Individual Assignment Length: 1500 words The Case Study Case Synopsis. In 2013, Under Armour had $2.3 billion in sales yet only $500 million came from its women\u2019s apparel, and the company was ready to expand into the female market segment. The \u201cI Will What I Want\u201d global women\u2019s marketing campaign was the largest Under Armour had ever run. Founder Kevin Plank and his team launched the campaign on a multichannel platform, with social media at its core. The campaign\u2019s success surpassed what Plank had imagined, and he is left wondering where to take Under Armour\u2019s advertising and marketing next. Assignment Questions 1. Should Under Armour continue targeting and growing the female market segment? Or should it target a broader population to gain more traction on Nike and get closer to the number-one spot? 2. Should Under Armour keep paying famous athletes to be part of its advertisement campaigns or should it use more everyday people? 3. Should the next campaign be run on multichannel platforms or should Under Armour solely focus on one channel, such as television or online advertisement? Hint: To gain competitive advantage Format: 1. Very brief summary about the Under Armour case (in 100 words) 2. Answers for Q1 3. Answers for Q2 4. Answers for Q3 5. Conclusion for Q1-Q3\u2019s results (100 words) UVA-M-0910 This document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. Rev. Jul. 27, 2016 Under Armour\u2019s Willful Digital Moves Created in 1996, Under Armour, which first created breathable, wicking materials to replace sweaty cotton found in the shirts worn under football pads, was a brand built on a tough-guy and football image. In less than two decades, founder Kevin Plank took Under Armour from a business run out of his grandmother\u2019s basement in Washington, DC, to a global business with just less than $4 billion in sales. By 2013, Under Armour had expanded to shorts, shoes, and even hats, and was already a success within the men\u2019s athletic-wear market, competing with powerhouses such as Nike and Adidas. Its marketing and advertisement had focused on targeting men by delivering technical apparel positioned as innovative and modern. In 2013, Under Armour had $2.3 billion in sales yet only $500 million came from its women\u2019s apparel.1 Plank was ready to expand into the female market segment. \u201cI Will What I Want\u201d Campaign In March 2013, Under Armour\u2019s rival, Adidas, ranked number two in the U.S. sportswear market, one spot in front of Under Armour, launched the \u201cUnite All Originals\u201d campaign targeting women using original artists popular on social media.2 The ad campaign garnered only 400,000 views on YouTube, did not help boost Adidas\u2019s sales, and was considered a failure.3 Despite Adidas\u2019s lack of success in targeting female athletes, in 2014 Plank and his team believed they could do better and decided to take the risk of targeting women with a campaign titled \u201cI Will What I Want.\u201d At $15 million, \u201cI Will What I Want\u201d was the largest global women\u2019s marketing campaign Under Armour had ever run. Plank and his team launched the campaign on a multichannel platform, with social media at its core.4 Debuting in July 2014, the \u201cI Will What I Want\u201d campaign first featured American Ballet Theatre ballerina soloist Misty Copeland dancing as a voice-over reminisced how she was rejected from a top ballet academy at the age of 13 for having the \u201cwrong body for ballet.\u201d5 Copeland disproved the sentiment by beautifully and powerfully dancing for the remainder of the advertisement. Copeland\u2019s ad was created for 1 Sapna Maheshwari, \u201cWhy Under Armour Made That Mesmerizing Ad with Ballerina Misty Copeland,\u201d BuzzFeed News, July 31, 2014, http:\/\/www.buzzfeed.com\/sapna\/under-armours-powerful-new-misty-copeland-ad-kicks-off-recor#.ookjnO1r9 (accessed May 2, 2016). 2 Anna Rudenko, \u201cAdidas Launches the \u2018All In for #My Girls\u2019 Global Campaign,\u201d Popsop, March 14, 2013, http:\/\/popsop.com\/2013\/03\/adidaslaunches-the-all-in-for-my-girls-global-campaign\/ (accessed May 2, 2016). 3 \u201cUnder Armour: I Will What I Want, and Why It Works,\u201d Clapp Communications, http:\/\/www.clappcommunications.com\/company\/blog\/under-armour-i-will-what-i-want-and-why-it-works\/ (accessed May 2, 2016). 