Adidas re-focus on marketing EFFECTIVENESS, not efficiency
The global media director of Adidas, Simon Peel, shared some important insights on how the global sports brand is shifting its focus from marketing efficiency to marketing effectiveness in a recent Marketing Week interview (1). Simon revealed how focusing too much on short term ROI led Adidas to over-invest in digitally-led ‘performance marketing’ at the expense of brand building.
Below I share some key talk-aways from his story.
1.What gets measured, gets done
Simon’s story illustrates the importance of measurement: teams adjust their day-to-day marketing based on what they are being measured and rewarded on. Going back to 2015, Adidas used ‘attribution modelling’ base on ‘last-click’: this involves attributing a sale to the last thing a shopper clicked on. For example, if I click on a banner ad that leads me to buy some shoes, the model gives all the credit to the banner ad. However, in reality the picture is more messy and hard to measure, as many things may have led me to finally click on the banner.
In addition, though hard to believe, Adidas didn’t do any brand tracking and so wasn’t evaluating the longer term impact of its marketing on brand equity measures such as awareness, penetration and brand imagery.
The combination of lots of data on short term effects, and lack of data on long term brand equity, led to a focus on cost reduction. “All the basics that exist to tell you how much you should invest in marketing didn’t exist,” Peel told the recent EffWeek conference.
2.Focus on penetration
Adidas had been using heavy investment in CRM (customer relationship management) to market to loyal customers. However, when it introduced of an econometric model it discovered a key point we’ve been regularly posting on: penetration is the key to brand growth. Simon and the team found that 60% of Adidas revenue came from first-time buyers.
3. Balance short-term sales and longer term brand building
Adidas focused 77% of its budget on short-term, ‘performance’ marketing objective, to drive consumer to ecommerce, the most profitable part of its business. Only 23% of the budget went on marketing focused on brand building.
However, econometric modelling showed that brand-focused activity drove 65% of sales across wholesale, retail and ecommerce. Adidas has adjusted its spend to get closer to the 60/40 split of brand vs. activation recommended by Les Binet and Peter Field, based on years of analysis for the IPA – see post here. With the brand idea of ‘Creating the New’, the focus is now on generating ‘brand desire’, with brand-driving activity at the heart.
4.Avoid a digital dead-end
Adidas has been heavily focusing its spend on digital advertising, but the new data showed that this approach was flawed. “We had an understanding that it was digital advertising – desktop and mobile – that was driving those sales and as a consequence we were over-investing in that area,” said Peel. For example, the Marketing Week article explains how Adidas learnt paid search wasn’t that effective: a breakdown at Google AdWords stopped its paid search marketing, but the brand saw no no drop in website traffic or revenue!
The company is now using in a more multi-channel media strategy including TV, outdoor and cinema.
5.Create a ‘chapter-based’ marketing plan
In the past, the main Adidas divisions and their multiple agencies were competing against each other, based on the belief that only the marketing of their own business built their business (e.g. only football advertising drove football sales). However, Adidas discovered that in reality that all advertising drove general Adidas sales.
Adidas is now trying to connect with consumers around ‘major campaigns three or four times a year’, an approach we call ‘chapter-based’ marketing plans, designed to create the fresh consistency that builds memory structure:
- Consistency: from a unifying brand idea, Creating the New, and other distinctive properties such as music, colours, graphic devices
- Freshness: campaigns promoting a specific event (e.g. World Cup) or specific product/service
In conclusion, the work of Simon and the Adidas team shows the importance of focusing on penetration to grow your brand, with a balance of longer term brand building and shorter terms sales activation, delivered with a media strategy that smartly combines digital with other channels such as TV, outdoor and cinema.