Germany. His shoes made their first appearance in the Olympics in 1928, and in 1936 Jesse Owens won four Olympic gold medals running in Dassler’s track shoes. It was not until 1948 that Dassler founded the adidas company. The company was immensely successful, flourishing through the 1960s and 1970s. At the 1972 Olympic Games, noted Advertising Age, more than 80 percent of the gold-medal winners sported adidas shoes, and all of the Olympic officials were outfitted in uniforms designed by adidas. During that decade adidas gear could be found on most professional soccer players and on about 75 percent of professional basketball players. By 1978, the year of Dassler’s death, the adidas brand enjoyed a global recognition rate of about 95 percent.
Although it took years for adidas to build a reputation, the company’s commanding grip of the athleticgoods market deteriorated quickly. Not only did adidas miss some important athletic trends, such as the jogging craze of the late 1970s, but it also suffered from management problems. Dassler’s son Horst took control of the company in 1985, but he died just two years later, and adidas was sold in 1989 to French businessman Bernard Tapie, who soon declared bankruptcy during the course of a political scandal. By the time creditors approached French businessman Robert Louis-Dreyfus to take over the failing company in 1992, adidas’s share of the U.S. running-shoe market had fallen from a leading 70 percent share in the early 1970s to a dismal 1.9 percent, and the company was losing more than $100 million annually. Louis-Dreyfus knew nothing about the athletic-shoe business, but he had succeeded in turning around other failing companies, notably the London advertising agency Saatchi & Saatchi. After taking the helm at adidas in 1993, Louis-Dreyfus downsized the staff, moved production to Asia, and nearly doubled the marketing budget, from 6 percent of sales to 11 percent, to acknowledge the importance of advertising and image. Not only did adidas manage to elude death, but it also quickly and steadily began to increase sales and boost its reputation. Between 1992 and 1996 the company’s share of the $8 billion U.S. market increased from 2 percent to a small but more respectable 5 percent, and its revenues grew from $1.7 billion to $2.8 billion. In 1994 U.S. sales grew 62 percent, and a year later the company went public, the same year the rather unfit Louis-Dreyfus symbolically demonstrated his commitment to adidas by running in and completing the Boston Marathon. By the late 1990s the company’s U.S. sales were growing at an annual rate of nearly 50 percent, and adidas had no intention of slowing its pace. Steve Wynne, president of adidas America, told Fortune in 1997, ‘‘We have huge market share to gain in the United States . . . We’re very focused on what we need to do right now. In 1998, you’re going to see some very big improvements in our sales.’’

TARGET MARKET
Because adidas was a multisport company, it traditionally geared its goods and its advertising toward athletes. The company developed equipment for numerous sports, including wrestling, weight lifting, basketball, tennis, running, and soccer. Adidas’s target audience suddenly expanded in the 1990s, however, as renewed interest in the adidas brand, particularly in apparel, grew. Adidas was no longer associated solely with sports enthusiasts but with fashion-conscious youth, and the company embraced the market composed of 20- to 25-year-olds.
Despite its popularity with the youth market, adidas continued its marketing efforts in niche segments, directing advertising toward markets with specific athletic needs. For the ‘‘Runners. Yeah, We’re Different’’ campaign, adidas narrowed its audience to pinpoint the serious runner, a group frequently overlooked by the sports media despite the popularity of running. The lack of hype surrounding running could perhaps be attributed to the individuality and solitude of the sport. As Leagas Delaney’s Ehringer remarked, ‘‘Most people who run run silently on their own for their own reasons, and nobody even knows they exist.’’ Ehringer also emphasized the importance of running and said, ‘‘It is very much a unique and individual sport, but it’s a part of almost every athlete’s life at some point.’’ To lure runners, an extremely dedicated lot, adidas adopted an honest and direct approach. Ryan Erickson, a marketing executive at adidas’s rival Reebok International Ltd., explained the importance of credibility when advertising to runners. Erickson said in Footwear News, ‘‘Runners sniff out fake stuff in a heartbeat.’’

STARS AND STRIPES
Adidas’s comeback was boosted by the resurgent popularity in the early 1990s of adidas gear, adorned with the trademark three-stripes design and once again considered stylish after decades of being passe´. Celebrities such as Madonna, Cindy Crawford, and the band Luscious Jackson all appeared sporting adidas apparel.

COMPETITION
In the highly competitive U.S. athletic-footwear category, adidas America faced considerable competition from Nike and Reebok, the top two athletic-shoe manufacturers in the nation. Nike, which had dominated the field since the 1980s, when it wrested market share away from adidas during the running craze, boasted a 47 percent share of the U.S. athletic-footwear market in 1997, up from 45.2 percent in 1996, according to the industry newsletter Sporting Goods Intelligence. Reebok held a market share of 15.2 percent in 1997 and 16.5 percent in 1996. Although it was trailing Nike and Reebok considerably, adidas was becoming increasingly successful and profitable. Adidas’s share of the athletic-footwear market had grown from 5.4 percent in 1996 to 6.1 percent a year later, and in 1997 adidas snagged the number three position away from Fila Sport SpA, the U.S. arm of Fila Holding SpA. Also that year, adidas’s U.S. sales enjoyed a 66 percent increase over 1996. Helping adidas was the rejuvenation of the runningshoe category in the late 1990s. Running-shoe sales in the United States increased by 11 percent in 1997, and even smaller niche players, such as New Balance Athletic Shoe, Inc., and Saucony, Inc., were doing well. By 1996 adidas had managed to move up to the number two spot in the running category, and that year its running business increased an impressive 74 percent in the United States. Although adidas had a long way to go before it could hope to come within hitting range of Nike, the company still set its sights on taking market share away from Nike and Reebok. Adidas did not have the aggressive marketing budget of its chief rivals—adidas estimated that Nike’s media budget was 10 times greater than its own—but adidas believed that its quality products and careful marketing could generate enthusiasm among consumers. Fortunately for adidas, Nike hit a rough patch in the late 1990s that helped pave the way for adidas’s success. Although Nike still dominated the athletic-footwear category, its hold grew weaker. Its U.S. athleticfootwear sales dropped 18 percent in the third quarter that ended February 28, 1998. David Aaker, a professor at the University of California at Berkeley, explained in Adweek, ‘‘The Nike brand has grown universal and ubiquitous to the point where it is losing its core appeal as a maverick.’’ In reaction, Nike expanded its famous ‘‘Just Do It’’ tagline and added the gentler ‘‘I Can’’ slogan in 1998, and its swoosh logo was toned down, no longer boldly emblazoned on every Nike product. Adidas, meanwhile, planned to take advantage of Nike’s slump to build its brand image. Ehringer noted, ‘‘Our job here in the U.S. specifically has been to replace the notion, ‘I’m buying this for what it isn’t’ to ‘I’m buying this for what it is.’ We’ve been trying to rebuild the brand in a sense and put its credentials out there and make sure people understand that it’s a multisport brand . . . so when fashions come and go, in the end, [adidas is] still a legitimate sports brand for sports.’’