4 \u201cI Will What I Want,\u201d Facebook-Studio, https:\/\/www.facebook-studio.com\/gallery\/submission\/i-will-what-i-want (accessed May 2, 2016). 5 E. J. Schultz, \u201cAd Age\u2019s 2014 Marketer of the Year: Under Armour,\u201d AdvertisingAge, December 8, 2014, http:\/\/adage.com\/article\/news\/marketer-year-armour\/296088\/ (accessed May 2, 2016). This public-sourced case was prepared by Mina Saghian (MBA \u201916) and Meghan Murray, Adjunct Lecturer. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright \u00a9 2016 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means\u2014electronic, mechanical, photocopying, recording, or otherwise\u2014without the permission of the Darden School Foundation. Page 1 of 5 Page 2 UVA-M-0910 This document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. television, print, and the digital space and proved successful in all three.6 The YouTube ad went viral with 4 million views in the first week.7 Following the success of Copeland\u2019s ad, Leanne Fremar, senior VP and creative director of women\u2019s business, thought it was a good time to release the second phase of the campaign featuring supermodel Gisele B\u00fcndchen. Wanting to integrate a stronger web presence to the campaign, Fremar said, \u201cInternally, there was a lot of discussion around creating something that really was going to live in the digital and social sphere and not be a traditional television spot or follow the playbook for a traditional sports campaign.\u201d8 The unexpected partnership between B\u00fcndchen and Under Armour resulted in a lot of social media backlash, which Under Armour used to its advantage.9 The ad experience integrated real-time social commentary from both fans and haters of B\u00fcndchen in response to her signing with Under Armour as she concentrated on a grueling boxing session and ignored the commentary displayed on the walls.10 Negative comments, such as \u201cGisele is just a model,\u201d poured in along with positive remarks such as, \u201cBravo! Gisele can do anything.\u201d Fremar stated that the overall goal of the campaign was to celebrate women \u201cwho had the physical and mental strength to tune out the external pressures and turn inward and chart their own course.\u201d 11 This goal was clearly and succinctly conveyed through the unorthodox athletes chosen by Under Armour and the message clearly resonated with audiences, who spent an average of four minutes on the site during the campaign\u2019s peak.12 Success of Appealing to Female Customers The \u201cI Will What I Want\u201d campaign\u2019s success surpassed what Plank had imagined. It produced 5 billion media impressions worldwide and a staggering $35 million in earned media.13 Adrienne Lofton, senior vice president of global brand marketing at Under Armour, stated, \u201cI Will What I Want was the highest earned impressions campaign we\u2019d ever done, with more than 3 billion earned impressions. It was definitely a sign to everyone here that women can definitely be the category that sets the standard for the rest of the brand.\u201d 14 The campaign resulted in a 28% increase in women\u2019s sales and a 42% increase in traffic to UA.com. 15 Targeting the female market with this viral campaign proved to be a winning strategy for Under Armour. 6 \u201cMisty Copeland \u2013 I Will What I Want,\u201d YouTube video, 1:00, posted by \u201cUnder Armour,\u201d July 30, 2014, https:\/\/www.youtube.com\/watch?v=ZY0cdXr_1MA (accessed May 2, 2016). 7 Eliana Dockterman, \u201cUnder Armour\u2019s Stunning Ballerina Ad Aims to Lure Women from Lululemon,\u201d Time, August 5, 2014, http:\/\/time.com\/3083114\/misty-copeland-under-armour-i-will-what-i-want\/ (accessed May 2, 2016). 8 Minda Smiley, \u201cAnatomy of an Ad: Under Armour and Droga5 on Creating the \u2018Very Unpolished\u2019 Gisele B\u00fcndchen Film,\u201d The Drum, July 27, 2015, http:\/\/www.thedrum.com\/news\/2015\/07\/27\/anatomy-ad-under-armour-and-droga5-creating-very-unpolished-gisele-b-ndchen-film (accessed May 2, 2016). 9 \u201cUnder Armour Unveils Newest Chapter of I WILL WHAT I WANT\u2122 Campaign Featuring Gisele B\u00fcndchen,\u201d Under Armour press release, September 4, 2014, http:\/\/www.uabiz.com\/releasedetail.cfm?ReleaseID=869180 (accessed May 2, 2016). 