Digital marketing helps Adidas cut ties to sports bodies

Wed Jan 27, 2016 7:51am EST
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By Emma Thomasson

BERLIN (Reuters) - If Adidas ends its funding of the athletics governing body, it would not just be a reaction to doping but also a sign of a shift towards spending on individual sports stars and teams who can promote brands directly to fans via social media.

The BBC said the German sportswear firm, whose 11-year deal made it the biggest sponsor of the International Association of Athletics Federations (IAAF), had decided against continuing with the contract as a direct result of doping and corruption allegations that emerged in December.

Neither Adidas nor the IAAF would confirm the report, but such a move would fit in with a trend towards sponsors like Adidas feeling less bound to sports governing bodies as the ultimate gatekeepers to fans.

The rise of social media has meant marketing budgets have moved away from television and towards online advertising, with top sports stars now able to directly promote their chosen brands to millions of fans who follow their feeds.

"The advent of digital means there is less need for the event platforms. Fans don't interact with the governing bodies. They engage with the sport, the teams and the individuals," said Rupert Pratt, co-founder of sports agency Generate.

Adidas is locked in a global battle with Nike for brand supremacy. But its pockets are not as deep as its U.S. arch rival - despite a recent hike its marketing budget is still about 50 percent less - increasing the need for it to be more discriminating rather than fight for every deal.

Under former boss Horst Dassler, Adidas practically invented the idea of long-term deals with sporting federations like FIFA and the Olympics to get its logo onto the field. It is now focusing more on contracts with the highest-profile players, clubs and national teams and less on federations.

This trend was shown last year when Adidas decided against renewing its contract with the U.S. National Basketball Association (NBA) so it could invest more in players like James Harden of the Houston Rockets, who struck a 13-year deal worth a reported $200 million.   Continued...

The Adidas logo on a 3D city map is pictured at the flagship store in Berlin, Germany, January 20, 2016.   REUTERS/Hannibal Hanschke