MARKETING STRATEGY
In planning the ‘‘Runners. Yeah, We’re Different’’ branding campaign, adidas and Leagas Delaney felt that it was important to speak directly to the runner. Ehringer told Joan Voight of Adweek, ‘‘I am so tired of this huge trend where ads keep telling you that you are not adequate in some way. ‘Be that’ or ‘Do this.’ . . . What is wrong with celebrating the fun-ness of the brand? . . . Better to have a conversation with people, not a conversation at people.’’ In keeping with this belief, and to make the most of adidas’s marketing dollars, Leagas Delaney created a series of colorful print ads that celebrated running with a direct and unique approach only runners would likely appreciate and understand. Ehringer explained, ‘‘The unusual thing about [the campaign] was we were really very literal about it. I think it was pretty courageous to do ads that were so honest about really talking to runners that a lot of people wouldn’t even know what you were talking about.’’ To add an extra element of interest and to further suggest adidas’s bond with runners, many of the ads starred adidas-sponsored runners, talented athletes with little face-recognition value.
One of the early ads was a two-page color spread featuring a male runner—an adidas-sponsored marathon runner—applying bandages to his nipples at a road race. His shirt, with pinned-on race number, was casually tucked into the waistband of his shorts as he completed the bandaging task. Skyscrapers and other runners appeared in the background. A heavyset woman in nonrunning attire, perhaps a spectator, observed the runner’s ritual with a slightly bewildered look, emphasizing how odd the act must appear to nonrunners. The only text in the ad was the adidas logo in one corner and the tagline in another. A second ad showed a walking and running path in a city. A male runner blew his nose in typical runner fashion—with a finger pressed against one nostril to allow the forceful emanation of mucus from the other—as a disgusted nonrunning female looked on. The ‘‘Runners. Yeah, We’re Different’’ slogan appeared in the middle of the ad, and the text at the bottom read, ‘‘You’ve never experienced a support shoe like this. The incredibly smooth ride of the Equipment Tyranny is something different too.’’ The $1 million campaign appeared in running-specific publications such as Runner’s World and Running Times and in the popular magazine Sports Illustrated. Another ad showed two male runners racing a cable car up a steep San Francisco hill as cable car riders looked on. The Vaseline ad featured a male and a female runner getting ready for a race by applying Vaseline to various body parts that might otherwise get rubbed raw while running. The male runner was Peter Julian, who was a four-time all-American while at the University of Portland. Similar ads continued until the campaign ended in 2000.

OUTCOME
The ‘‘Runners. Yeah, We’re Different’’ campaign generated much interest and discussion among runners. The campaign ended in 2000, and some of the final ads were bolder than those from 1998. One 1999 ad, for example, featured a full view of the backside of a naked male runner (two-time 10,000-meter Olympian and four-time 10,000-meter U.S. champion Todd Williams) who stood by the open trunk of his car to change out of his muddy running clothes. Another ad showed a female runner squatting by a tree next to a trail, her shorts pulled down. Although these ads were quite daring, the acts featured were not out of the ordinary for runners. Adidas’s director of marketing communications, Karyn Thale, told Adweek that the company was pleased with the advertising efforts and said, ‘‘It is time to tell our story in the U.S., and the Leagas ads are doing a great job of [expressing] our brand’s young, fresh and hardworking image here.’’ Adidas continued to thrive and in 1998 held onto its number three ranking in the athletic-footwear industry with a 6 percent share, according to market research firm NPD Group, Inc. In comparison, Nike’s retail dollar share was 34 percent and Reebok’s 13 percent. Although overall spending on athletic shoes dropped 6 percent from the previous year, running shoes continued to lead the athletic-footwear category, acquiring 17.1 percent of retail sales. Adidas’s U.S. net sales jumped 68 percent to $1.59 billion, and the running category grew more than 50 percent from 1997. Adidas spokesperson John Fread told the Business Journal of Portland, ‘‘For us, [1998] was an outstanding year, another record.’’ Adidas was definitely back in the game, and it planned to stay there, pursuing its commitment to sports and athletes around the globe.
In the campaign’s final year adidas reached its highest brand awareness in company history. The adidas sales increase during the campaign shocked sporting-goods analysts because running shoes were previously considered a slow-growth category. The print ads collected more awards than print ads released by any other competitor in 2000, and adidas eventually expanded the campaign internationally.