Integrated Strategy And Planning: Case Analysis Adidas
“After first steps in his mother’s wash kitchen, Adi Dassler registered the “Gebrüder Dassler Schuhfabrik” in 1924 and embarked on his mission to provide athletes with the best possible equipment” (Adidas,2017).
Adidas have a fascinating story – between a relationship breakdown of brothers that became business rivals to the monumental 3 stripes logo to the innovative products that improved efficiency and comfort for athletes over the years.
Adidas’ success hasn’t been easy. They are constantly competing with Nike, the world’s best sportswear brand. From product design, pricing, marketing campaigns and brand ambassadors, they constantly fight for their target market’s attention. One example would be Michael Jordan versus Kanye West, who originally started at Nike but is expecting “to top $1.5 billion in 2019” (O’Malley Greenburg, Z, 2019).
Adidas are constantly evolving their business and marketing strategies to stay relevant. Adidas’ main target audience is the 13 to 30, sporty but fashion conscious group that want to be seen wearing the cool brands. According to Brian Mac Gabhann, “teens have gone from questioning and challenging the corporate world to helping promote it” (MacGabhann, B,2005).
Looking at Adidas’ target market, Adidas’ 2015 “Creating the New” strategy in which current CEO Kasper Rorsted announced they would be moving away from traditional TV advertising and focusing solely on digital advertising. The target market Adidas are trying to attract engages with the brand through mobile devices, according to Rorsted (Gilchrist, K,2017).
This strategy will be looked at in detail, clearly outlining if it worked and what could have been done differently. A suitable marketing strategy will be suggested that would communicate effectively with Adidas’ target audience, and emerging technologies that Adidas could be using will also be outlined.
Overview of the Adidas Marketing Strategy
The “Creating the New” campaign outlined in 2015 focuses on young customers that want the latest trends and fashions. They want the same brands that they see their favourite celebrities wearing, and they want to fit in with their peers. “Cool is a lucrative commodity and is greatly sought after” (Diane Cassidy, T. and Van Schijndel, H.,2011) for young, impressionable teenagers, and this is the market that Adidas are focusing their efforts on.
Rorsted stated that these younger consumers engage with Adidas “predominately over the mobile device” and this was his reasoning behind moving away from TV advertising when he did an interview with CNBC in 2017 (Gilchrist, K,2017).
The aim of this fully digital marketing strategy is to quadruple the revenue from online sales to €4 billion by 2020. Adidas’ social media channels have seen great success so far with their younger audience, especially on mobile devices. Matching their budget with their celebrity endorsements, one would think that this would be a recipe for success. Adidas’ aim for the celebrities that their target audience idolize, getting more than athletes and sports personalities on board.
This strategy was decided in 2015, and Kasper Rorsted then started to build the strategy around digital advertising. Fast forward to March 2019, Rorsted spoke to CNBC about how the “company grew its online business by 36 percent” from 2017 and that 2018 was the best year in the history of Adidas as a brand (Taylor, C.,2019). Overall, business seems to be growing and Adidas are set to achieve their 2020 goals. However, did their “digital only” marketing strategy have anything to do with this growth or has it hindered Adidas’ sales?
Is this an appropriate strategy for optimal growth and target market connection?
Looking at figures in relation to Adidas’ online business, one would think that the marketing strategy would have been a success. Previous studies of digital aspects in relation to attracting customers are varying. Looking at research done by the IBM Institute for Business Value, they look at a concept called the advocacy paradox within social media users. While most companies are of the opinion that social media increases advocacy, “only 38 percent of consumers agree, and more than 60 percent believe passion for a business or brand is a prerequisite for social media engagement” (Heller Baird, C. and Parasnis, G.,2011). This would mean a customer that is less passionate about Adidas as a brand would be less likely to click on a social media advertisement if it was presented.
In contrast, the book “Strategic Direction” looks at effective ways to attract new customers, and “sponsored search is up with the best of them” (Strategic Direction,2015). Looking at different elements of Adidas’ digital advertising strategy and how profitable they were in comparison to previous years would be ideal, but as figures aren’t available, a look at whether it was a good idea to move away from TV and other forms of non-digital advertising will be explored.
After a record breaking 2018, one would think that Adidas’ digital advertising strategy would have been successful. Digital advertising is definitely a key factor in Adidas’ marketing strategy given their younger target audience, but too much focus has been put on the online, short-term metrics.
