Sunday, February 22, 2015

On Sponsorships - Part 2

(This has been festering in my Draft file for almost a month. I started it soon after my first Sponsorship post, and kept meaning to edit it or add more - perfectionism can be so paralyzing! - but I lost my enthusiasm and it never happened. Still, I liked all the discussion from the first post, and felt like I had more to say on the subject. So here is my "raw" part 2 on how sponsored athletes influence sales.)

Recently Montrail and Pearl Izumi essentially disbanded their ultra-teams despite having several top level runners on their teams such as Ellie Greenwood, Max King, Amy Sproston and Kaci Lickteig. This change in marketing strategy by these companies begs the question: Do sponsored athletes improve sales?

In response to a previous post, Gretchen Brugman admits that after seeing Ellie Greenwood on her blog in a black puffy jacket, she immediately ordered one for herself. I do think elite athletes can influence impulse purchases, because impulse purchases aren't based on logic or need, they are based on wants and emotions. Having one top level athlete in agreement with the product you desire may be all the reason you need to go ahead and buy that item you have been longing for. 

Impulse purchases aren't necessarily bad - Gretchen says she loves her jacket and has no regrets - but when it comes to products that typically cost upwards of a hundred dollars (shoes, jackets, hydration vests, sunglasses, etc.), how often do we buy these things on impulse alone? More often than not, people do at least a little internet research before shelling out their cash. When making an educated purchase consumers may compare price, manufacturer's specifications and online reviews. But I'd be surprised if anyone weighs which top athletes are wearing the products they are considering.

Of course, for someone to consider purchasing a product, they have to be aware that product exists. And sponsored athletes may bring that attention to a product. But do sponsored athletes really increase sales?

Ken Michal noted in his recent URP interview that he thought it was cool that Dave Mackey wore the same shoes as he did, but as a back-of-the-pack guy what he really cares about is if the shoes work for other back-of-the-packers, not if they work for fast guys like Dave Mackey. I know when I got into this sport the three goddesses of ultrarunning were Nikki Kimball, Lizzie Hawker and Kami Semick, all sponsored by The North Face at the time. Those three were my heroes and I wanted to be just like them, yet I have never bought a single item of The North Face gear. To me, being like them meant training hard, performing well in big races and having lots of amazing running experiences; it didn't mean dressing like them.

I think most consumers recognize the success of the elites is due primarily to their hard work, natural talent, and gritty racing tactics and very little to do with the equipment they wear. We continuously watch elite athletes switch sponsors with virtually no change in their level of performance. And I don't think one has to be too cynical to think the reason athletes change sponsors has more to do with money than the products themselves. As I heard from one elite last year, "I really loved working with [company X], but the deal from [company Y] was too good to pass up." Similarly, as Montrail announced a cut in funds to athletes, most of their athletes quickly abandoned (sponsor)ship.

And it is hard to take recommendations from sponsored athletes at face value due to the inherent biases they have from being sponsored. Don't get me wrong, I am sure most sponsored athletes are with companies they believe in and are using products they really like, but would you ever expect them to recommend a brand other than the one they are running for? For example a Western States rookie runner recently asked me, Amy Sproston and Denise Bourassa for hydration pack recommendations and we all three recommended packs from companies that sponsor us. I know we are all quite happy with our packs and the responses were not disingenuous, but being sponsored means we may not have the same breadth of pack experience as someone who has had to go into a store a try out multiple packs before picking one, or even if we had two packs we liked, we might not mention one from a competitor brand. (For the record, I paid full price for my Ultimate Direction AK vest long before I was sponsored. Then again, I am probably telling you this to promote my sponsor. ;)

A Forbes study from 2012 showed that recommendations from friends or family had the greatest weight in determining what people purchase. Other promotions can influence sales as well. For example, Garnier beauty products got a bigger boost in social media buzz and sales after a coupon promotion than after announcing Tina Fey as their celebrity endorsement (but indeed there was a significant boost with that endorsement). Ace Metrix, a company devoted to television and video analytics, studied 2,600 commercials and found those with celebrity endorsements were no more influential (and in some cases even slightly worse) than those without celebrities. A study in the Journal of Advertising Research concluded professional athlete endorsement equated to a 4% boost in sales if that athlete was performing well. There was a lesser boost from retired or "non-winning" athletes. 

