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Volume 10 No. 22

Marketing and Sponsorship

Adidas, the world's No. 1 football brand and official partner of the 2014 FIFA World Cup, wants to break $2.6B in football sales in '14, up from more than $2.2B in '12. Adidas Senior VP of Global Football MARKUS BAUMANN talked to SBD Global about how the company wants to achieve those numbers, new product innovations, growth potential and the impact of partnerships.

At a press conference in June, adidas CEO Herbert Hainer set the goal of breaking €2B ($2.6B) in football sales in ’14. How do you want to achieve this goal?
Markus Baumann: We are very confident that we will break €2 billion in 2014 for the first time with sports performance football products. We will launch a firework of innovations in the next couple of months, starting from the end of 2013 onwards and then throughout the whole year of 2014. Innovations are key for us. They drive the industry; they drive the consumer. This is something where we clearly see ourselves as the No. 1 football brand, and we are very strong, and were very strong in the past, to always deliver innovations and bring innovations and newness to the game. In addition, we will also launch the biggest brand campaign in 2014. The World Cup and our strong federation and player portfolio will of course also help us to achieve maximum sales in 2014.

Q: You just mentioned innovations. Could give some examples?
Baumann: Unfortunately, I can’t give you too many details because we want to keep them secret until we are launching the innovation. Let me give one example on the match ball. We did something completely new, we already released the name. We worked all year on a complete new concept, we included the Brazilian population to vote for the name, so Brazuca is well-known, but so far nobody has seen how Brazuca is going to look. This is something where we will definitely generate a huge impact from a technical point of view, but also from a design point of view. All other innovations that we are rolling out will start in November with the federation jerseys. All those kinds of new products and innovations, technical stories, design stories, will create a lot of consumer excitement and, therefore, demand.

Q: What markets do you think have the biggest growth potential for adidas football?
I believe that especially in Latin America we have huge growth potential. Over the last couple of years, we have always doubled our growth in Latin America as well as in Brazil. But we also look into markets in Asia, where we see huge growth potential. And also partly in markets in Europe, but that depends a little bit on the category because we see a lot of potential, for example, in team wear as not every market is as strong or as established as the central European markets like Germany and France. So there is also a lot of growth potential in European markets, but the biggest ones are definitely Latin America and Asia.

Q: Brazil recently hosted the Confederations Cup, and the event was surrounded by a number of protests. Do you think such protests would impact your business if they would happen during next year’s World Cup?
Baumann: I think it is a normal procedure that the people in Brazil used the platform of the World Cup to get awareness for their issues. I think this is normal in a democratic country and as long as those protests are peaceful it is absolutely OK. We don’t expect that this is somehow affecting our World Cup business because, as I said before, Brazil is an important market and we see the World Cup as a growth opportunity for us across the world, so in all other territories as well. Therefore, I don’t expect that this would have an impact on our business in Brazil or on our global business.

Q: Adidas is an official partner of FIFA and as such of the 2014 World Cup. How important is such a sponsorship deal in terms of sales, image and brand awareness?
Baumann: It is very important for brand awareness because we will have a massive presence throughout the World Cup with stadium boards, ball kids, volunteers in the stadium and referees. For brand awareness and brand visibility it’s a huge benefit for us. It also has a huge commercial impact for us through our licensing business with official lifestyle products such as bags, caps and shirts that we will launch in all markets. For brand awareness, image and also commercial impact, it is very important and very beneficial for us to be the partner of FIFA, UEFA or Champions League, which gives us unique commercial opportunities around the world.

Q: Adidas has an impressive portfolio of federations, clubs and players in its football family. How important are those deals and are you looking to add to it?
Baumann: As the No. 1 football brand, we are always looking at what kind of clubs, federations or players would be beneficial and would be a great addition to our portfolio. This is simply a normal process. The clubs and federations that we currently have in our portfolio are very important to us because they are not only representing the three stripes, but they are also important from a commercial point of view. For example, Bayern Munich’s on-field success by winning the historic treble this season clearly translates into sales numbers. In the whole year of 2013, we will sell more than 1 million Bayern Munich jerseys. Another example is Brazilian side Flamengo. The Rio de Janeiro-based club is the biggest club in Latin America with approximately 13 million supporters and the latest addition to our family. The deal with the club started in May and it shows that we also invest in markets where we see growth potential.

