Pogba + United + adidas – The perfect marketing match?

An announcement under the hashtag #Pogback at 12.30am signalled Paul Pogba’s return to Manchester United after four years at Juventus. The boy who left England with bags of potential has come back as a man to finish what he started with his first senior club.Whilst Jose Mourinho has signed Pogba for purely footballing reasons, it’s clear the club, adidas and the player himself will all benefit commercially from this new partnership. From a marketing perspective it seems to be the perfect match.One of the biggest personalities and most exciting young players in the game has joined the biggest club in the world, which is just starting its second season with kit supplier adidas, for whom Pogba is already a key ambassador.

Signing up Pogba on a £31m 10-year deal earlier this year has helped adidas create a fresh, new look that capitalises on the Frenchman’s unique style, individualism, flamboyant nature and flashy personality. He has been the figurehead of the brand’s #FirstNeverFollows campaign, a brand position that builds on the previous #ThereWillBeHaters activation and mixes football, fashion and music. The aim of this is to appeal to the younger audience, the next wave of potential adidas consumers, and win them over from newer brands like Under Armour and New Balance, who are challenging the more established giants.

Pogba gives adidas a point of difference over its rivals, such as Nike, who were also competing for his signature. He wasn’t signed just as a face to shift trainers, but as a catalyst to help change the nature of adidas’ football marketing…to make his mark on the brand itself.

From United’s viewpoint, Pogba and adidas also help the club reach a younger audience, an audience that may be swaying towards supporting Manchester City, Real Madrid, FC Barcelona or another of Europe’s big clubs.

Pogba will be the face of both United and adidas for years to come. He hasn’t returned to Old Trafford for just one or two seasons; he will surely be there for a significant proportion of his career. He represents the new United, forging a new identity in the post Sir Alex Ferguson, era under the leadership of Mourinho.

Adidas, like other sponsors, do not get a say in the club’s transfer activity (although they may have had a quiet word in Ed Woodward’s ear), but for them shirt sales are clearly critical. Aligning one of their big ambassadors with one of their biggest clubs (alongside Real Madrid) will have been music to the ears of adidas, as the ‘POGBA 6’ United shirts start flying off racks around the world.

One of the reasons adidas teamed up with United in the first place is because the club has a huge fan base in the US and Asia, both target markets for the German sports brand. Pogba will help to gain cut-through in those markets.The French midfielder’s social channels have more than 13m followers. For United, this offers an opportunity a reach a new audience; whilst for Pogba, joining the Red Devils will no doubt see this figure grow and grow, as has happened with other recent arrivals to the club – a win-win. And adidas can utilise this massive reach to push out branded content and messaging to his adoring fans.This branded content played a role in the announcement of Pogba’s capture. Adidas teamed up with UK grime artist Stormzy to record a short piece of music-focused film featuring Pogba that matches the #FirstNeverFollows theme, announcing the player’s arrival at United. We are likely to see more dual-branded content like this appear as adidas and United push Pogba to the front of their marketing activity and his global appeal spirals skyward.

Watch this Space: Jersey Sponsorship in the US

In this year’s NBA All Stars game in Toronto, there was one towering difference on the court. It had nothing to do with what the players were doing with the ball, but everything to do with what they were wearing. On their jerseys, for the first time, there was a brand logo – Kia.
Let’s put this in proportion: at 3.25 inches by 1.6 inches it’s barely noticeable in comparison with the logos on MLS or European sports jerseys, but it’s the barrier it crosses that’s significant. There can be no doubt that this is the NBA putting feelers out for what Commissioner Adam Silver talked about back in 2014 when he said: “We know what the value is to advertisers…to be able to show fans in-game branding.”

The math is simple – the average MLS jersey goes for around $3–3.5m dollars a year, but for commercial departments from the leading “big four league” teams in the US, I would imagine that there have been some envious glances across the pond to Manchester United’s deal with American car company Chevrolet at $75m a year.

Whilst the NBA have been joined by the NHL (whose Commissioner described jersey sponsorship as “coming and happening”), the MLB and NFL have been certainly more lukewarm. There are obvious logistical issues around it.

First, with a league’s collective bargaining agreements there needs to be consensus and balance as to whether it’s sold centrally or as per the European sports model, team by team. And secondly, the objection of broadcasters concerned about potential conflict and lost revenue.

The real question here is not whether this will indeed happen in the USA (I believe it’s inevitable over the next few years in NBA and NHL, at the very least), but rather whether it will impact negatively for consumers. And moreover, will brands here in America learn the lessons from the decades of good, bad and ugly jersey sponsorships in the past to influence the future?

So do consumers care…and, in particular, the Millennial consumer?

At Synergy, we’ve long been frustrated by the lack of real understanding and insight on the way Millennials engage with and view sports – both now and in the future. There are countless myths that have been built across the demographic, some of which are wrong and many of which can skew the way brands and rightsholders build campaigns. At the end of 2015, we undertook a bespoke and comprehensive piece of research with our sister agency, The Intelligence Group, around both Millennial and Generation X attitudes towards sports, sponsors and the future of sports engagement, with findings featured throughout Now, New & Next 2016.