Ultrarunning is different than a lot of sports because it is such a "niche" endeavor. Even the best in our sport are largely unknown to those outside of the sport. But I think participants in ultrarunning feel more connected to the elites than the fans do in other sports. Because ultrarunning is so low-key, the elites remain approachable and relate-able. On race day, everyone lines up together and deals with the same hardships of the course, creating a sense of shared experience between the front runners and the rest of the field. The elites hang out post-race and eat the same post-race meal. And because sponsorship dollars remain fairly low, most elites still have day jobs and other obligations like the non-elites. Those that are able to subsist on running alone certainly aren't multi-millionaires living a life of opulence. And because ultrarunning is low key, most pre- and post-race interviews resemble an amicable conversation, rather than a formal press conference. For all of these reasons, I think many of the elites remain approachable and in some ways feel like "friends" with trustworthy opinions.

Because sales is about exposure and word of mouth, I do think the amount of commercial money coming into this sport will increase, especially as the sport continues to grow. BUT, I think this is going to be in the form of sponsors casting a much broader net with sponsorship opportunities trickling down to "sub-elites", frequent racers, and other visible but non-elite athletes. While sponsorship money for top athletes is  increasing, I think true "professionalism" in our sport will remain elusive. Due to the demanding nature of ultramarathons, a single athlete can only run a handful of races in top form every year. Add to that the fairly high risk of injury/burnout and it makes sense why companies would want to invest multiple small amounts of money in many different runners than a large sum in a single high profile runner. So while many were surprised and dismayed by the dissolution of of the Pearl Izumi team, their "grassroots" ambassador program is not without merit or business sense. Those athletes who are trying to make a living will likely need an entire list of sponsors to make it work.

There's a lot more money coming into the sport these days compared to when I was getting started. That's a good thing for promising runners looking to get some free gear or even subsidize their racing, especially for those who are willing to work for it and have high visibility amongst the fans. But I don't see runners getting rich off of sponsorship anytime soon, which means my job will continue to be my biggest "sponsor". ;)

So how do sponsored athletes influence your purchases? Do you ever think top ultra-runners will be able to "go pro" and earn enough to own a home or support a family? 


Peter said...

The North Face's (TNF)upper echelon marketers are really the only ones/company thus far that "gets it" on why their sponsorship in the sport has is because they are not using TNF sponsorship of athletes and events to market to the ultrarunning market of consumers per se but utilize the sport and their participation in it to leverage their brand/products to a much larger demographic. TNF was successfully dong this way before "Born To Run" hit the NY Times Best Seller list . All you had to do was open an issue of Outside Magazine or go to NY or Long Island in the winter to see how their "Endurance Is" campaign captured the minds and souls of urbanites who identified with those ads. If other companies realized the sport could leverage their brand with a broader demographic then the value of sponsorship would make sense.

Anonymous said...

Another great post. One other angle on the impact of sponsorship: Other factors being equal, I'd be more likely to buy a product from a brand that supports athletes because I want to support the companies that are supporting athletes- it sends a good message to me about how the company is putting its earnings to use. I also feel that companies that support elite athletes have the potential to create better products as they get feedback from their athletes on what works and what doesn't in the field. Personally, I'm still more interested in what works for top competitive runners than in what works for casual or midpack runners.
I also think top athletes are still very useful for marketing new products or categories. Here I'm thinking of a brand like North Face and running gear- they're best known for cold weather outdoor gear, but after seeing their elite trail running team rocking the gear I have bought some for myself (on sale though). Or look at Hoka signing up track athletes like Leo Manzano as they move into speedier, lighter shoes- it might not have the same impact if they spread their marketing dollars among a bunch of more recreational but social media savvy runners.

Tim Tollefson said...

Great post.

An environment that can support fully sponsored professional athletes is still years away as you mention. But, I think our sport has the potential for this to happen.

There is more excitement, risk, and attraction from a spectators perspective when comparing an MUT race with a road marathon. This brings with it the possibility of increased marketing dollars, consumer spending and national recognition. There is also more room for multiple sponsorships per athlete than there is with Track and Field or Road Racing; think Nascar.

I think a necessary change however is to branch away from USATF and found an independent professional sports league. A system that supports a legitimate racing series with a primary goal of doing what is best for its' constituents.

We need a system that is governed by an entity not sponsored by individual manufacturing companies. Our current model, MUT being a very small niche subset of the enormous USATF machine, is not going to allow for growth in the sport.

Michael Owen said...

I've enjoyed your recent posts on sponsorship Pam.

I wonder what your thoughts would be on regional or community appeal for sponsored athletes to a brand. I'm thinking of a specific example of when David Horton was sponsored by Montrail. Although Horton was one of the top ultra runners, I think his main draw was the races that he directed (still directs) in Virginia. His connection with Montrail meant Montrail being sponsors of all his races. This resulted in the Mountain Masochist shoe and virtually everyone wearing Montrail shoes for a while. I think it is less common now because Montrail is no longer a sponsor.

