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Traffic Building Techniques for Sportswear and Equipment Brands Digital technologies for marketing Hyphen Communications 21017550, 21033749, 21033875, 20907228 23/3/2012


contents

Market and Brand Position

..................................... Pages 3-6

Ad strategy and Branding Strategy

... ................................. Page 7

Affiliate Marketing Pros and Cons

..................................... Page 10

Affiliate Marketing

.................................... Page 11

Nike Marketing/Advertising Strategy

.......................... ......... Page 12

Viral Marketing

................................... Pages 14-17

E-mail Marketing

................................... Page 19

Banner Ads

.................................... Pages 21-23

The Goals of Interactive Advertising

..................................... Page 26

How strong is Interactive Advertising?

..................................... Pages 27-28

Interaction

.................................... Page 29

Search Engine Optimisation

..................................... Pages 32-33

Social Media

..................................... Page 34

Recommendations

................................... Page 35-37


Market and brand position

To fully understand the three brands position in the market, one must identify current trends in the sports wear market as a whole. Consumer expenditure on selected leisure goods and activities has collectively risen in the last five years with cinema, music events and theatre going seeing the highest increase. Unfortunately, the purchasing of sports equipment has dropped by 6.7%. The bigger picture is that expenditure on sports equipment actually increased to over ÂŁ1.5b in 2008 but has seen a dramatic decrease to around ÂŁ1.3b. Interestingly though sports participation has actually increased by 20.9% in the last 5 years. This huge contrast between equipment and participation could be down to the increase in expensive sports like golf and a decrease in sports with

little equipment required like athletics and more specifically jogging. As the sports equipment market continues to decline, online and offline sports stores such as SportsDirect and JD Sports have seen a large increase in sales. This contrasting change can be down to the pricing of the products. For instance, Nike will sell a trainer at RRP on their site and SportsDirect will offer the same product at a discounted price. The convenience of having all of the sports brands under one roof or on one site is far more attractive to consumers as they are more inclined to get bargains online because they are less worried about being perceived as less affluent.


Nike Nike goes from strength to strength in the generation of capital and it would be foolish to predict a loss in sales for 2012. The question is however ‘where is the majority of the sales coming from?’ knowing that the sales of sports equipment has dipped.

This table indicates the sales performance for all of Nike’s operations. Although this is superb, one still has to question the fall in the sale of sports equipment as the Olympic Games approaches. Nike should prosper from the Olympics as they look to sponsor it and increase exposure of the already sterling brand. The idea is to sell more stock, like any company, but should Nike focus on generating traffic to their own site or rely on indirect purchases from sports retailers.


Adidas The most recent figures suggest Adidas are also excelling on the whole. As said before with the increase in participation in sport due to the Olympics and other sporting events there is no reason why brands like Adidas would fail to grow. Compared to Nike, Adidas are clearly trailing but the figures we are interested in are the sales generated with e-commerce. Do Adidas effectively market themselves online? Do they also suffer from the success of retailer’s discounted prices?

Below is the breakdown of net sales by segment. As you can see, a huge percentage of their income is generated by wholesale selling their products at a lower cost to retailers due to economies of scale. Importantly only 20% of revenue is generated by their own retail stores and online. Adidas can increase their net sales massively by increasing their own retail sales at RRP by only a few percent. This can be done by driving sales to their website through promotions and an increase in the quality of their website. The 12% sold to other businesses is not insignificant but other businesses would not shop online for large amounts of equipment or sportswear, there would be a direct meeting between Adidas and the business eliminating the use of a store.


Puma

2011 Full Year Highlights • PUMA delivers on its € 3 billion sales target for 2011 • Gross profit margin continues to be in the upper echelons of the industry at 49.6% • EBIT rose by 8.6% to € 333.2 million • Net earnings rose by nearly 14% to just over € 230 million • EPS increased from € 13.45 to € 15.36 As you can see Puma have exceeded expected sales of 2011. Although compared to Nike and Adidas the target is very small, £3 billion is not to be sniffed at. To gain market share in this highly competitive market bodes well for Puma who have not really positioned themselves as a fashion brand or a functionally astute one. Their online presence is weak as they do not appear on the first 10 pages of Google when searching for ‘Sportswear’. On sites such as sportsdirect.com competitors such as Nike have the largest exposure where as Puma products only appear when specifically asked for. If Puma are to rely on these retailing sites, there positioning and awareness must increase.


