Dream Endorser: Tiger Woods as a Giant of Marketing ROI
NEW YORK (AdAge.com) -- Follow the bouncing golf ball to see how much marketing impact one man can have in a celebrity-driven, star-making culture.
1966 Nike deal
In 1996, Nike signed Tiger Woods to an endorsement deal, mostly for apparel. In 1998, the company decided to create Nike Golf. In 2000, Mr. Woods began playing with a Nike ball. In 2002, he switched to Nike clubs.
This year, Nike Golf became the fourth-largest equipment retailer in the $5.8 billion golf-equipment market.
$650 million man
For Nike Golf, he's the $650 million man. For General Motors Corp., he's the magician helping Buick shake its image as an old-people's car, lowering the median buyer age by a decade. And for EA Sports, he's part of a sports-game team that's helped it triple sales since 1999.
"Tiger Woods might be the single most impactful endorser in the history of marketing," said Paul Swangard, managing director for the University of Oregon's Warsaw Sports Marketing Center. And yes, that includes basketball phenomenon Michael Jordan, whom he beat for the top spot in the annual Harris Poll that measures America's favorite sports stars -- which Mr. Jordan had topped since its inception in 1993.
At this writing, results aren't in from the biennial Ryder Cup, where the U.S. team is led by Mr. Woods, but it's clear he's on an unprecedented roll. He recently won five straight tournaments; recorded the 50th victory of his 10-year career; and snagged his 11th and 12th major titles, the British Open and the PGA Championship.
He's also lapped the entire sports world when it comes to marketing. Forbes reported he made $87 million last year, most of it from endorsement deals with a very select group of marketers: Nike, American Express, Buick, Accenture, Tag Heuer and EA Sports. Mr. Woods' representatives from IMG did not comment for this story.
"Likability, believability and popularity," said David Carter, president of the Los Angeles-based Sports Business Group. "Nobody else has that combination. Tiger Woods delivers for his [marketing] partners, and you can add it up."
Indeed, the numbers are staggering.
PGA Tour impact
Start with the PGA Tour. It has reaped the benefits ever since Mr. Woods won the 1997 Masters, the first of his majors, a year after turning pro. TV-rights fees have increased more than 50%, and prize money has almost quadrupled to $257 million. In 1996 there were nine players on the tour who made $1 million or more. Last year there were 78. "I thank him every chance I get," said Phil Mickelson, the world's No. 2 player.
Mr. Woods' alliance with Buick is measured less in dollars than in demographics. The age of the average Buick driver has dropped from 65 to 55 since Mr. Woods signed with GM in 1999 (he re-upped in 2004 for five years and $40 million). Granted, Buick has introduced newer, hipper models that appeal to a younger demographic, but Mr. Woods deserves some of the credit. And GM is looking to expand the relationship.
"We're not talking about switching him from Buick to another vehicle brand," GM's top sales executive, Mark LaNeve, told the Detroit Free Press. "But maybe we could find ways to associate traits of Tiger's -- like precision -- with the corporate GM image."
China and Canada GM brand
Larry Peck, Buick's golf-marketing manager, confirmed that. "We look to leverage the assets we have, and we look at how we can do that with Tiger," Mr. Peck said. "We're now using him in China and Canada. ... We continue to try to leverage him for the GM brand as well as Buick. From a sponsor standpoint, he's a perfect partner."
EA Sports, which makes and markets Mr. Woods' video game, has seen revenue triple from $500 million in 1999 to $1.6 billion in North America. (Of course, it's had a lot more help from NFL commentator John Madden's football franchise.)
Even peripherally, Mr. Woods has had an impact. According to a two-year-old study by Indiana University, the number of golfers has increased 5% annually since he turned pro.
"What he's done, it's a tough thing to get your mind around," said Adam Barr, business correspondent and analyst for the Golf Channel. "Here's an example: Nike gives him credit for bringing the mock turtleneck into golf. Now, that may be a small thing. But when you have golfers going into their local pro shop and saying, 'You better stock this shirt,' I mean, that's the kind of influence he has."
Nike did not respond to interview requests, but its association with Mr. Woods has worked wonders for the company. After signing him in 1996, Nike redid the deal in 2000 for a reported $105 million. That may sound like a lot of money, but not only has Mr. Woods single-handedly built Nike Golf, his apparel deal means that even when he appears in ads for his other partners, he wears Nike clothing. The swoosh is clearly visible in ads for Buick and American Express.
Mr. Woods has not signed a significant deal in a while, preferring to keep his endorsements limited.
"That's his management's M.O.," Mr. Barr said. "They don't want to overdistribute a product that is difficult to access already. You better have a blockbuster deal ready for his people to even take a sniff at."