Under Armour wants to be a ‘louder brand’ as it looks to turn ‘each marketing dollar spent into three’
The American sportswear company is trying to make marketing dollars stretch further as it faces relentless competition from industry giants Adidas and Nike.
Under Armour plans to be a “louder brand” and turn each marketing dollar it invests “into three” as it faces declining sales in North America, its largest market, and continues to fight for market share in a landscape dominated by Adidas and Nike.
The focus on marketing effectiveness comes after the activewear giant today (13 February) unveiled its fourth quarter earnings, which revealed that while revenue from its international business increased by 24% to $395m, revenue for North America, which is responsible for 71% of sales, declined by 6% to $965m.
Overall, revenue was up 2% to $1.4bn, while wholesale revenue increased 1% to $737m and direct-to-consumer revenue “fell flat” at $577m.
Speaking on a conference call, Under Armour’s chief operating officer Patrik Frisk said the company needs to become a “little bit smarter” with its marketing spend and data analytics in order to truly understand the customer journey.
“It’s making sure we’re understanding the consumer journey and being there when we have an opportunity to interact with them,” he said.
“Understanding how that consumer moves through their purchase journey when they’re in the area of looking to invest into some foreign activity and then making sure that we’re there whether it’s in a digital or real world. And making sure that we’re delivering the right content, the right tone of voice at that moment in time and doing it in an Under Armour-appropriate way.”
We’re doing a lot of work to really understand the return on marketing investment… we’re now able to start to deploy that, to spend each dollar smarter and make each dollar work like three.
Patrik Frisk, Under Armour
The report also indicates revenue was up 32% in EMEA, compared to Asia-Pacific (up 39%) and Latin America (down 15%).
Apparel revenue increased 2% to $970m, while footwear revenue decreased 4% to $235m and accessories revenue slumped 2% to $108m.
When asked about product launches for 2019 and how that might change depending on whether the company gains confidence, Frisk said Under Armour plans to support those launches by becoming a “louder brand”.
“And we’re supporting [new products] with a louder brand and being more deliberate with our marketing. [We’re doing a lot] of work to really return [and] understand the return on marketing investment,” he said.
“We’re now able to start to deploy that, to spend each dollar smarter and make each dollar work like three.”
The company’s chief financial officer, Dave Bergman, said Under Armour’s marketing investment in 2018 was around 10.5% of sales, which falls into a range that feels “right” for the company. But rather than upping that spend to give it a louder voice, the company hopes the focus on effectiveness will make its marketing investment go further.
“The power of that 10.5% should be a lot stronger going forward with all the roaming work we’ve been doing and also with the restructuring and freeing up some marketing dollars where we don’t think the returns have been as strong and being able to reinvest into the right spot,” Bergman said.
“It’s probably similar planning principle to the amount of marketing dollars, but hopefully a lot more return for that same amount of dollars.”
