Sponsor Content Above the Clutter with Pete Krainik
Episode Seven: Man And Machine
Brought to you by: IBM
Under Armour CEO Kevin Plank does not mince words when asked about the company's first attempt at attracting women. "We stunk," he said, conceding that the original clothing line in the early 2000s was "made by a bunch of dudes." It was so bad the company sent the first batch, worth $600,000, straight to an incinerator.
But lately the company's sales -- not its clothes -- are on fire, thanks to a groundbreaking women's campaign, smart PR and a take-no-prisoners approach embodied by Mr. Plank, a feisty former University of Maryland football player whose goal is to topple Nike and become the world's top retail sports brand.
The company, which was founded in 1996, is on pace to reach $3 billion in revenue this year and recently completed its 18th consecutive quarter of more than 20% sales growth. Those results, along with the hugely successful "I Will What I Want" women's campaign from Droga5, are why Ad Age named Under Armour our 2014 Marketer of the Year.
"There is just a cultural attitude at Under Armour of we can be a little better, we can push a little harder. So why would we set our sights on anything but being No. 1?" Mr. Plank said in an interview at the company's corporate headquarters in blue-collar Baltimore, which includes an employee cafeteria aptly named Humble and Hungry.
At the rate it's going, Under Armour might "just do it." While Nike's sales are still 10 times larger, Under Armour, in the 12 months ending in August, increased revenue at three times Nike's pace, Bloomberg reported in early September. It's "well on its way to becoming the second-largest global athletic brand, ultimately eclipsing Adidas," Canaccord Genuity stated in a Dec. 1 report to investors, projecting the company would surpass $10 billion in sales within five years.
Under Armour's 2014 performance was so strong it managed to turn losses into wins. For instance, Nike in late summer outgunned Under Armour for a coveted 10-year deal with NBA star Kevin Durant, worth a reported $300 million. But Under Armour's aggressive pursuit likely forced Nike to pay more, Mr. Plank said at the time, while signaling the company means business. "We put every athletic director, team president [and] league commissioner on notice that Under Armour should be in the game for any deal that is out there globally," said the 42-year-old Mr. Plank, who founded the company in his grandmother's basement.
Earlier in the year, Under Armour came under fire when its uniforms for the U.S. Olympic speedskating team were cited as a possible factor in the team's losing streak. But rather than blaming the athletes or going into hiding, the company gave extensive media access to executives who defended the suits, while deploying endorsers such as Lindsey Vonn and Michael Phelps on its behalf. The effort has been lauded as textbook crisis communications. Under Armour had "enough brand equity to endure the seven or 10 days that we needed until we could actually proactively get our story out to the marketplace," Mr. Plank recalled.
The seeds of success were planted a couple of years ago when the company overhauled its marketing approach. Rather than "dribbling marketing out over the course of 12 months," Under Armour began focusing on three annual "brand holidays," Mr. Plank said. They typically include big campaigns to promote new products.
Under Armour's U.S. measured-media spending -- $18 million last year -- pales in comparison with Nike, which spent $64 million in 2013, according to Kantar Media. Under Armour maintains a disciplined marketing approach that restricts spending to no more than 11% of revenue. But the brand holidays have served to rally the company and help it break through the clutter.
The "I Will What I Want" campaign that launched in late summer is a prime example. One of the architects is Leanne Fremar, senior VP and creative director-women's business, whom Mr. Plank wooed two years ago from fashion brand Theory.
While Under Armour's women's line had progressed from its early "shrink it and pink it" days, the brand had yet to launch a global women's campaign. Ms. Fremar started with a wish list of endorsers, including some unorthodox picks for an athletic brand: Misty Copeland, who stars for the American Ballet Theatre, and supermodel Gisele Bündchen.
Ms. Fremar calls the campaign strategy a "woman-a-festo," saying Under Armour sought to break through the "sea of sameness" in the category. The insight behind "I Will What I Want" was not "you go, girl," she said. The goal was to celebrate women "who had the physical and mental strength to tune out the external pressures and turn inward and chart their own course."
The ad featuring Ms. Copeland shows close-ups of her muscular physique as she dances, while a voice-over recalls that she was once rejected from a top school because she had the "wrong body for ballet." Ms. Bündchen's ad features the grueling kickboxing workout she practices in real life. Ms. Fremar distilled the narratives to a few words: In Ms. Copeland's story, "will trumps fate," she said. And for Ms. Bündchen, "will trumps noise," she added, a reference to the unforgiving media glare on supermodels.
The critically acclaimed campaign proved that women's marketing is no longer an afterthought at Under Armour. The Canaccord report cited the effort -- along with higher-quality female clothing -- as spurring sales in Under Armour's North American women's apparel division, which is on pace to reach $1.8 billion in sales by 2019, up from $410 million this year. To help fuel growth, the company earlier this year opened an office in New York's West Chelsea neighborhood that houses the women's design team.
But Under Armour's soul remains in Baltimore, where it operates from a six-building campus near the city's Inner Harbor that was once a Procter & Gamble plant. Under Armour kept the old building names, which recall P&G brands like Ivory, Tide and Dawn.
The workforce is dominated by 20- and 30-somethings who come to work dressed in Under Armour shoes and hoodies. Meetings are called "huddles." On a recent day inside the Cheer building, workers congregate in the cafeteria, where a TV is tuned to ESPN. Campus walls are covered with posters of Under Armour endorsers—many of them men, like NBA star Stephen Curry and 2014 Cy Young winner Clayton Kershaw. But some of the biggest images are of Ms. Copeland, whose ad has prominent placement on a giant TV screen in a reception area. She belongs there, no doubt.