Tag Archives: Entertainment

Adidas vs. Nike: The Real World Cup Battle

As the world convened on the country of Brazil to passionately watch thirty-two countries compete for immortality on the FIFA World Cup stage, another epic battle unfolded between the sportswear giants, Nike and Adidas.

Much of how consumers interact with businesses is based on perception and taste, which is why so many resources are devoted to marketing and advertising.  Through sponsoring the countries’ football teams and famous players and countless commercials and marketing ploys, the two brands geared up for a month long sporting festival that was sure to entice the consumers and bring in large chunks of revenue.  Let’s take a look and see which industry leader came away with the upper hand.

Adidas

Overall, you probably saw the Adidas logo more prevalent in the World Cup competition because of the official partnership the company has with FIFA.  At around $70 million per four year cycle, Adidas has the rights to manufacture and sell the World Cup Brazuca game balls as well as the referee kit.   Such a deal aligns Adidas with the FIFA logo on pretty much any advertisement, as we saw on ESPN’s virtual scoreboard.  Needless to say, this deal, for any sportswear brand, is extremely lucrative since the brand was quite visible.  Expenditures for the German company did not stop there, though.  According to reports, Adidas spent $2.3 billion in advertising and marketing for the World Cup.  High numbers, yes, but the ratio between the marketing budget and revenues in 2014 has held steady with the ratio during 2010’s World Cup in South Africa (10.1% and 10.7% respectively).  The target revenue with this year’s World Cup was $21.2 billion.

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Another indicator of Adidas’ exposure at the World Cup was their share price throughout the entire tournament.  Starting on June 12th, Adidas was selling at $52.99 per share and ended the tournament at $50.22 per share.  Initially, I had thought both corporations would see increased stock prices during the tournament, seeing as they would have extreme visibility and favorable marketing, but this $2.77 decline may actually be completely unrelated to the Cup.  Just yesterday, Adidas agreed to a ten year, $1.3 billion kit deal with English football club, Manchester United.  Despite the fact that this deal severs the thirteen year partnership Nike had with the football club, concerns were raised (and consequently stock prices lowered) due to the staggering price of such a deal.  Thus, it is not certain whether the World Cup had a positive affect on Adidas’ share prices.

Lastly, and maybe foremost, Adidas’ triumph at the World Cup could’ve been cemented on the final day.  Out of the thirty-two teams, Adidas sponsored nine with two of those nine making it to the World Cup Final (Brazil and Argentina).  Furthermore, out of the 166 World Cup goals, 78 were scored with Adidas soccer cleats, which belonged to some of the tournament’s top performers including Lionel Messi (Golden Ball winner), James Rodriguez (Golden Boot winner), Thomas Mueller and Andre Schuerrle of Germany.

Nike

Although Nike did not have the official FIFA World Cup sponsorship, the Oregon-based company played as big of a role as its counterpart.  As usual, Nike had the most aggressive, yet artistic marketing campaign for the event.  You probably noticed their ‘Risk Everything’ campaign, which featured the cartoon versions of Brazil’s Neymar Jr., USA’s Tim Howard and Portugal’s Cristiano Ronaldo–all Nike sponsored athletes.  Prior to the World Cup, Nike introduced their first ever football-only store in Rio de Janeiro which boasted Brazil’s World Cup kits and the boots Nike athletes would wear during the games.  With such an extensive advertising scheme, its no wonder the company’s marketing expenses jumped 36% to $876 million in the quarter to end May.

Contrastingly, Nike saw share prices increase for the month of the World Cup, opening at $74.77 and closing at $77.95.   This could have occurred for several reasons:  Nike’s forecasted 21% growth in the global football business, its share of 80% of a $5 billion industry with Adidas or because of the potential the game of soccer has in the United States.