Q: Does it mean we can expect more deals to come in Latin America and Asia?
Baumann: If there’s a fit and the right symbol available, definitely, but I would not limit it only to Asia and Latin America because there are potentially also interesting opportunities in Europe. We are, of course, always looking to see what is possible here in the next couple of years.

Q: What about your competition such as Nike and Puma. How do you stay ahead of them?
Baumann: Most of the innovations in football came from adidas or were developed by adidas and this is somehow still the spirit that drives us. Our team is constantly looking and in close contact with players and coaches to see how the game is developing. I would say we are the brand that understands the game the best.

Q: What are the long-term goals of adidas football?
Baumann: I believe with new technology and new materials coming to the market in the next 10 years, there are still opportunities to further grow the business. We enjoyed double-digit growth in a lot of countries in Latin America, and we don’t see this coming to an end. The same is true for Asia. And there is growth potential in team wear, even in well-established markets in Europe. I believe football as a sport in the last couple of years got bigger and bigger and this gives me a lot of confidence that in the years after the 2014 World Cup we will be able to further grow the business and report new record sales.

Chinese Taipei tennis player Hsieh Su-wei is "mulling giving up her citizenship to represent China's mainland, where she could receive a much bigger sponsorship deal," according to the AFP. Hsieh's father made the announcement after her "historic win" in the Wimbledon women's doubles contest. The "hard-won triumph" made Hsieh the first Chinese Taipei tennis player ever to grab a Grand Slam title. However, Hsieh's father, Hsieh Tze-lung, "took the public by surprise when he said his daughter may give up her citizenship to represent China's mainland" in exchange for an annual 10M yuan ($1.6M) sponsorship deal "offered by a Chinese brewery." The deal "would dwarf the 27-year-old's current total annual sponsorship income" of just $50,000, a sum "paid by two local companies" (AFP, 7/9). In Hong Kong, Amy Li reported Peng Shuai and Hsieh "were finally forced to confront the elephant in the room" at a press conference after they beat Australian duo Ashleigh Barty and Casey Dellacqua at Wimbledon on Saturday. And when they did, "the divide was apparent." When a Japanese reporter asked Taiwan’s Hsieh what it means to win a grand slam for “her country” as a “Taiwanese” person, their conversation "was interrupted by Peng." Peng said, "I am sorry, but I am still sitting here, and I don’t accept the claim that Taiwan is a ‘country.’” Peng also said "she and Hsieh would not broach the topic in private." Peng's comment "was met with mixed reaction on China’s blogosphere." While some applauded her for being “patriotic,” others "criticised her for embarrassing her partner in front of a room of reporters" (SOUTH CHINA MORNING POST, 7/9).

Wimbledon sponsor Robinsons "has released a new version of a 2009 ad, edited to incorporate Andy Murray's historic victory" at Sunday's tennis final, according to Louise Ridley of CAMPAIGN LIVE. A Robinsons spokesperson said Bartle Bogle Hegarty was "finally able" to run the ad, which originally aired in '09. It features people celebrating a British champion and is accompanied by a voiceover that says, "it will happen again, and we'll be proud to be part of it." The ad has now been updated and ends with the line, "worth the wait wasn't it?" Meanwhile, Murray’s sponsor adidas tweeted a celebratory image of Murray from its @adidasUK Twitter account, overlaid with its logo and the word: "Wimbledone." The message, which was written in house, has had more than 3,000 retweets (CAMPAIGN LIVE, 7/8).

The Under Armour brand "has built awareness among athletes," and last year hit sales of $2B. Now, Under Armour "is on a vicious growth strategy to expand the business" outside the U.S. over the next three years and "double revenues" by '16. Under Armour Senior VP of Brand & Sports Marketing MATTHEW MIRCHIN talked to MARKETING MAGAZINE about "gaining traction" in the U.K. and its "vicious growth strategy."

