With a fashion shift away from the flashy looks of basketball shoes and cultural rejection of the brash athletes that wear them, an industry booming at the beginning of 1997 is now stumbling, and its players are abandoning a marketing formula minted by Nike and investing in new messages that communicate brand authenticity.
"This is the year the tire went flat," says Steven Grasse, president of Puma's agency, Gyro Worldwide, Philadelphia. "The hype Nike spent years generating is gone and it has opened room for a lot of brands like Puma to get in the game."
The formula Nike created rested on the brand's credibility as a superior performance product among pro athletes. But sports marketing warfare has pounded the meaning out of the word "endorsement." It now means hired gun.
Marketers in the past year have focused more on brand messages and product attributes than deifying athletes.
Venturing into the unknown can be liberating.
"If you're a Tommy Hilfiger or a fashion brand, you don't have to worry about adding more sports authenticity. If you're an Adidas or Nike, you can focus on the product, the diversity of sports for the everyman," says Courtney Beuchert, managing director of Leagas Delaney, San Francisco, agency for Adidas.
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Reebok International shaved athletes from its endorsement rolls, most notably NBA superstar Shaquille O'Neal. Nike and other companies let contracts expire and inked rookie endorsers for little cash and no promises of ad exposure.
Athletes haven't been banished, though.
"The key to using athletes successfully is to make sure the ad isn't about the athlete but about the product and the brand," says John Wardley, Reebok's director of global advertising.
Adidas, one of the few hot Nike-esque brands at retail, has used pro athletes in most of its '98 ads. But the TV messages made soulful statements about sports; print upheld product. Industry observers say Adidas has shown you don't have to spend like Nike to compete with Nike.
Sales of sneakers in the U.S. increased 11.9% to $8.07 billion in '97, according to industry newsletter Sporting Goods Intelligence. But after a strong start, the industry wheezed to the finish line as casual and "athleisure" footwear knocked the wind out of it.
No one has been sucking wind more than Nike. The industry leader posted fiscal '98 sales of $9.6 billion, up 4%, but its fourth-quarter footwear sales plunged 11% in the U.S. Sales in the U.S. plunged another 13% in its recently completed first quarter '99, part of an overall decline Nike attributes to sluggish sales in Asia.
"We will not get over $2.68 per share [achieved in fiscal '97] until Asia comes back for us," said Nike chairman-CEO Phil Knight in the '98 shareholder's letter. "To come back does not mean Asia has to be booming again, but it does mean we need to see the bottom of the slide, so that retailers are again confident enough to order several months in advance."
Currently, Nike has countered poor sales activity in Asia by dramatically reducing its backlog of U.S. product, and shipping in the Asian surplus, keeping factory outlets overstocked with the swoosh. Nike will slice $100 million from global marketing in fiscal '99, most of it in advertising, and most of it in the U.S.
With few exceptions, players began pruning ad spending in first-quarter '98, and those fewer dollars have been spent against softer messages. In January, Nike launched the kinder, gentler "I can" campaign. Its impact wasn't felt at retail, and Nike has let the campaign fade into the background.
Nike followed this summer with a "What are you getting ready for?" campaign that positions sports training as integral to the everyman's lifestyle. Celebrity athletes are used sparingly, almost anonymously, fulfilling the function of making a product point or a joke that supersedes personality.
Reebok International has been bolder in being different. Last spring, it launched a global TV push positioning its DMX cushioning technology as radically different, superior, and altogether appropriate for the everyman yearning to assert the inner someone in a swoosh-filled world. The creative has succeeded in spurring sales of the running shoes.
The industry's flashiest categories -- basketball and cross-training -- are its biggest, and they're hurting. Basketball grew only 2% in '97; cross-training dipped 8%, according to NPD Group. Industry observers see Nike's "What are you getting ready for?" ads as an effort to generate heat for cross-training that will spread to other categories.
"Basketball is still the biggest but it has to be reinvented," says Bob McGee, editor of SGI. "Demographic research says the influential teen and young adult is turned off to basketball and will turn on a dime to fashion."
Teens have a desire to be dazzled and need authenticity -- a mercurial mixture for marketers. Just ask Fila USA, which rocketed to No. 4 in the category behind fashionable basketball products and clever advertising. But it has cooled and is seeking to root itself in performance.
In '98, running has supplanted basketball as the sport to build brand image around. The clean, simple look of running shoes is red-hot. Sales of running shoes shot up 38% in '97, fueled by fashion, according to Athletic Footwear Association.
Nike, Reebok and Adidas have invested more in "running" advertising this year. But their messages owe something to red-hot New Balance, for years touting product performance and praising the average Joe. Sensing opportunity, New Balance in January launched a brand push dubbed, "Achieve New Balance," tripled its ad budget to $13 million and made its first foray into network TV. Its focus: Sports are important but they're not all you do.
"It's just not about `just doing it'," says Jay Durante, partner at New Balance agency, Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York.