The survey (3,145 consumers in America with 66% 18–34-year-olds and 34% 35–54-year-olds) specifically examined the potential impact of jersey sponsorship among the audience.

In short – they don’t see it as an issue. The rise of European soccer, MLS and WNBA has made jersey logos a more acceptable part of the viewing experience for the Millennial sports fan. The research highlights that 27% of Millennials think jersey sponsorship is “very appropriate” (higher than Gen Xers), whilst, tellingly, more Gen Xers than Millennials think it’s better for brands to be in the ad break or break bumpers.

History also shows that team success soon overcomes fans’ commercial objections. FC Barcelona – whose motto is famously “More than a Club” – held out for decades against commercial shirt sponsorship by featuring Unicef on the front of their jersey (at no charge), before replacing the global charity with sponsorship from the Qatar Foundation for a then record $40m a year.

Whilst there was a clear media backlash, it didn’t last long when a team with significantly increased resources went on to lift the UEFA Champions League. So if it helps your team produce a great spectacle, most fans soon overlook the logo.

Critically, fans soon discover that a brand appearing on their shirt will not affect their “fanship.” Indeed, more than being just a benign presence, fans may even come to see a jersey sponsor as a positive force for good, with the brand actively enhancing this very fanship. Another reason why this front-and-center asset can be so powerful.

As a jersey sponsor you have a responsibility, since your logo becomes part of the history of the team. Famous jerseys down the ages of European sports are identifiable due to the brand logo on the front of them – the brand locked forever, in the very midst of that trophy-lifting moment. The same applied off the pitch, where through the replica shirt market, fans of all ages wear your brand on a daily basis.

You cannot be edited out – be that in the live moment, or the subsequent media coverage: your brand is indelibly stencilled into that moment of history (for good or bad).

This responsibility means that you must understand and tap into the players, the fans, the culture and the tone of the team.

Lessons Learned for the Future

So what lessons can brands considering jersey sponsorship here in the US learn to ensure this doesn’t become just a glorified media buy?

Jersey sponsorship has always been the closest you can get to being in the action as a brand. New tech can only help this to literally get up close and personal with your team and your favourite players. At the 2016 CES Sports Forum, virtual reality was talked about by one team owner as “what TV was to radio” – imagine the creative capacity for VR technology being able to take fans into the action courtesy of the jersey sponsor.

Being at the heart of the action means being at the heart of the live moment, and research shows that Millennials notice brands in-game more than anywhere else. As a jersey sponsor you need to ensure you contractually own the live moment by having access to your team’s official social media feeds in order to feed the consumers’ desire for in-play, shareable content that can enhance their fanship.

Get the players onside and fast, as they’re the living embodiment and running billboard for your brand. This is what can make the activation of a shirt sponsorship both easy (as you don’t need to shoehorn your brand into the situation) but also dangerous (you may not want your brand involved in certain off-court exchanges).

Again, with players controlling their own IP and the restrictive contracts they can have with teams in the US on its usage, brands need to be savvy enough to work in harmony with the players. Additional agreements with them are a must, especially in relation to their social feeds. Take, for example, the starting line-up for the Cleveland Cavaliers, which has a combined Twitter and Facebook following of 58m, versus the team’s official feeds of just over 5m.

LeBron’s Twitter following alone is nearly as big as that of all the other teams in the league combined.

Don’t be afraid to innovate or have fun with it – when Intel signed a jersey deal with FC Barcelona they literally turned the traditional model inside out by putting their Intel branding on the inside of the jersey. Some brands have handed over the space to a charity that they back for key matches – something that usually attracts positive sentiment.

The geographic activation restrictions of most US league deals ensure that the jersey sponsor would need to keep home fences mended, but the real potential for the leading teams would be the global potential. It’s no accident that leading UK soccer clubs Manchester United, Liverpool and Chelsea are sponsored by Chevrolet, Standard Chartered and Yokohama respectively – all brands targeting a global audience. Chevrolet don’t even sell vehicles in the UK.

Jersey sponsorship will happen here in the US, and fans will accept it. Leagues and brands, however, must look past the jersey as simply prime estate, instead seeing it as a chance to help share the very beating heart of the team.

Respect this, enhance it and tap into the fan culture, and it’s among the most powerful assets in a sponsorship arsenal. Get it wrong and it’s an expensive – and very public – mistake.

This blog comes from Synergy’s Now, New & Next sponsorship and entertainment outlook for 2016, which can be viewed in full here.

adidas & Manchester United: Keeping Their Eyes on the Prize

Back in late 2014, Synergy cut through the wave of commentary on the record-breaking £750m adidas kit deal with a value-based view on whether the deal would be worth it.

According to adidas CEO, Herbert Hainer, it has.