On field success for Nike was expected, as it out-kit Adidas with 10 sponsored countries including host nation, Brazil.  Furthermore, 53% more players wore Nike boots than any other brand.  However, a series of unfortunate events on the pitch, like Neymar’s back injury, Ronaldo and Portugal’s lackluster performance and Brazil failing to make it to the final hampered Nike’s exposure as the World Cup waned.

Conclusion

Adidas was the much more visible brand during the 2014 World Cup. In competition, their teams triumphed and it seemed like all the individual awards were also given to Adidas athletes.  Beyond this, Adidas’ YouTube viewership during the World Cup eclipsed Nike’s by six million.

The future is bright for Nike, though.  The buzz around the World Cup and for the Men’s National Team in the United States was created because of Nike’s marketing.  The brand understands that while Adidas may hold a stronger foothold around the globe, it is in control of the largest consumer market in the world.  With Major League Soccer growing in popularity, Nike is primed to capitalize on soccer equipment, apparel and footwear in the US.  As far as I am concerned, Nike is well positioned to make a run at Adidas again in 2018.

Maxwell

Lammily: Challenging the Perception of Beauty

Societies’ perception of beauty is completely based on a false reality that is perpetuated by television, the fashion industry, and even the dolls our children play with today.  The debate over this issue, this craze, has long been discussed; however, little has changed.  Each year we can count on watching “Angels” seductively walk down a runway which promotes borderline unhealthy physiques that women all across the world painstakingly try to achieve.  Every time we walk into a toy store we can count on seeing the iconic Barbie doll, an idealized, yet implausibly, shaped blonde figurine which millions of girls and boys have grown up with. Nickolay Lamm, creator of Lammily , has finally challenged these surreal desires.

Lamm, a Pittsburgh based artist and researcher, has begged the question: What if fashion dolls were made using standard human body proportions?  Provided by the CDC, Lamm has used the average body measurements of a nineteen year old women to generate a 3D digital prototype of a doll he hopes to produce.

Just two days ago, Lamm used Crowdtilt to garner crowd-sourced funding for his venture.  His target amount to cover the costs of manufacturing was $95,000.  Today, he has succeeded this goal by over $100,000 with twenty-nine days left in the first round of financing.

Lamm has been lauded for his previous work by Buzzfeed, Business Insider, Huffington Post, and many more news outlets.  The USA Today featured Lammily just yesterday.  Lamm’s ability to ask the unthought of questions and then visualize the answers in artistic renderings is the reason why Lammily is so innovative.  In our terms, Lamm is an entrepreneur.  A clear void in the fashion doll market was apparent and he has created a way to effectively exploit it.

I would also like to comment on his use of crowd-funding, a brilliant idea in my opinion.  Rather than trying to meet with investors to back his project, which we know can often lead to failure, he opened Lammily up to the public for support.  This suggests (A) his confidence and the market potential for the fashion doll, and (B) his understanding of the intended retail audience.  I do not think crowd-sourcing works for every entrepreneur, as it is necessary that your product receives the proper amount of attention for such a decision to pay off.  With that being said though, I believe this way of financing is an under-utilized option within the entrepreneurial community.

Nickolay Lamm and Lammily are prime examples of why entrepreneurs and innovation are integral parts of our society.  Lammily challenges a convention that, frankly, is unattainable while creating a new socially progressive alternative.  This is what pushes boundaries.  This is how new paradigms are created.  Congratulations on a wonderfully thought out product.

Maxwell

Jay Z: Growth

Picture a start-up company that is stable with an increasing market and the ability to use its own resources to function rather than seeking out investor support.  This stage, which many entrepreneurs attempt to achieve, and more often than not fail at, is the growth period.  Personally, I would stress this stage most emphatically within the business’ development because the end result can either be rich with financial success and recognition, or, contently chugging along with little progress.  I would argue that factors such as innovation, foresight, and perseverance are just as important during this phase as it is during the start-up period.  How else do you take your company from ‘mom-and-pop’ to global icon?  You have to push the envelope.  Jay Z did just this, as he was quickly becoming one of the most popular hip-hop artists in America during the early 2000s.  His vehicle?  Roc A Fella Records.