10 \u201cUnder Armour: Will Beats Noise,\u201d Droga5, http:\/\/droga5.com\/work\/will-beats-noise\/ (accessed May 2, 2016). 11 http:\/\/www.thedrum.com\/news\/2015\/07\/27\/anatomy-ad-under-armour-and-droga5-creating-very-unpolished-gisele-b-ndchen-film. 12 \u201cDroga5\u2019s Gisele Campaign for Under Armour Scores the Cyber Grand Prix at Cannes,\u201d AdWeek, June 14, 2015, http:\/\/www.adweek.com\/news\/advertising-branding\/droga5s-gisele-campaign-under-armour-scores-cyber-grand-prix-cannes-165541 (accessed May 2, 2016). 13 https:\/\/www.facebook-studio.com\/gallery\/submission\/i-will-what-i-want. 14 Jeff Beer, \u201cHow Under Armour Uses a Scrappy Outsider Will to Get What It Wants,\u201d August 31, 2015, Fast Company, http:\/\/www.fastcocreate.com\/3050420\/behind-the-brand\/how-under-armour-uses-a-scrappy-outsider-will-to-get-what-it-wants (accessed May 2, 2016). 15 http:\/\/www.adweek.com\/news\/advertising-branding\/droga5s-gisele-campaign-under-armour-scores-cyber-grand-prix-cannes-165541. Page 2 of 5 Page 3 UVA-M-0910 This document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. Competitive Landscape Following the success of the \u201cI Will What I Want\u201d campaign, Under Armour surpassed Adidas and moved from the number-three spot in the U.S. sportswear market to the number-two spot.16 This was a significant accomplishment for a company only 20 years old and represented just the beginning of where Plank wanted to take Under Armour. Plank\u2019s goal was to move Under Armour to the number-one spot in front of Nike, but because of Nike\u2019s strong brand awareness and history, it would need to continue with groundbreaking advertising campaigns similar to \u201cI Will What I Want.\u201d He had to consider what part of the business would focus on women and how to keep viral momentum. Plank also needed to be aware of other power players in the athletic-wear market such as lululemon athletica, which had 2014 revenues of $1.8 billion and expected revenues of $1.97 billion in 2015.17 Sports Marketing Advertisement Celebrity endorsements In the United States, celebrities were present in more than 15% of advertisements. That number increased internationally resulting in an estimated $50 billion invested globally in celebrity endorsements.18 A celebrity\u2019s endorsement of a brand helped build brand equity and increased brand awareness since consumers associated the celebrity with the brand. Signing a famous name to a brand had been found to increase a company\u2019s sales by $10 million annually and increase the company\u2019s stock returns by 0.25%.19 For example, following Tiger Woods\u2019s 1996 endorsement, Nike transformed its golf business from a $120 million business in 1996 to a $500 million business in 2006.20 Tiger Woods was also an example of the risks of a celebrity endorsement. After his 2009 maritalinfidelities scandal, Nike lost $1.4 million in profit, 136,000 customers switched from Nike, and there were longer-term negative effects to its brand.21 Brands needed to be cautious, because the image of the celebrity representing their brands could change overnight. Another aspect to consider was if the price of a celebrity endorsement was worth it. Companies signed celebrities to multi-million-dollar deals expecting a larger return on their investment. Brands such as Dove, however, embraced the everyday person in their advertisements instead of the hit movie star or basketball star of the moment and saved millions of dollars on endorsement deals. By celebrating the natural beauty of the everyday woman instead of publicizing a celebrity with a picture-perfect body, Dove increased sales and brand awareness.22 16 Sara Germano, \u201cUnder Armour Overtakes Adidas in U.S. Sportswear Market,\u201d Wall Street Journal, January 8, 2015, http:\/\/www.wsj.com\/articles\/under-armour-overtakes-adidas-in-u-s-sportswear-market-1420753934 (accessed May 2, 2016). 17 Brent A. Miller, \u201cLululemon: Double Digit Revenue Growth Expected in 2015,\u201d Seeking Alpha, March 29, 2015, http:\/\/seekingalpha.com\/article\/3036186-lululemon-double-digit-revenue-growth-expected-in-2015 (accessed May 2, 2016). 