Ad Strategy Company Nike

Adidas, Reebok Puma

Other companies

Strategy     

Endorsing Athletes Sponsoring sporting events City based advertisements Banners & billboards Themes on bringing inspiration and innovation to every athlete in the world  Sponsoring sports events  Endorsing athletes  Themes on improving performance of every athlete  Mixing influence of sports, lifestyle & fashion  Puma concept retail stores  Puma fashion shows  New staff advertising campaigns  Building seasonal momentum during holiday seasons Minimal or less advertising based on stores

Branding Strategy Company Nike

Adidas, Reebok

Puma

Other companies

Branding message and strategy Athletic, influential, outgoing, aggressive, hi tech, futuristic, retro cool American way of living. Associated with athletes in the top rankings of their sport. To bring inspiration and innovation to every athlete in the world. Clear, orderly, hi tech, sophisticated, sincere. Conservative European style. Associated with elite soccer players/NB stars as well as Hip Hop artists. Elegant, colourful, fresh, spontaneous, individual, metropolitan international. Mixing influence of sports, lifestyle & fashion. Fashion brand, performance & casual footwear and fringing into extreme sports. Based on their product lines. Generally not a strong brand message.


Affiliate marketing pros and cons

Affiliate marketing could be said to be the ultimate form of marketing communications as it is in fact payper performance. A commission based arrangement where the merchant, in this case Nike, Adidas or puma will only pay when they make a direct sale or get a lead. This form of marketing however is not suitable for business products or lower priced consumer products since it wouldn’t be sufficiently profitable for the affiliates. (Chaffey & Smith, 2008). What are the pros and cons of affiliate marketing? One of the main benefits that ecommerce sites find in affiliate marketing is that of the potential to use it as a platform to reach different audiences that may not know about the product. Other smaller, less developed sites may use its affiliates as a stepping to a better search engine optimisation to

tend to to go go straight straight to to the the II tend online online store store because becauseII usually know usually what know I’mwhat looking I’m for and where lookingI can for and findwhere it. I can find it.

gain more customers however giant brand power houses such as Nike, Adidas and puma have little need for this. As well as benefits there are substantial flaws to using an affiliate marketing strategy. The simple fact that a company’s affiliates are mainly motivated by money and not on the site itself should cause some concern. With large brands such as those in question affiliate sites may exploit the brand name or damage a brands reputation which in the current competitive market sport brands just can’t afford. For these reasons the top sporting brands use very little affiliate marketing and when they do it’s with respectable sites which follows a similar brand ethos and morals, and are usually linked to the brand in other ways.

Surely brands like Nike and Adidas don’t need to use affiliate sites because everyone goes their first anyway


Affiliate Marketing

Nike Nike being such a powerhouse brand does not necessarily need to use other websites for affiliate marketing. Nike, the go to brand for almost any sporting purchase no longer have the burden of promoting brand and site awareness to gain market share. This being said however Nike does place logos that act as a direct link to their website on sports stores where they act as a third party

brand, sites that sell their merchandise include JD sports, Sports Direct and JJB. Nike’s affiliate brands include that of Converse, Cole and Haan, Umbro and Nike golf, all of which are owned by the Nike brand. These sites are based around the pay per click model when directing traffic to these sites, with the advertiser paying the publisher when the ad or logo in this case is clicked


Nike

Nike

Marketing

Advertising

Strategy

Strategy

A significant amount of sporting brands market share relies on footwear and clothing in order to strengthen brand image, develop product identity and promote customer loyalty. Competition between players is nonpriced but rather based on differentiation in brand image and product innovations. Therefore, substantial investments in marketing campaigns are needed. Nike invests annually between 11%-13% of revenue on marketing.

Nike’s strategy was to always create a dominant presence in the media. The real drivers in Nikes early Advertising campaigns were giant billboards that displayed images of not only the product but more importantly the athlete. Nike portrayed a sense of excellence. Nike also went on to sponsor sporting events such as the 2008 Beijing Olympics as well as using cleverly designed commercial ads and print media. Dawning into a new age Nike also specialises in viral ad campaigns to create awareness for its latest releases.


Viral marketing, it is all in the name ‘viral’. The whole concept of viral marketing is that it spreads like a virus. Just like a virus on a PC, viral messages are passed along, be it videos, posters, cartoons, news stories, you name it there would have been a viral message on those platforms. (PR Smith, 2005), describes viral marketing as a clever, shocking idea which makes for compulsive viewing. Viral marketing makes use of the huge network set forward by the internet, by making use of all these channels the message can be spread

along by either word-of-mouth or word-of-mouse. What makes a viral campaign so successful? It is the whole buzz created by the advert that surrounds the media and all those that follow it. Many people will find the campaign exciting even if they don’t have any particular interest in the message that is being passed along. Viral marketing should fill people’s minds with a sense of awe, be it the hilarity of a ‘Charlie bit me’ that was uploaded onto YouTube or men running on water to promote the water resistance of new HITECH hiking shoes.

