Adidas’ Hainer: Olympics help close gap on Nike, boost growth in China

Adidas CEO Herbert Hainer
Adidas’ sponsorship of the London Games has helped the company close the gap with the United Kingdom’s market leader, Nike, narrowing a 3 percent advantage to 1 percent, Adidas CEO Herbert Hainer said.

“We have clearly closed the gap,” Hainer said, adding that the goal is to supplant Nike as market leader in the U.K. by 2015. “I am sure the Olympics has helped already but will help us also over the next 17 days to bring the elements to the consumer that shows them that we are the Olympic brand for all the different sports and not just football.”

Adidas this year is projecting a 12 to 17 percent increase in its earnings per share, boosting total earnings to more than $925 million. Sales are expected to increase modestly from $16.4 billion in 2011. In addition to the Olympics, it sponsored UEFA’s European Championships earlier this summer.

The global apparel company signed a reported $100 million sponsorship deal with London organizers in 2007. The company has undertaken a massive advertising campaign in London, and its three-stripe logo is visible throughout the city.

Adidas spent more than $3 million to put a wrap featuring its British athletes around the Metro newspaper, which is free every morning and read by millions of people taking the Underground. And along with outfitting some 5,000 athletes and coaches, it is outfitting 85,000 volunteers working the London Games in jackets, shirts, pants and shoes, and it has extensive out-of-home advertisements highlighting its sponsorship of the British national team.

“I am pleased with the exposure we have been getting the last few weeks, and what I see in the city,” Hainer said the day before the opening ceremony. “When the Games start, you will see Adidas athletes everywhere.”

Hainer, with soccer icon David Beckham, credits the company's World Cup sponsorship with boosting its soccer division's sales by $2 billion.
This is the second consecutive Summer Games sponsored by Adidas, following its sponsorship of the Beijing Games in 2008. The company also sponsors FIFA’s World Cup, which Hainer credited with boosting the company’s soccer division’s sales by as much as $2 billion.

Hainer said the Olympics don’t provide as much of a direct benefit to the company’s bottom line as the World Cup because the soccer tournament results in the sale of countless national team jerseys and balls. The Olympics, he said, are less about sales and more about exposure.

“There are clear commercial targets [with soccer],” Hainer said. “This is not the case with the Olympics. If you are great with the 100 meter [dash], no one goes off to a store and buys a sprint shirt [jersey]. But what it does is, for 17 days in a row, exposes your brand to I don’t know how many billion cumulative people who go watch the Olympics. This hopefully will lead to the fact that next time they go to the store to buy running shoes, track shorts or a pair of trainers, they will say, ‘Adidas, I see them all the time in the Olympics. This is the brand athletes rely on.’”

Hainer said he had not seen the new Nike campaign “Find Your Greatness,” which includes an ad that features the word “London” extensively, though not anything from the actual host of the Games.

Adidas’ Beijing Games sponsorship helped it build its business in China, Hainer said, expanding to 5,000-plus stores across the country. He said he was “extremely pleased” with the results there and credited it with helping the company increase sales there to more than $1 billion.

“I don’t know how many percentage I can give back to the Olympics, but overall, within our marketing mix, this was money well spent,” Hainer said.

Despite the benefits the Olympics offered Adidas in China and London, it opted not to pursue a sponsorship of the 2016 Olympics in Rio. Nike reportedly has signed a deal to sponsor the 2016 Games.

Hainer said Adidas felt sponsoring the 2014 World Cup in Brazil and 2016 Olympics would be redundant, so the company decided to concentrate on the World Cup because soccer is the most popular sport in Brazil, as well as worldwide.

The company will begin its marketing push for the World Cup in Brazil around next year’s Confederation Cup.

Hainer ran the Olympic torch down Queen Victoria through central London on Thursday. It was the second time he’d carried an Olympic torch, and he said this time was “amazing” because millions of people were lining the streets to see the torch.

“I have never seen anything like that,” he said. “There were 10 people behind each other, standing on buildings, everywhere. The excitement of the people was much greater … and the crowd came closer and closer so that at the end of the line the police had to create a small space so that we could go. They were all making photos and clapping and uploading. It was really cool.”

He said he is most looking forward to seeing the 100-meter final, in which Adidas sponsors two of defending gold-medalist Usain Bolt’s competitors, Jamaican Yohan Blake and American Tyson Gay.

“The race is open,” Hainer said. “It will be spectacular."

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