Under Armor in Super Bowl
When Pittsburgh and Arizona square off Sunday in Super Bowl XLIII, it will be the finale to weeks of anticipation and media coverage, and one Baltimore company is looking to again cash in on the buzz.
After paying big bucks for a Super Bowl television ad last year to announce its cross-trainer shoe — then seeing its share price fall partly in response — Under Armour is taking a grassroots approach this year in Tampa to marketing its new running shoe on the sporting world’s biggest stage.
The athletic apparel company’s senior vice president for brand, Steve Battista, said a television ad this year just didn’t fit into the strategy for the shoe’s launch Saturday.
“Remember last year, no one had ever even seen what Under Armour [non-cleated] footwear looked like,” he wrote in an e-mail. “The Super Bowl is great for that.”
Instead, Under Armour sent a team of salespeople and athletes to market the new product at the NFL Experience — the Super Bowl’s fanfest at Raymond James Stadium — through activities and athlete demonstrations. Visitors can test out the new shoe in a 40-yard dash and in training sessions, or browse Under Armour’s retail section which will include the new shoes on Saturday.
The Ravens’ Troy Smith, the Redskins’ Santana Moss and the 49ers’ Vernon Davis (a University of Maryland alum) will be among the handful of athletes at in-store promotions and autograph signings on launch day in Tampa. Moss, along with the Bears’ Devin Hester and the Giants’ Brandon Jacobs, will promote the product on local and national media outlets, and Under Armour will give away 10 Super Bowl tickets at Tampa-area stores.
Elsewhere, specialty partner Fleet Feet will host an event in Chicago beginning at 11 p.m. Friday — one hour before the launch day — where customers can test shoes on a late-night run and opt to buy the shoes after midnight. Under Armour is also running an event at Hibbett Sporting Goods in Atlanta with Braves outfielder Jeff Francoeur, whom the company sponsors, as a continuation of a promotion there during the football season.
No launch events were planned for the Baltimore area because local marketing staff and athletes will be in Tampa to focus on the Super Bowl this weekend, according to Under Armour’s communications staff. Future events at the specialty stores in Bethesda and Annapolis are possible.
The guerilla approach is a stark contrast to the dramatic, 60-second spot the company bought for last year’s Super Bowl, but far less controversial. Although last year’s game, in which the New York Giants upset the New England Patriots, did end up being the most-watched NFL championship in history, the Fox Network’s base rates were a then-record $2.7 million for a 30-second ad. When Under Armour announced it was springing for a spot worth $5.4 million — its first Super Bowl ad purchase — analysts questioned the decision, prompting a 33 percent dip in the company’s stock last January.
Robert J. Thompson, director of the Bleier Center for Television and Popular Culture at Syracuse University, said Under Armour’s timing seems off. Running a high-profile ad during last year’s game, three months before the launch of the cross trainers, was a curious decision, he said. And an ad this year might have made more sense.
“In some ways, on the surface I don’t quite get it,” Thompson said. “Last year, they have a February ad even though it’s not launched until May; this year they don’t have an ad but the launch is the day before the Super Bowl. It seems like an ad would have been better this year in terms of a timing standpoint.”
Thompson noted that Super Bowl ads tend to get buyers more bang for their buck because of the attention they draw from media and replays of the spots on other television networks and the Internet. The ads have historically been a tactic for announcing a new product.
“There’s no place at any other time on the calendar where you can get so many people talking about your ad and product,” he said. “Under Armour is an interesting case because you have athletic shoe companies like Nike that everybody knows, and Under Armour’s ad last year made some degree of sense — their move to the Super Bowl was like saying they wanted to become the Pepsi to Nike’s Coke.”
But Battista said that, unlike the cross trainers last year, the new running shoe has already been featured in national publications and benefited from word-of-mouth advertising.
“All of our retailers have shoes in store, plus, we’ve been seeding it to members of UA RUN club and our pro athletes for several months,” he said. “These individuals are the influencers … the product has been strategically placed in the marketplace, whereas with trainers it was all about the unveiling [at the Super Bowl].”
In addition, advertising is more expensive this year — NBC’s base rate is $3 million — and in a sinking economy with historic lows for consumer demand, retailers nationwide are scrutinizing their expenses more critically.