When considering sports brands, an avenue they not always but frequently venture into is the use of viral marketing. It seems to be an effective strategy because those people who are into sports, one could argue are into the ‘virality’ of the internet.


Let us consider Nike for instance, it is arguably the largest sports brand known to man. They need to be able to connect with all of their audiences. Using viral marketing they can cover a ‘niche’ market, by intriguing audiences with a ‘wow’ campaign.

By analysing this viral ad campaign done by Nike and Kobe Bryant, there was a lot of not-sosubliminal messaging done by Nike to promote their new basketball shoe ‘hyperdunks’. Kobe is also clad from head to toe in Nike clothing, the Nike emblem is almost burnt into the mind of the viewer . On first glance the video looks like the real deal, with the handy cam effect, one would expect there to not be much production value, and that is the effect the video gave. The shadow in the background and the car for that matter makes for very convincing viewing. That is because it is very real, Kobe Bryant really did jump over a moving car and that is what inspired the public to share it, because ‘it’ was so very real. This as one can see had a great effect on the publics judging by the 5 million+ viewing figures. This is not the first time Nike has ventured into the viral marketing strategy. They used the Manchester United legend Eric Cantona in a string of football focused viral campaigns to promote the beauty in football and of course Nike itself.


Now for another global sports brand that also tried to venture into the world of viral marketing, Adidas, they collaborated with Liverpool FC to produce a television ad on the LFC television channel. It depicts strangers swapping shirts with one another. The people wearing a LFC shirt will swap with someone who is just wearing their general attire. One might assume that they are trying to show the world the comradely emotions that all LFC fans share. However judging by the viewing figures on YouTube one might think that this campaign was not very effective in what it was trying to do. However, seeing as this was a television commercial first and foremost, it is entirely understandable. It was for a particular target market, Liverpool FC fans so the entire world will not be so intrigued by it. Whereas the Nike one was for a more general taste, ‘the impossible feat of someone jumping over a speeding car’. Adidas’ attempt showed that if one is to venture into the viral

marketing world one must be sure that the message you are trying to convey is for a wide audience and not just focused on a particular demographic. This is the whole point of viral marketing to reach a varied audience, to create a buzz and almost compel the public to share it with one another. Nike achieved this but Adidas struggled to find the right content to ‘compel’ the publics to share the video


Lastly consider Puma, a large brand, yes, but a Minnow compared to the likes of Nike and Adidas. They have not yet ventured into the viral marketing aspects specifically by going out and creating a viral campaign but, what they have done is something more. Puma released this advert a week ago and as one can see it already has over 1Million views on YouTube. It took less than a week for this advert to get a 5th of the views that the Kobe Bryant campaign has and this was not even specifically created as a viral campaign. The advert depicts young people just ‘living’ the life that they were given, not just staring at a dull television screen. It is effective in its message

that one must venture out to get the most out of life and the only way to do it by wearing puma clothing while doing so. The Puma effect shows that even if a viral campaign was not at the front of the mind of those that conceived it, it still has the opportunity to do so if it is well enough produced and actually speaks to those that want to listen and create that intrigue that almost forces those who have seen it, to pass it on. In essence viral marketing is an effective tool to enhance the penetration of the brand on the consumer if it is done in the right fashion and creates the buzz that was envisaged in the first place


E-Mail Marketing

E-mail is most commonly widely used as a prospect conversion and customer retention tool using an opt-in house-list of prospects and customers who have given permission to a company to contact them, (Chaffey & Smith, 2008). E-mail marketing has been described as direct mail on steroids due to it’s over exposure and here are some of the benefits.

 Being relatively low cost enables companies to distribute an almost unrestricted amount of information to customers.  E-mail marketing encourages customers to click through to the desired website where the offer can be redeemed immediately; this increases the likelihood of an immediate, impulsive response.

 Ease of personalisation. It is easier and cheaper to personalise e-mail than real physical “snail mail”.  Through combining e-mail marketing with other direct media such as personalised direct messages and the introduction of mobile messages and notifications allows campaign responses to increase due to the different form of media.


