Nike and Adidas definitely get digital marketing. The North Face, Patagonia and L.L. Bean are also on the ball, but Eddie Bauer, Speedo and Danskin are lagging. Those are the conclusions of a new report from New York-based digital consultancy L2 that ranks the online competence of sportswear companies.
L2, in conjunction with the NYU Stern School of Business, recently released its first digital ranking of the sportswear industry, having already taken on fashion, specialty retail and the hotel industry with what it calls its Digital IQ Index. Looking at 42 companies from June through August of this year - nicely timed to coincide with the hoopla around the 2012 Olympics - the report analyzed each company's moves in mobile, social media, on their websites and within the digital marketing space (appearances in search rankings for example).
Nike and Adidas, the top-two ranked companies, were ranked in the "genius" level by L2. They were followed by eleven companies considered "gifted," 13 who were "average" and another ten called "challenged." An unlucky remaining six companies were deemed "feeble." The companies were chosen based on their size, sector (only apparel-oriented companies) and the strength of their presence in the U.S. and Western European markets.
"There was a lot of buzz with the Olympics and athletes tweeting on behalf of their brands, and we felt it was an excellent time to look at the industry," said Maureen Mullen, director of the research and advisory group at L2. "The brands that top the sportswear rankings have been extremely effective in increasing the stickiness and perceived value of their products through technology and many other industries could learn from this," she noted.
Large Brands Go Cross-Channel
Brands that were dubbed genius or gifted are trying a lot of bold things online, according to the report. "In general our findings emphasize how crucial it is to develop an effective online presence," said Mullen. That includes experimenting with mobile commerce, letting consumers customize products online, tapping into emerging platforms such as Instagram and Pinterest, launching useful iOs applications and running cross-channel campaigns. The report also suggests that multi-brand firms, which can spread their technology investments among numerous businesses, are more likely to have a high online Digital IQ than a single brand or privately-owned businesses. This includes companies such as Adidas, Nike and VF Corporation, which owns brands including The North Face, Vans and Timberland.
As an example, Nike ran a successful multi-channel campaign called "Find Your Greatness" during the Olympics in July that attracted wide consumer attention. A film clip featuring ordinary people getting in touch with their inner athlete was shown on digital channels two days ahead of the opening of the Olympics and on YouTube the following day. Finally it ran on television in 25 countries on July 27th, the day of the opening ceremony. The campaign also encouraged people to tweet using the #findgreatness hashtag through a promoted hashtag campaign on Twitter. The clip has drawn some five million views at last tally on Nike's YouTube channel. "Nike knows how to use a TV spot to spike awareness and then deepen that online to cultivate a relationship with the customer," said Mullen.
Both Nike and Adidas, the report notes, have also made great use of fitness apps to engage with customers. Nike+ and Adidas miCoach both allow people to track their sports performance, improve workouts and even compete with one another. "Because exercise and fitness are so sticky, these brands have a unique opportunity to be part of their customers' daily routine, and fitness apps use technology to create customer loyalty. It's a big opportunity for these brands," said Mullen.
The report also gave shout-outs to companies including Converse, which allows users to customize their own sneakers on its website and has gathered 32.6 million likes on Facebook, the largest number in the sportswear category. It also praised L.L. Bean for its approach to customer service. The catalog firm uses multiple digital channels to get in touch with customers, and guarantees it will respond to all customers via Twitter within three hours.
Nike's Tribal Branding
Another benchmark for success according to the report was a brand’s ability to create a tribe, a large group of highly engaged users. Only two brands were deemed by the report to be nearing tribe status on Facebook: NIKEiD and Nike Basketball, which have more than 500,000 users and a level of engagement as high as 0.20 percent. Others who were close included Nike Running, Nike Mercurial and Quiksilver.
Not surprising, it was found that when athletes were involved in promoting a brand, the engagement rates of users greatly increased. The average engagement rate for athletes was 0.53 percent compared to only 0.09 percent for brands. The report also tracked posts of 42 athletes and found that on average, their brand-related posts had a higher engagement rate than their posts unrelated to their corporate sponsors.
The report also compared companies' Google search volume to the number of Facebook fans they have. Those whose numbers of fans significantly lagged their search volume numbers, such as Korea's Fila, were tagged as "underachievers." Only Converse was identified as an "overachiever," because it had higher-than-expected numbers of fans based on search volume. Other companies could soon attain that status, said the report, including Lacoste, Volcom, Reef and Patagonia. Mullen said companies will have to mull whether the cost of acquiring more Facebook users, which is getting increasingly expensive, is worth the effort.
E-Commerce is King
The report also hints that those companies with a high Digital IQ ranking are selling more products, though it stops short of drawing a direct link. It cites strong e-commerce sales growth of anywhere from 30 to 70 percent year-over-year by players mentioned in the report including Columbia Sportswear, Under Armour, VF Corporation and Nike. At the very least that shows these companies have successfully exploited online sales.
"I think the report points to the ever increasing importance of e-commerce, at a time when retail sales are flat or down. You simply cannot over-commit capital to e-commerce," said Mullen. But she said it is too early to show hard data linking increased e-commerce revenues and these brand efforts online. The data gathered in this and follow-up reports will be analyzed by NYU's Stern School of Business to look for links between the companies Digital IQ ranking and business performance, such as share price and other financial performance metrics. The next report will appear in a year.
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Mary Lisbeth D'Amico is a freelance writer based in Jersey City who frequently covers digital marketing, social media, tech startups, and venture capital. She has contributed to a wide range of publications including The Wall Street Journal, Business Week, Red Herring, and Real Deals. Find her on Twitter at @mldamico.
March 19, 2014