Branding: A Risky Business

In regard to Daniil's post titled “Sports and Brands: Athlete Endorsements,” I agree that athlete endorsements can be very risky for brands that strive to build long-term equity (most, if not all, brands fall in that category). Whether the endorsement is for a small company in Boston or a leading global brand, negative publicity created by the athlete can destroy brand equity. Since endorsements with current athletes are the riskiest due to high probability of changing teams, endorsements with retired, well-known athletes could be a better decision.

On the other hand, endorsements with golfers provide an exception to this risk theory because golf is an individual sport. Further, endorsing with a global icon such as Tiger Woods, who will not “change teams,” has already accomplished more than most golfers in history, and is extremely unlikely to generate negative publicity, is almost risk free. Such an endorsement, however, comes at incredible cost.

Nike has leveraged its endorsement deal with Tiger Woods, as well as its unparalleled brand equity in other categories, to become the leader in golf apparel in the U.S. and worldwide as well as in the top three in the U.S. in balls and footwear. As mentioned in the December 11 Brandweek in an article on page 10, Nike has accomplished this leading market position just 8 years after entering the industry. Nike used its equity as a leading brand in numerous other categories in hopes of dominating the lucrative golf industry. Now with Tiger Woods and other top golfers on board, Nike will launch a $20 million campaign in January to feature many new products, most notably the SUMO “square” driver. Nike strives to be the top brand both on tour and for amateurs, offering equipment and apparel. Nike golf apparel even attracts non-golfers. Exclusive golf brands such as Callaway and Taylor Made continue to lose market share to Nike.

The lesson here is that leading brand equity can be leveraged in almost any market. However, the risk of failure could destroy equity in the new category as well as existing categories, potentially ruining the brand. Adding an expensive athlete endorsement to that equation adds even more risk. Nike is an example of a brand enjoying incredible success in both new and mature markets, but not all brands are so successful. There are numerous factors to consider before brand bridging and even more factors to consider before signing an endorsement of any type.

Robert Cusumano