How strong are Banner Ads? Created in 1994, as nearly as old as the internet itself, Banner Ads enjoyed a successful stint at the top of online marketing, hitting figures as high as 78% click-through-rate (CTR). The harsh reality dawned; users became computer literate and the only way for Banner Ads was down. The question was ‘how far down’? The answer was quite a lot! Today, Banner Ads suffer a humiliating 0.2% CTR and in social media, statistics average at 0.08% CTR. Usability guru Jakob Nielsen’s studies prove ‘Banner Blindness’; the concept that the eye is trained to look at the ‘important’ elements of web pages dismissing Ads (Right). This suggests the idea of roaming the internet has become extinct as users can find exactly what they are looking for instantly through search engines. A good Banner Ad CARES... 1.

Call-to-action- an element of the Ad which allows the consumer to link directly to a your website or social media sites. ‘CLICK HERE’ is the most common and predictable option.

2.

Animation- to avoid ‘Banner Blindness’ an element of the Ad must give the consumer a reason to look at it in the first place. This must be functionally and creatively excellent.

3.

Relevant to Target Market- a user of the site you advertise on must be the type of user you are targeting. For example, Nicorette Gum advertises on TheSun.com.

4.

Excellent Ad Copy- the text must be readable, intriguing but above all it must portray the message you are trying to say. Promotions are effective but often looked over.

5.

Small

File- the Ad itself must appear at the same time as the main

content of the website in order to be seen. Users quickly scroll down a page; a second can cost a fortune


NIKE

As a Man Utd fan, I am obviously going to think these are brilliant! They really capture the feeling of the game.


The goals of interactive advertising

Good Interactive advertising must be PURE-

Personalisation-creating a personal touch to your advertisement gives the sense of individualisation to the user which in turn increases enrolment to your website which directly increases sales.

Understandable- the user must comprehend the message being portrayed. A muddled message can waste the highly distractible, iphone generation’s time which means you waste your money.

Reactive- an ad must have a USP which gives the user a reason to either join your site or more importantly purchase your product or use your service.

Engagement- the ad must have an element of participation in order for it to be interactive. The element must be exciting enough for people to spend long enough on the ad to recognise what is being advertised.


How strong is interactive advertising? The stark contrast to Banner ads is that Interactive advertising is on the way up. "Interactive advertising revenues in the U.S. hit $7.88 billion for the third quarter of 2011, representing a 22% increase over the same period in 2010," says Seneca Mudd. Mudd is director of the Interactive Advertising Bureau's (IAB). This may have something to do with the immergence of the ReImagining Interactive Advertising Task Force in 2009, comprised of top online publishers, media agencies and, for the first time, creative officers from the nation’s leading advertising agencies. The intention was to allow agencies to have a say in the very top of the food-chain in order for Interactive Advertising, both on-line and off-line, to prosper. Line runner interaction

I love to procrastinate and spent like 15 minutes playing around on this which really made me remember the brand.


puma laces interaction Nike catch the flash

They do loads of this kind of stuff at uni which gets everyone interacting, interacting; I I justwished just wishedI iknew knewabout aboutthis thisbefore before


Interaction With the increase in touch screen technology it has been increasingly easy to interact with consumers. In order for these brands to increase their interactivity the future will be in tablets and touch screen smart phones. The trick however is for adverts or apps or websites to not feel gimmicky. This problem arises in 3D viewing as well. The content must be imaginative and fun so that consumers do not feel they are

being advertised at but they feel a part of the advert. Another advancement in interactive advertising is the use of real-time or live advertising. Celebrity endorsements in real-time adverts will bring a whole new dimension to advertising. Twitter currently allows people to talk to celebrities or industry specialists or technical engineers directly and 3D television and Smart TV can also do the same.

Obviously it is impossible to predict the success of any forms of interactive advertising however the one certainty is that agencies and brands are reassessing their budgets to increase digital marketing.

“I really like the way brands such as Nike are letting you design your own boots. Doing it on a touch screen pad makes it quite fun as well.�


Search Engine Optimisation

As a marketing strategy, search engine optimising shows us how search engines work, e.g. what is actually searched, the specific search terms and keywords or phrase typed into search engines. It also shows which search engines are preferred by their targeted audience. Optimising a website may involve editing its content and HTML, it might also need to change it’s associated coding to both increase its relevance to specific keywords and to remove barriers to other areas. Brands like Nike, Adidas and Puma, search engine optimisation (SEO) is different, as they are considered the biggest and most global companies; people already know their names so they carry out a specific named search, they do not often rely on a broad search to bring there names up, as the companies know that most consumers who are buying sports wear will look at them first before looking elsewhere.


To understand why search engine optimisation is so crucial to brands is quite simple. If a company appears on Google’s first page e.g. after searching ‘sports clothes’ you would hope that the big brands would appear at the top of the page and that the rest would follow in prioritised order, however if they do not, the search can be deemed too broad for the site/sites.