18 Dean Crutchfield, \u201cCelebrity Endorsements Still Push Product,\u201d AdvertisingAge, September 22, 2010, http:\/\/adage.com\/article\/cmostrategy\/marketing-celebrity-endorsements-push-product\/146023\/ (accessed May 2, 2016). 19 Douglas Karr, \u201cAre Celebrity Endorsements a Viable Marketing Option?,\u201d Marketing Tech (blog), May 6, 2015, https:\/\/www.marketingtechblog.com\/celebrity-endorsements\/ (accessed May 2, 2016). 20 Kevin YC Chung, Timothy Derdenger, and Kannan Srinivasan, \u201cEconomic Value of Celebrity Endorsements: Tiger Woods\u2019 Impact on Sales of Nike Golf Balls,\u201d September 12, 2011, http:\/\/www.econ.ucla.edu\/workshops\/papers\/io\/celebrityendorsements.pdf (accessed May 2, 2016). 21 Francesca Di Meglio, \u201cUse Real People or Celebrities in Your Advertising Campaign?,\u201d Monster, http:\/\/www.monster.com\/careeradvice\/article\/real-people-or-celebrities-in-ads (accessed May 2, 2016). 22 Jennifer Flagg, \u201cWhat We Can Learn from Dove\u2019s Marketing Strategies,\u201d Mechtronics, August 23, 2013, http:\/\/www.mechtron.com\/blog\/whatwe-can-learn-from-doves-marketing-strategies\/ (accessed May 2, 2016). Page 3 of 5 Page 4 UVA-M-0910 This document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. Word-of-mouth and viral marketing Word-of-mouth and viral marketing had gained a lot of attention from companies that wanted to save money on their advertising and marketing budgets and have a greater impact on their consumers. Consumers\u2019 increased social connectivity was rapidly making marketing easier for companies by sharing, posting, and reposting videos until they become viral.23 For example, Volvo\u2019s Epic Split video was shared more than 8 million times across social networks, making it one of the most-shared YouTube clips.24 A big reason wordof-mouth and viral marketing were so successful was that 92% of consumers trust recommendations from friends and family over other forms of marketing and advertisement.25 In 2014, Nike spent about $3 billion on \u201cdemand creation,\u201d its terminology for marketing and advertising, and that number was expected to grow.26 Of that amount, about $56.4 million was spent on television advertisements through the end of June 2014.27 As Nike\u2019s demand-creation expenses increased, so did its revenues\u2014in 2014, it earned $27.8 billion in revenue compared to the $3 billion spent on demand creation. Although their budgets were not as large as Nike\u2019s, Adidas and Under Armour had marketing expenses of approximately $1.8 billion and $333 million, respectively, and revenues of approximately $4.1 billion and $3 billion.28 Video advertisements went viral when they triggered a strong emotional response. Celebrities had not been proven to influence online video advertisement sharing.29 Of the 100 most-shared video advertisements, only 13% had celebrities in them. There was a risk, however, in focusing on the viral nature of a video ad. Consumers tended to forget what brand the advertisement was associated with.30 For example, only 7% of viewers could remember what brand was associated with the 2014 Chrysler Super Bowl advertisement featuring Bob Dylan.30 A viral video advertisement that elicited a strong emotional response did not necessarily help consumers recall the brand. Fitness market in the United States By 2013, more than 45 million Americans belonged to a gym or fitness club and more than 25 million exercised at home.31 In 2014, more than 54 million Americans paid for gym memberships, and the average member visited his or her club more than 100 times.32 Niche gym memberships, wearable fitness trackers, 23 Kimberly A. Whitler, \u201cWhy Word of Mouth Marketing is the Most Important Social Media,\u201d Forbes, July 17, 2014, http:\/\/www.forbes.com\/sites\/kimberlywhitler\/2014\/07\/17\/why-word-of-mouth-marketing-is-the-most-important-social-media\/2\/#3d50c5454a95 (accessed May 2, 2016). 24 Meg Carter, \u201cHow Volvo Trucks Pulled Off an Epic Split and a Game-Changing Campaign,\u201d Fast Company, June 18, 2014, http:\/\/www.fastcocreate.com\/3031654\/cannes\/how-volvo-trucks-pulled-off-an-epic-split-and-a-game-changing-campaign (accessed May 11, 2015). 25 http:\/\/www.forbes.com\/sites\/kimberlywhitler\/2014\/07\/17\/why-word-of-mouth-marketing-is-the-most-important-socialmedia\/#c034ce57a77c. 26 Pete Forester, \u201cYou Won\u2019t Believe How Much Nike Spends on \u2018Demand Creation\u2019,\u201d Complex, July 26, 2014, http:\/\/www.complex.com\/sneakers\/2014\/07\/nike-spends-3b-on-demand-creation, (accessed May 11, 2016). 