Taps FCB to support retail push: Nautilus bulks up to move beyond direct response

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Hiring one of the largest and oldest ad agencies won't mean the end of the direct-sales pitches for Nautilus Group, the maker of the wildly popular Bowflex home gym. After all, those before-and-after tales of flabby, hairy guts transformed into sleek, well-muscled complexes of abs and pecs made the home gym a hot seller, going from $10 million in sales in 1995 to $585 million seven years later.

In hiring Interpublic Group of Cos.' Foote, Cone & Belding and sibling shops including Marketing Drive, Nautilus-which also manufactures and markets Schwinn Fitness and Stairmaster brands-will broaden its approach beyond direct response TV to general advertising, direct mail, promotions, events and other channels. The Interpublic agencies will also support Nautilus' push into retail locations, which began more than a year ago with equipment made available in sporting-goods stores and clubs.

"By aligning with IPG and Marketing Drive, we hope we can get a holistic approach to our customer base," said chief marketing officer Tim Hawkins.

One of the agency's first challenges, said Mr. Hawkins, will be "resurrecting the Nautilus brand, which has been a sleeping giant in terms of recognized brands. We have taken our eye of the ball for about 15 years."

Before hiring FCB, whose Seattle office will lead the account, Nautilus' ads were created in-house. Mr. Hawkins expects new creative to surface late this year or early 2005. The marketing push is expected to cost about $95 million, a figure that's in line with recent spending.

boon for retailers

Mr. Hawkins didn't offer any details as to what the creative could look like. Whatever the approach, the campaign will benefit from the high levels of brand awareness achieved over the years by the direct-response spots, which-though not known for their production values-have been effective in making the Bowflex name stick with consumers. And that effectiveness has been a boon for retailers.

"The advertising they did on the direct model benefits the retail model, and the retailers like that," said DA Davidson analyst James Bellessa. "They've done a good job of building up brand awareness. When a customer walks through a store and sees a Bowflex sitting there on the floor, they've already been presold to a degree."

Currently, Nautilus does half its business in retail and half in direct sales. Company executives have said that they'd like to achieve 65% retail. However, the company still has a focus on direct, having recently introduced a set of Bowflex dumbbells through the direct channel.

Financially, the company is in the midst of a turnaround. Nautilus fell on hard times following the expiration of the Bowflex patent and the subsequent rise of imitators. In 2003, profits plunged 65%, from $98 million to $34 million.

new designs

The company responded by naming new management-including CEO Gregg Hammann, known for helping Procter & Gamble Co.'s Crest gobble up market share-and by introducing new designs. One of the new products, the Treadclimber, which combines the Stairmaster with a treadmill and an elliptical trainer, did $19 million in sales last year and is on pace to do $50 million this year, according to Mr. Bellessa. Last week, the company's stock price fell because Nautilus failed to meet analysts' expectations during its third-quarter report.

For FCB, the Nautilus win, which came without a review, was the third big triumph recently, following its netting of the Office of National Drug Control Policy and The New York Times accounts. These come at a crucial time, as the agency awaits a decision in Samsung's global review.

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