The attached screen shot on the right highlights the three sports brands appearing in the title of other companies, this is sort of affiliate marketing.

Even typing in a relatively common search in which Nike, Adidas and Puma should feature and they do not appear up on the first page it can be seen as shocking, considering that these are three of the biggest and most influential sporting brands in the world to date. What is obvious is that the logos of the three companies are what’s known and they appear on the image search as the first link.


Social Media These very popular leaders in the market of social media are a ‘must have.‘ A company wanting to stay current and look young look would and should have a Facebook or Twitter feeds and pages, however companies like NIke, Puma and Adidas which are already entwined

very much in social media as they are such well known brands they need and must have a heavy online presence. Looking further into the future it becomes more and more apparent that a lot will depend on internet presence and how it holds itself online.

.

Therefore it would possibly benefit a company to make their pages more interactive whether it be Facebook or Twitter, and also to link it closer with their consumers and viewers. This in theory should increase the brands image, consumption and loyalty, which would in turn increase awareness revenue.

Social media does not just come in the form of Facebook and Twitter it also has other platforms, the website online can also act like a networking platform, as this is where you buy and sell and comment on the products new, inseason and old.


Recommendations Sadly it’s not always the best products that succeed but rather reasonably good ones that everyone knows about and can easily find when they need them. Driving traffic or customers is paramount to any online business but what is

even more important is how to acquire the right visitors to a site in order to achieve the right marketing outcomes. Discovering which channels your chosen demographic will interact with best is the key for cyber survival.

Hyphen recommendation: using affiliate marketing can be a powerful tool when attempting to drive traffic to any site, however this method is most effective when small brands or companies are involved. Nike, Adidas and puma are currently the market leaders in the industry and have a huge fan base. Online shoppers looking for sports equipment or clothes often use these sites as a first port of call therefore paying for affiliate sites may not be a cost effective method of diverting traffic to their sites.

Hyphen Recommendation: In recommendation on the future of viral marketing, it is clear that due to low cost and high potential exposure viral marketing is fool-proof. However, if the ad does not affect the consumer in an emotional way, be it comical, heart-warming, gut-wrenching, the ad itself reduces its chances of becoming viral. To cheat, companies as big as Nike can hire companies to ensure that a campaign will go viral. Although this increases the costs dramatically, it enhances the chances of success.


Hyphen Recommendation: We have already seen the demise of banner ads. Dropping. From over 70% CTR to less than 1% CTR is almost impossible to redeem as internet savvy consumers have seen through their purpose. The answer lies in not relying on a high CTR but focusing on using the advertising space to improve brand image. The focus should not be on using promotions because consumers aren’t going to click through. The new strategy should revolve around pictures over ad copy and expressing a message over increasing visits to the sits. Users are exposed to so many adverts in one day that being remembered is more important than ever.

Hyphen Recommendation: With the increase in touch screen technology it has been increasingly easy to interact with consumers. In order for these brands to increase their interactivity the future will be in tablets and touch screen smart phones. The trick however is for adverts or apps or websites to not feel gimmicky. This problem arises in 3D viewing as well. The content must be imaginative and fun so that consumers do not feel being advertised at but they feel a part of the advert. Another advancement in interactive advertising is the use of real-time or live advertising. Celebrity endorsements in real-time adverts will bring a whole new dimension to advertising. Twitter currently allows people to talk to celebrities or industry specialists or technical engineers directly and 3D television and Smart TV can also do the same. Obviously it is impossible to predict the success of any forms of interactive advertising however the one certainty is that agencies and brands are reassessing their budgets to increase digital marketing.


Hyphen Recommendation: As stated before the continuation of effective marketing on social media sites is essential for sports brands. As sports brands are constantly in the spotlight due to sporting events it is vital for the brands to be able to communicate with its consumers quickly and efficiently. As the Twittershpere grows rapidly every day, consumers have the power to bad mouth products or services. This can be combated however by reacting to the negativity and solving the problems instantly. New technologies or new campaigns can be spread by the social media sites; the trick is to have the content that users are willing to spread.

Hyphen Conclusion: in conclusion, it is clear that the more interactive and responsive the marketing i.e. social media sites and interactive advertising, the more useful the toll can be in this digital era. Integrated Marketing Communications state that a brand must deliver all marketing content with the same goal in mind based around one set image. Confused marketing sprouting off different ideas does not leave a lasting image in the consumers head. The solution to traffic building and a greater online presence is based around the effective use of all online marketing tools from e-mail marketing to the use of interactive TV. All these aspects play a part in improving brand image and overall increasing exposure of your brand.


Traffic Building Techniques for Sportsware and Equipment Brands