As in any business, there are seminal moments in which opportunities are taken to exploit an existing model or to fill a void.  Starbucks capitalized on the coffee boom before it surged across America and Apple created the iPod.  Innovation is what propels companies and business leaders into visionary statuses.  The creation of Roc-A-Fella Records was just the type of establishment to shift the music industry.  According to Shawn Carter, “A key part of business is recognizing change,” (Jay Z and Warren Buffet, Forbes Magazine Interview).  Dash and Carter’s principles were simple, do not let other people make money off of Roc-A-Fella music and compensation should be made for the endorsements their rappers plugged into their lyrics (“Always win, and other lessons from the life of rapper Jay Z”, Potter).  These were ideas that were unheard of in the music industry, yet completely ingenious.  It is not uncommon to hear artists name-plug their favorite clothing brands, cars and watches into verses, as Migos raps “Versace, Versace, Medusa head on me like I’m ‘luminati,” in his song “Versace.”  Luxurious brands that were synonymous with the rap lifestyle were given free product placement in songs, which increased the company’s sales, while the artists did not benefit at all.  With the principles of Roc-A-Fella records, Jay Z has garnered endorsement deals with the New York Yankees, Adidas, and watchmaker Hublot (“Jay Z’s 10 Best Endorsement Deals,” Melia Robinson).  This practice is no different from what major athletes like Lebron James and Derek Jeter do, for it increases revenue in areas outside the realm of their profession.  Jay Z and Dash had the foresight to understand the partnership music and retail could have and implement this model into their own business ventures, elevating the brand of Jay Z to a global icon.

In financial terms, increased security and longevity can be acquired through investments and diversified portfolios.  For an independent label, like Roc-A-Fella Records, it was not a priority to develop the lesser-known artists on a label.  The emphasis was more on marketing the headliner, which in this case was Jay Z.  Unlike smaller labels though, Jay Z and Dash’s company made a distinct decision to find and develop new artists from the New York and Philadelphia areas to expand their audience and increase their revenue (Greenburg 68).  Much like investment, the label secured its future by spending the time and money on artists whom had the potential to be widely popular, which in turn increased the chances of Roc-A-Fella records growing into a bigger, more powerful record label company.

Roc-A-Fella diversified its assets by exploring other areas of commerce that could be fruitful.  The label was merely a platform to catapult the business minds of Carter and Dash into uncharted territory for hip-hop artists.  “We gonna build a tree and let the limbs grow all kinds of different places,” says Jay Z in an interview with Business Wire.  Rocawear, a clothing brand established by Jay Z and Damon Dash in 1999, was possible because of Roc-A-Fella Records.  “Dash encouraged Jay Z to cross-promote their products whenever he had a chance,” Greenburg notes in his book (71), “why give free advertising to someone else when he could boost his own sales with a Rocawear shout-out?”  Rocawear’s success was immediate, selling over $80 million in clothing over its first two years (‘Jigga Man’ Jay Z Gets Down to Business, Business Wire).  Dash and Jay Z understood their audience and marketability enough that they were able to branch out and add a new asset to the ever growing Jay Z brand.  Jay Z’s name is everything to his empire, if he can correctly place it in as many avenues as possible he increases his chances of becoming more popular and increasing his wealth, much like what people do when investing money for the future.

Now that we have books like, Zack O’Malley Greenburg’s and Jay Z’s Decoded, fans and the public alike can comprehend how smart Shawn Carter truly is.  Back at the turn of the century, we didn’t have access to such information unless we heard about some of the mogul’s ventures through interviews and news reports.  Yes, Jay Z is an entertainer, but his brand, his tree with thousands of different limbs, is all encompassing; if there is some facet of consumption that is closely related with the music industry, Jay Z will find it, water it, and watch it grow.  Respect the man’s talents; he sees the potential in things that you and I may not see, he’s Hova.

Maxwell