Brand Case Study #6
Factors contributing towards the success of Adidas in Digital medium are,
1. Digital media helps Adidas develop all along the value chain. The company incorporates data from digital engagement to help them develop products, from design, manufacturing, and sales. The company believes by consolidating ad spend in digital efforts will eventually help the company expand margins. Clearly, Adidas is having major success with digital and social channels, and believes that dedicating a majority of marketing resources to the channel will ultimately pay off in strides.
2. Athletes have large and engaged social media followings. Real Madrid’s Cristiano Ronaldo has the world’s largest Facebook following, about 120 million, and reaches over 260 million users via social media. This prompted Nike to sign a $1 billion lifetime pact with the soccer player, which some believe was a bargain for Nike. Adidas, meanwhile, has a lifetime deal with Barcelona's Lionel Messi, which is reportedly worth $10 million a year.
3. Consumers continue to increase their time spent consuming digital media, while advertisers continue to increase their ad budgets into digital channels.
Future is starting to look more and more uncertain for traditional advertising medium and its only a matter of time before its overlooked in developing countries like India too.
Adidas
is making a big bet that advertising on digital channels will be more effective
at driving revenue growth than commercials on TV.
The shifting of Adidas’ ad budget to largely digital channels reflects their ambitions to attract younger users, who watch less or no TV and are increasingly shifting attention to mobile device.
According to Kasper Rorsted, the CEO of Adidas, it has turned its back on Television Advertising. The reason being that Adidas is aiming at generating a revenue of $ 4 billion by 2020 and wants to use the digital channel to get there.It is almost clear that younger consumers engage with Adidas predominantly through mobile devices and that digital engagement is the key to capturing the young target audience.
If you look at the company's marketing budget, almost half of its marketing investments go into partnerships, while its other marketing expenditure goes towards digital, advertising, point-of-sale, and "grassroots" activation, on the ground with local sports clubs.
The shifting of Adidas’ ad budget to largely digital channels reflects their ambitions to attract younger users, who watch less or no TV and are increasingly shifting attention to mobile device.
According to Kasper Rorsted, the CEO of Adidas, it has turned its back on Television Advertising. The reason being that Adidas is aiming at generating a revenue of $ 4 billion by 2020 and wants to use the digital channel to get there.It is almost clear that younger consumers engage with Adidas predominantly through mobile devices and that digital engagement is the key to capturing the young target audience.
If you look at the company's marketing budget, almost half of its marketing investments go into partnerships, while its other marketing expenditure goes towards digital, advertising, point-of-sale, and "grassroots" activation, on the ground with local sports clubs.
Factors contributing towards the success of Adidas in Digital medium are,
1. Digital media helps Adidas develop all along the value chain. The company incorporates data from digital engagement to help them develop products, from design, manufacturing, and sales. The company believes by consolidating ad spend in digital efforts will eventually help the company expand margins. Clearly, Adidas is having major success with digital and social channels, and believes that dedicating a majority of marketing resources to the channel will ultimately pay off in strides.
2. Athletes have large and engaged social media followings. Real Madrid’s Cristiano Ronaldo has the world’s largest Facebook following, about 120 million, and reaches over 260 million users via social media. This prompted Nike to sign a $1 billion lifetime pact with the soccer player, which some believe was a bargain for Nike. Adidas, meanwhile, has a lifetime deal with Barcelona's Lionel Messi, which is reportedly worth $10 million a year.
3. Consumers continue to increase their time spent consuming digital media, while advertisers continue to increase their ad budgets into digital channels.
The
influx is not expected to let up in the near future. For instance, in the US
digital advertising industry will continue to experience remarkable growth
through 2021 to reach nearly $100 billion in annual revenue, driven primarily
by the sustained migration of ad dollars from traditional TV to digital video
and the continued increase of social spending. Overall, the strong growth
of the US digital ad market can largely be attributed to increased time
spent by consumers on digital media and brands' increased comfort with
allocating budgets to digital formats, particularly on digital video.
In
a recent 2016 survey of almost 400 US ad agencies and marketers, it
was found that two-thirds of respondents plan on increasing spending on digital
video in 2017. Moreover, mobile will become the top destination for
digital ad spending as advertisers continue to attempt to resolve the
disconnect between the rapid growth in time spent on phones and tablets and the
relatively small share of ad budgets that are allocated to such platforms —
known as the mobile opportunity gap. In fact, mobile is set to eclipse desktop
ad spend by 2018
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