However, in a recent interview with German newspaper Suddeutsche Zeitung, Hainer appeared to place equal emphasis on United’s style of play, saying “Business with Man United is going very well, we sell more shirts than expected. We are satisfied….even if the current playing style of Man United is not exactly what we want to see.”

And, sure enough, it’s Hainer’s comments on the United playing style which have hit the headlines…with many football fans agreeing with him.

But as adidas CEO, responsible for maximising value for shareholders, aren’t Hainer’s remarks concerning the £ value added to adidas’ bottom line more interesting? Is it not more remarkable that a £750m deal, regarded by many sports marketing experts at the time to be too expensive, is in fact outperforming sales expectations? As I’m sure Manchester United manager Louis Van Gaal would insist, sports marketers and newspapers should focus on the value-based facts and figures like:

- “… we sell more shirts than expected” (Herbert Hainer, adidas CEO)

- “Many adidas retail partners have reported a 200% increase in day one sales vs. last year’s kit launch” (Steve Marks, adidas’ Director Of Sports Marketing for Manchester United)

- Sales of the club’s shirts broke the existing Megastore record by almost 50% (Manchester United)

Though Hainer’s single comment on the United playing style hit the headlines, the adidas CEO is clearly keeping his eyes on the prize – profit. Whilst adidas’ Manchester United kit sales are off to a strong start, this is a marathon, not a sprint. Only with time and effective measurement will we know whether adidas have created lasting value for their shareholders over the full 10-year term.

adidas & Manchester United: Will It Be Worth It?

Since Manchester United confirmed the record-breaking £750m adidas kit deal in July, are we really any clearer on whether the 10 year deal is good value for the German sportswear giant?

On the face of it, the wave of commentary post-announcement has given sports fans across the world a comprehensive account of the costs and benefits. If we believe the benefits outweigh the costs – as adidas and many fans do – then the deal would represent value for money. The key considerations look something like this:

• Costs: £750m rights fee over 10 years, products supplied and outfit of all the club’s teams
• Benefits: increased brand awareness, enhanced favourability vs. Nike, direct revenue from shirts and dual branded merchandise

However, something is missing.

Do we know the £ value adidas expect from increased awareness? Do we know the £ value adidas expect from increased shirts sales? Do we know the £ value adidas expect to return to shareholders? Nike decided against extending the contract (2013 value £38m), claiming the terms “did not represent good value for Nike’s shareholders“, so if we really want to understand adidas’ record-breaking deal we need to understand how it’ll make them money. Put another way, we need to understand the pathways through which adidas will generate value and what they are worth.

Pathway #1: Brand awareness

adidas chief executive Herbert Hainer is right when he says “[the deal] will help us to further strengthen our position in key markets around the world“. Manchester United is one of the most popular teams in the world with a claimed global community of 659m followers, and is increasingly prominent in the Far East and US.

So what is this worth?

Outside in, we cannot demonstrate Synergy’s tailored approach to measurement. What we can do, is apply some logic against a hypothetical scenario. So, if we imagine that 2% of United followers are unaware of the adidas brand, adidas is reaching over 13m more people because of the sponsorship. If we assume 20% of those are open to buying United / adidas branded merchandise and that 20% of those actually do, then adidas have 520,000 new customers (13.2m x 20% x 20%). If we assume each of them generates £50 profit for adidas per year, the total 10-year value created is £260m.

Pathway #2: Brand Favourability

Among those already aware of the adidas brand, the deal increases relative conversion rates down the sales funnel. Put another way, some of the 659m United followers will move away from Nike towards their new team sponsor, especially if Manchester United can turn followers into addressable individuals for their sponsors. Doing so would add further weight to the not unrealistic assumption that, given the size of the Manchester United fan base, the deal will give adidas a significant competitive over Nike.

So what is this worth?

As before, with a few inputs and assumptions we can estimate Pathway £ value. From the outside in it’s tough to determine – so we’ll leave this as a thought exercise for now – but some simple logic can go a long way.

Pathway #3: Direct revenue

As part of the agreement, adidas will supply product to Manchester United and outfit all of the club’s teams. In addition, adidas will have the exclusive right to distribute dual-branded merchandising products worldwide.

So what is this worth?

If we take Mr Hainer’s estimates as accurate, we expect “total sales to reach £1.5bn during the duration of our partnership”. Remember, however, that revenue is not the same as value. The value each of the c.1.5m annual shirt sales from 2009/10 – 2013/14, for example, has a profit margin. The higher that margin the more valuable the “direct revenue” pathway to adidas.

Only when we consider the £ value created by all pathways can we truly know whether adidas’ £750m expense will create value for shareholders. Sports fans don’t need a rigorous cost-benefit analysis to debate deal value – most will understand the dent in adidas’ wallet comes with huge potential upside. But for brands and rightsholders worldwide, understanding of £ value created across Pathways to Value should be a pre-requisite to any sponsorship deal.

Only with time and effective measurement will we know whether adidas have created value for their shareholders.