Simon Peel, Adidas Global Media Director, spoke to Marketing Week on two separate occasions and expressed that the digital advertising strategy was “overinvested” in. Peel stated that Adidas “had an understanding that it was digital advertising that was driving online sales and as a consequence we were over-investing” (Visard, S,2019). An introduction of an econometric model showed that while Adidas presumed, they had loyal, repeat customers that were driving sales, “60% of revenue came from first-time buyers” (Visard, S,2019).
Peel said they were too focused on short-term metrics and weren’t thinking about the long-term health of the brand and their knowledge that “behind short-term deliveries, the brand is the one that ultimately delivers against them” (Hammett, E,2019).
But what does this mean for Adidas looking into the future? Should they be reducing focus on digital advertising and putting a stronger emphasis on other channels?
Strategic alternatives to achieve overall marketing success
When looking at strategic alternatives that Adidas could use, they need to continue with digital advertising, but should also look at other media to ensure that they are first-in-mind for their young target market. An integrated marketing strategy would be ideal for Adidas, incorporating both online and offline advertising.
For an integrated marketing strategy to work, there needs to be integrated communication within the organisation. Integrated communication has “been broadened to include virtually everything an organization says and does and everyone who is affected by the organization’s existence and activities” (Torp, S.,2009). It is extremely important that Adidas are sending out the right messages to the audiences that buy their products. Again, it is extremely important to include both digital and traditional methods of advertising to get the message out.
Adidas have to take into consideration the saturation of the digital advertising marketing in recent years. “In 2019, worldwide digital ad spending will rise by 17.6% to $333.25 billion” and in most countries, digital advertising is already the biggest ad medium for many companies (Enberg, J,2019). Also, ad-blockers are becoming more popular, which is unhelpful to brands who are trying to advertise online.
A SimilarWeb search of “Adidas.com” shows that search advertising is driving 38.48% of traffic to the website. If they could raise other traffic sources, there wouldn’t be such a huge emphasis on paid search advertising. Looking at different media Adidas can use to communicate with their audience could be influenced by traffic sources too.
Suggested combination of media to communicate effectively with their target market
As discussed, Simon Peel spoke about over-investing in digital advertising. One observation made from econometric data was that other channels should be invested. Results showed that Adidas “should invest in video, as well as TV, outdoor and cinema to drive e-commerce” (Visard, S,2019). Other suggested channels are outlined below.
Contrary to Adidas’ beliefs that TV advertising isn’t of importance to their company, Dr. Karen Nelson-Field found that “TV commanded more attention with twice the active viewing of YouTube and 15 times that of Facebook” (WARC,2018).
Customers need to be reached offline too. Having an integrated strategy ensures that your customers can recall your brand, and instead of having to invest a large amount of money into one channel, you can ensure the brand is well-known for their collaborations, brand ambassadors and products. Kendall Jenner, a world-famous supermodel, has collaborated with Adidas, and they could utilize this further with billboard or outdoor advertising.
Cinema could also be an extremely effective channel for Adidas. The fact that there are no distractions in a cinema is a major plus for any advertisers. Looking at Irish statistics, “94% watch the ads before the film” with 76% stating that they aren’t distracted by outside factors (mobile phones). Also, 50% of people think that the advertisements shown before a film are “an important part of the cinema experience” (Adworld,2018).
With video advertising, the consensus is that the “gap between TV and internet consumption is narrowing”. Research on video advertising found that for hedonic products, video advertising “resulted in stronger attitudes toward the ad and brand, and intentions to purchase” and for low involvement products there was “stronger purchase intentions and likelihood to opt-in for more information” (Stewart, K et al,2019). In reality, purchasing sportswear or clothing is associated with “emotional type motivations, hedonic ones, in addition to the practical, utilitarian ones” (Epuran, G, et al,2015).
A focused digital advertising strategy would enable Adidas to effectively reach their target market. Adidas should target popular social media sites, as well as a targeted search ads campaign with highly focused keywords. An interesting route Adidas could look into would be shopping advertisements. These are described as “an integrated service of Google Search that acts as an intermediary between companies, offerings products in the internet and people searching for products in the internet” (Blanckenburg, K.,2018). A vital part of Adidas’ digital marketing campaign should be remarketing to those who have visited the site, and especially to those who left products in their basket when exiting the site.
Email Marketing Campaigns
Effective email marketing campaigns may be effective for Adidas as an online method of reaching customers. Email marketing would need personalisation, and Adidas have personal data on customers from previous purchases. “The most effective email personalisation leads to up to triple increase in open and click through rates” (Strycharz, J. et al,2019), and customers can be enticed onto the website by special offers, discount codes, sales and new product launches.
