Adidas: we overlooked traditional media's ability to drive ecommerce sales

Global media director said sports giant is on journey to make marketing more effective.

Adidas: Peel speaking at EffWeek
Adidas: Peel speaking at EffWeek

Adidas might be one of the biggest advertisers in the world and one of the best-known brands globally, but until four years ago the sports giant didn't even do any brand tracking, its global media director said during a presentation at EffWeek on Tuesday. 

Speaking about how the brand has driven marketing effectiveness and grown its share within the sporting goods market, Simon Peel said: "Adidas is by no means streets ahead when it comes to marketing effectiveness. That's not a humble brag, because we're not – but over the past few years we have started to introduce an element of marketing effectiveness.

"As an example, about four years ago we didn't have any kind of econometric modelling  our attribution modelling was based on last click; we didn't do brand tracking. So all of the basics that exist to show you how much you should be spending on marketing didn't exist."

Peel revealed how the company, which he said outpaced the growth of the wider sportswear sector, is undertaking a fresh look at how to measure its marketing success and is focusing more on brand rather than product-led marketing, after econometric modelling suggested it was underinvesting in brand.

Brand advertising grows sales across all categories

Adidas, he said, had been spending only 23% of its marketing budgets on brand and emotionally led advertising, compared with 77% on performance advertising  despite the fact that brand advertising drives the majority of Adidas sales across wholesale, retail and ecommerce.

"One of the other things we saw from the econometric modelling was that our individual business units were not driving their own business unit sales," he told the audience. "So although we believed that football [advertising] was going to drive football sales, actually it wasn't; football was driving running sales, running was driving Originals, Originals was driving training."

He added: "Around this time, we put in place a new campaign framework and at the heart of that was emotional brand driving activity – something we call 'reasons to believe'. At the same time, we had a concurrent approach we called 'reasons to buy', typically with a rational persuasive message."

Adidas has been too "overly focused on digital attribution", Peel said, partly as a result of the ability to "look at short-term measurements in real time".

"But when you look at econometric modelling it's telling you something very different," he said. "It's telling you that you should be investing in video, which doesn't do very well in last click attribution, that you should be investing in TV, that out of home and cinema is driving ecommerce sales."

This real-time ROI can mean brands get tempted into ploughing investment heavily into digital  but, actually, he noted, that can result in short-termism that doesn't ultimately grow the brand or sales, and can give "misleading" results.

"We accidentally came across this about two years ago when Google AdWords broke," Peel explained. "What we found was that we couldn't invest in paid search, but got a similar amount of traffic and revenue anyway coming from SEO. That happened for about two days.

"And that happened again about six months later for a week and the pattern recurred. Again, we were chasing and investing in a particular channel to drive ROI, but it was sales we were going to get anyway."

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