So Under Armour’s choice to take a grassroots tactic with the marketing opportunities the Super Bowl presents is likely motivated by finances and the response to last year’s method, those in the industry say. In its annual report released Thursday, the company said it would maintain a strong balance sheet this year by lowering capital expenditures while anticipating revenue growth, mostly due to its new product. Watching costs also means Under Armour will not open any new full-priced, specialty retail outlets this year.
Finding a less expensive way to still make a splash during the media event of the year — given the unstable economy — is a wise move, marketers say.
“The money they would have spent on a Super Bowl ad, they’re going to spend far less with this grassroots marketing approach and I think that’s a much more effective way to do things,” said John Maroon, president of Marriottsville-based Maroon PR. “A 30-second ad can be effective, but to be on the ground at the Super Bowl utilizing media, utilizing public relations, seems to be a better use of time.”
The grassroots approach — Under Armour’s bread and butter in its early days — does have its disadvantages, however. The effects of it are subtle and harder to track than conventional media advertising. But, said Maroon, the results are what matter.
“If somebody hears an Under Armour spokesman on a radio show and it hits a nerve, or somebody bumps into a [marketing] team out on the streets — that’s not stuff you can necessarily trace,” he said. “So it is more challenging, but who cares? At the end of the day, you look up and say we’re selling more shoes — and if you’re selling more shoes, you’re doing something right.”
According to its year-end report, Under Armour expects nearly all of its growth to come from its running shoe category, and analysts anticipate 1.5 million to 2 million pairs priced between $85 and $120 will be sold this year. But unlike its venture into the cross-trainer market, one dominated by Nike, Under Armour’s running shoe will face off against other stiff competitors like adidas, Reebok and New Balance.
In addition, analyst Jeffrey P. Klinefelter of Piper Jaffray points out in his note this week, the company is also up against “intense competition and strong brand loyalty” from specialty competitors like Brooks, Asics and Mizuno in the estimated $3.2 billion running-shoe market.
But while runners tend to be loyal to their shoe brand and defections to the new brand may be harder to achieve, it’s not impossible, said University of Maryland marketing professor Roland T. Rust, an avid runner.
“I’ll go out and buy 15 pairs of Brooks [shoes] at a time, so that makes it tougher for someone breaking into the market,” he said. “But on the other hand, you might get a runner right before one of those binges … if you can get people to start on your shoe once, then you may be able to turn them.”
On the plus side, Under Armour’s brand awareness, which is also strengthened by being face-to-face with some of the sports world’s most influential people in Tampa this week, is strong and its loyal following will give the new running shoe an automatic base of customers.
According to a recent survey by analysts at Stifel Nicolaus, 25 percent of the 300 respondents expressed interest in buying Under Armour products (up 4 percentage points from a year earlier) and 9 percent responded they planned to buy the new running shoe. While just over half of the respondents also expressed interest in buying a Nike product during the next three months, Under Armour’s slice of the market pie is encouraging.
“I think in a lot of cases the brand will sell itself,” said Thomas D. Shaw, who headed up the survey. “Lots of teens buy the product because it’s Under Armour; they already have the shirts, hats, the pants, and this completes the look. The question is can it sell itself to people who are [loyal to other brands].”
Battista said the fact that the running-shoe category is bigger and in far better shape than the cross-training category is an advantage to Under Armour.
“Unlike football, baseball and lacrosse cleats, this category is very important to the female consumer,” he said. “I really like our chances.”
Kevin Roche, a principal at the Seattle-based retail design firm Callison, said to be a player in the running-shoe market, Under Armour essentially needs to protect its house.
“People don’t buy brands, they join them,” Roche said. “In this economy, design concepts like creative excellence and commitment to differentiation appeal to the consumer on an emotional level and I think you can begin to protect your position [with that]. Clearly there will be less volume moving, but you can protect your margin to some degree.”
In the meantime, this weekend’s launch and the activities in Tampa will be about making waves where it counts.
“If you’re a big name in the sports industry and the sports world and have something to say, you’re down there this weekend,” said Maroon. “Although it’s tough because everyone else has also determined the Super Bowl is the place to be or to launch their product so you have to do something to stand out from the fray. But if you do that you’re golden.”
Labels: Under Armor