Discount codes could draw younger audiences in as they want to feel like they are getting a bargain but are also brand conscious. They want the latest “cool” fashions, and also turn to peers or other influences in order to gain their own personal identity. Discount codes could be distributed on email campaigns, magazine flyers, or a mail drop around popular university accommodation spots.
Pop-up shop campaigns
Pop-up shop campaigns could be something that Adidas may invest time and effort in. Adidas previously attempted similar events but caused such chaos that it was shut down before the opening time. If Adidas could focus on doing pop-up shops that are reflective of their physical stores and based around locations that their target markets physically are, this would be a great way to market their brand and products. An example would be to have a pop-up shop in a university, or a wellness event.
Digital innovations that can influence Adidas’ future marketing plans
Adidas must try keep up with the trends around emerging technologies to compete with their main rivals and emerging competitors. While the law is becoming stricter on people’s personal data, companies must be extremely careful on how they store and use data. However, there are some digital innovations outlined below that could be useful for Adidas to consider in their future marketing plans.
Augmented reality could be a game-changer for the clothing and footwear industry in the future. Customers can have an “immersive shopping experience while comfortably seated in front of their computer” (Caboni, F. and Hagberg, J.,2019), trying on clothing using webcams or mobile apps. Recently, a mobile app has been created to use the capabilities of a smart phone in order to enable customers to try on a pair of shoes in your own home, and Adidas can really tap into this market because their target demographic is young and wants to be involved in the latest craze. Curry’s PC World’s point & place is an example of this – it enables the customer to see what a certain piece of furniture would look like in their home.
Looking at the sports and fitness industry, an emerging technology could be wearable technology. This market is quite established already but has the potential to grow massively in the future. Adidas have previously tried to tap into the electronic wearable market, but failed to make an impact, much like Nike’s attempt. However, Nike have collaborated with Apple on their smart watch, and the watch connects the popular Nike running app. Adidas could consider forming a similar collaboration with Fitbit, Garmin or other competitors in this space.
This isn’t the only wearable technology Adidas could tap into. Smart Vests are also emerging, and many professional athletes can be seen using them in recent years to track movement, speed and distance among other metrics. Perhaps Adidas could also research a collaboration with industry leaders in this market.
Chatbots & Instant Chats
Currently, Adidas have no chatbots or instant chat services on their website or social media, but potentially get queries through these platforms. A better way to deal with these queries would be to have instant chats or chatbots that can answer or direct queries to people who will be able to answer them.
Adidas’ current online customer service is “send us an email and we will respond within 2 days”. Is this enough for the younger generation of today? In comparison to Amazon who have 24/7 customer service with instant chats, or Spotify who have a Facebook Messenger chatbot that informs subscribers about new releases or account information, Adidas may need to step up as younger customer expect their queries to be dealt with straight away. Customer satisfaction can be a big factor when looking at if you will shop with that company again or not.
Firstly, personalisation techniques can be used in some of Adidas’ online marketing techniques, such as email marketing or remarketing products people may like in the form of social media advertisements. However, Adidas could take a different approach to personalisation, by going back to their customers and putting them at the centre of a campaign. People relate to other people and having customers that will be a brand advocate to you is a very important tool.
Another element of personalisation Adidas could use could be within their product range. Currently, Adidas allow users to personalise their shoes by allowing them to add 11 characters free of charge. Adidas could utilize this collaborative tool further by letting the users become the designers. Picking custom colours, custom writing, length of sleeves and materials used would allow the customer to design exactly what they wanted and felt included in the design process.
In summary, this case analysis explored the “Create the New” Adidas Marketing strategy that was outlined in 2015 and looked at in detail. Adidas as a company have seen a growth in sales but their digital advertising only marketing campaign was found to have its downsides. Adidas over-invested in digital advertising and focused on short-term metrics rather than looking at the long-term implications of their decision. Brand health was the most important aspect that wasn’t being looked at in this new strategy.
For strategy, Adidas need to be looking at an in integrated campaign that includes channels such as digital, TV, outdoor, cinema and email, along with high-quality content such as video. Adidas rely on their search advertising to bring 38.48% of their audience to their website, but if they branch out into different methods of advertising, both online and offline, they will bring traffic from different sources.
Emerging technologies will play a huge part of future marketing campaigns. Ideas that Adidas can possibly implement are using augmented reality tools to aid customers to make a purchasing decision or tapping into the wearable technology market by collaboration with an expert in the field. Implementing an in-depth conversational chatbot on both their website for customer service and social media messenger applications could be beneficial, as well as the personalisation of campaigns and products.