In a similar example, Clark Zealand is a Patagonia guy directing three highly popular races in Virginia. His connection with Patagonia has garnered what seems to be Patagonia being worn by EVERYONE! (not so much shoes, especially now that Pat. stopped producing footwear).

I feel that, regardless of race results, if a person has a significant impact on a region or trail running community, such as race directors, or club directors, etc., their positive impact on sales for a brand is very significant.

Any thoughts?

sharmanian said...

The Scott US team was also disbanded for 2015.

Anonymous said...

I've said this on a few sites now that have covered the topic but for me, elite athletes and good photography have made me buy WAY more things than Jack and Jane middle of the packers (aka "ambassadors") And I currently am an ambassador for 2 companies. 3 examples: I bought a TNF Jacket after seeing a picture of Krar looking smooth as heck in it. I bought a pair of Smartwool socks because they had this beautiful full color ad showing their green PhD socks covered in mud and it drew me in. I have bought Salomon gear only because it's looked awesome in their Kilian videos.

I know PI/Montrail are hoping for the "family and friends impact" sales, but I don't really give a crap what shoe you're wearing if you're finishing your local 5k in 26 mins. I know wearing the same jacket as Krar isn't going to make me perform like him, but it means he's wearing a piece of apparel that he trusts enough to wear in a race, so I would trust that product too.

SteveQ said...

I think companies started sponsoring ultrarunners in the hope of being in the vanguard of a new movement like the one that caused EVERYONE to think they had to run a marathon and that isn't happening (at least at a fast enough rate for them) but the increased interest in the sport has caused races to increase entry fees to the point that it has become a sport of doctors (ahem), lawyers, engineers... and professional athletes. That group has a lot of disposable income and that has kept corporate interest; it just isn't a big enough market for major corporations and that's why sponsorship is dropping.

Scott Dunlap said...

Great stuff!

I've always thought my sponsorship with inov-8 was a pretty straight-forward arbitrage. Yes, we share ideals, a love for the sport, and I do enjoy their products, but most importantly they end up with about $28,000+ in equivalent online advertising each year from my blog and social media mentions.

Take it from a runner who is a head of marketing by day, that's a solid ROI. ;-)


Rod Bien said...

In the context of the "The most Interesting Man in the World", I'll say: "I don't read many blogs but when I do, I read yours!"

Anyway, some good points and mostly I agree. I would say the big 'miss' is hopefully a big part of the sponsorship puzzle, which is that sponsored athletes actually can make the companies' poducts a lot better. For me personally, I don't have any real interest in being associated with a brand where they aren't using the athletes to improve the products. Being sponsored by Patagonia for the last 8 years, I think the biggest emphasis they have is feedback on gear. Designers make product but a lot of times, they can't really know what works when gear/clothing is really put to the test. We do a bunch of tests with our gear including first impressions, how it works after a certain amount of time, and the long term review of the gear. Some of the most successful pieces in the Patagonia line are pieces that are pretty much 100% athlete driven products from inception to production. In that context, I think that companies definitely get their money back in how it translates with regards to sales.

Rod Bien said...

Honestly, almost weird reading this. I just had one of the worst bonks of my life in the IMS Arizona marathon 3 weeks ago. My bonk started a few miles before yours and was one of worst death marches I've had in a while. And, like you, I won (I have no idea how) the Masters and got a nice little check which was hilarious considering my performance!

Chemendoza said...

I tried to get sponsorship from low profile local brands but guess what... need 3000 followers on instagram :(

Chisholm Deupree said...

I received a pair of Hoka from the Distributor in 2009 after an inquirey, and a request for Race Sponsorship ( as the RD ) The company hase provided 6 pairs annually for the event to award for top Female and Male winners.

The payoff is that Hoka now has 3 speciality Running retailers in Oklahoma City and a few hundred more runners that BUY their shoes as a direct result of their donation.

Through the years, Hoka has provided me with 6 pairs of shoes to model, and race in when I went abroad. In the same time frame I also purchased 10 pair for myself , and 5 pairs for family, so the relationship has been very good. I hope to continue to influence runners to try the shoe for themselves also, because I have found a "fit" !!

When I see athletes like Dave Mackay and Mike Wardian as poster boys for HOka, it only reinforces what Ive found about the comfort, ( esp given my age and years of running ultras)