Q: Under Armour is firmly rooted in American football in the U.S. -- how do you translate such an American brand into the U.K. and the rest of the world?
Matthew Mirchin: As a brand, we make sure we secure the right assets in different regions of the world to make sure we tell our performance story. In the U.S., we do it through American football, in the U.K. through Tottenham Hotspur. In Chile, we’ve just signed football side Colo Colo, and in Japan we’ve done it through basketball. We know the brand translates when we do it correctly: the storytelling is the same across the regions, we just have to make sure we have the right people telling it.

Q: How will you utilize your technical sponsorship of Tottenham Hotspur for your marketing work in the U.K.?
Mirchin: Tottenham Hotspur is an incredible asset for us. It's got a presence in the world of football and puts us firmly in the U.K. market. This is the second year of our sponsorship, so everything we have coming up around retail, point of sale, social and digital in the U.K. will revolve around Tottenham Hotspur.

Q: How do you feel about wearing women's lingerie?
Mirchin: I wear it all the time now, it's fantastic. But seriously, one of our number-one requested products by athletes is our underwear, our boxer shorts. It’s the most comfortable lingerie you’ll ever wear.

Q: Under Armour has previously benefited from athletes visibly wearing your clothing for its technical ability despite their sponsorship deals. Do you still see the brand’s logo popping up in unexpected places now that the business is accepted as a challenger brand?
Mirchin: Now that we’re bigger, it’s tougher to be guerrilla about our marketing and it is a little difficult to get our product onto players with big sponsorship deals. But when you see an athlete wearing Under Armour while they are paid by another sponsor, it is about as good an endorsement as you get. We love it (MARKETING MAGAZINE, 7/9).

Swiss Super League side FC Zürich "is still without a title sponsor with only a little more than a week until the start of the new season," according to the NEUE ZÜRCHER ZEITUNG. Club Technical Dir Marco Bernet said, "We currently don't have a title sponsor, but we are in negotiations." Bernet said that "there are several interested parties." He also added it is an "unpleasant" situation. Bernet said that "it is a difficult market situation and cited the financial problems of the Swiss F1 team, Sauber." The deal with former title sponsor telecom company TalkEasy expired at the begining of July as talks in the past several weeks "didn't lead to a result." TalkEasy paid around CHF800,000 last season to be on the jersey of the club (NZZ, 7/9).

Writing under the headline "Sports sponsorship has gone too far," the London GUARDIAN's Nick Evershed opined "I would hazard a guess that sponsorship and advertising around sports events is higher than its ever been." It is "worth big money." A report in June found sport sponsorship in Australia is worth around $735M per year. We are "bombarded with brands in areas that were previously virgin territory." Sports codes "have people whose sole job it is to sit around and think of things that aren’t sponsored, and for which they can sell sponsorship for." Perhaps "the urinals at the MCG could be brought to you after a quick message from our sponsor?" Does "all this sponsorship and advertising matter? I’d rather the NRL get money from sponsorships than pokies if I had a choice." And keeping the games on free-to-air TV "is a good thing for fans, and advertising and sponsorship are obviously needed to support this." However, "I do think there should be a line drawn somewhere" (GUARDIAN, 7/9).

Bundesliga club FC Schalke 04 has terminated its contract with ticket partner viagogo with immediate effect. The contract, which took effect on July 1, was terminated by Schalke, citing several contract violations by viagogo (FC Schalke 04). ... Second Bundesliga side Fortuna Dusseldorf has extended its partnership with kit supplier Puma for another four years (Fortuna Dusseldorf). ... Havas Sports & Entertainment and iSportconnect signed a global partnership that will see both parties work together to expand "iSportconnect Directors' Club" events to Paris, Munich, Moscow and N.Y., all before the end of '13, as well as other locations around the world starting in the first quarter of '14 (HS&E). ... Procter & Gamble has extended its partnership with the UAE National Olympic Committee for the second year in support of UAE school of Olympics program. The partnership, formed last year, "was promoted by P&G's 'Thank You Mom' campaign." The campaign "will increase the reach of sporting programmes in UAE schools and help discover future stars" (GULF TODAY, 7/9).