27 Nathalie Tadena, \u201cNike Dominates Shoe Sector\u2019s TV Ad Spending,\u201d July 10, 2014, http:\/\/blogs.wsj.com\/cmo\/2014\/07\/10\/nike-dominatesshoe-sectors-tv-ad-spending\/ (accessed May 2, 2016). 28 Nunez Enterprises, \u201cNike\u2019s Demand Creation Expense: A Slam Dunk for The Company\u2019s Bottom Line,\u201d Seeking Alpha, December 31, 2015, http:\/\/seekingalpha.com\/article\/3784346-nikes-demand-creation-expense-slam-dunk-companys-bottom-line?page=2 (accessed May 2, 2016); \u201cUnder Armour Reports Full Year Net Revenues Growth of 32%; Announces Creation of World\u2019s Largest Digital Health and Fitness Community,\u201d Under Armour press release, February 4, 2015, http:\/\/investor.underarmour.com\/releasedetail.cfm?ReleaseID=894686 (accessed May 2, 2016); and \u201cAdidas Group Full Year 2014 Results,\u201d Adidas Group press release, March 5, 2015, http:\/\/www.adidas-group.com\/en\/media\/news-archive\/pressreleases\/2015\/adidas-group-full-year-2014-results\/ (accessed May 2, 2016). 29 Ayaz Nanji, \u201cWhat Makes an Ad Go Viral Online?,\u201d MarketingProfs, May 27, 2014, http:\/\/www.marketingprofs.com\/charts\/2014\/25217\/whatmakes-an-ad-go-viral-online (accessed May 2, 2016). 30 \u201cFitness Industry Analysis 2016 \u2013 Costs & Trends,\u201d Franchise Help, Gallup, https:\/\/www.franchisehelp.com\/industry-reports\/fitness-industryreport\/ (accessed May 2, 2016). 31 Sandra Faleris, \u201cThe Exercise Market Going Strong,\u201d Examiner, September 3, 2013, http:\/\/www.examiner.com\/article\/the-exercise-marketgoing-strong (accessed May 2, 2016); \u201cNumber of Participants in Home Gym Exercise in the United States from 2006 to 2013 (in Millions),\u201d Statista, http:\/\/www.statista.com\/statistics\/191614\/participants-in-home-gym-exercise-in-the-us-since-2006\/ (accessed May 2, 2016). 32 https:\/\/www.franchisehelp.com\/industry-reports\/fitness-industry-report\/. Page 4 of 5 This document is authorized for use only by Haydn Northover at UNSW Sydney. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. Page 5 UVA-M-0910 and mobile applications supporting high-intensity interval training grew steadily through 2014 and 2015.33 In addition, 58.4% of males and 52.7% of females exercised for at least 30 minutes three or more days per week.34 By 2014, the U.S. women\u2019s nutrition market was more than $125 billion. Health, fitness, and weight loss was a $277 billion industry.35 Globally, the health club industry was more than $78 billion in 2014, and it grew annually by 2.2% between 2010 and 2015.36 Worldwide sports apparel and footwear sales grew by 8% per year from 2013 to 2015, compared to 2% to 3% for general apparel. 37 The United States accounted for 36% of those sales; this $97 billion industry was driven by fitness and wellness but also \u201cathleisure\u201d wear such as running shoes for nonrunners and yoga pants worn all day.38 As a result, specialty-apparel manufacturers began to target specific activities, from Pilates to rock climbing, and allowed companies such as Athleta (owned by Gap) and lululemon athletica to enter the market in unique niches.39 Women\u2019s apparel specifically grew 10% between 2014 and 2015.40 The worldwide apparel market was estimated to grow to $184 billion by 2020.41 Next Campaign? The \u201cI Will What I Want\u201d campaign took women\u2019s apparel to 30% of Under Armour\u2019s sales, making Under Armour significantly more competitive with lululemon and Nike.42 The question for Plank was, what\u2019s next? He wondered if Under Armour should continue targeting and growing the female market segment. Or, should the company target a broader population to gain more traction on Nike and get closer to that numberone spot? The successful \u201cI Will What I Want\u201d campaign had gone viral , but it would be a challenge for Under Armour to continue that momentum. Plank voiced to various media outlets that he planned to make the company a $10 billion brand by 2020, and having successful marketing campaigns was a key part to getting there.43 He had seen success both with television and online advertisements but wasn\u2019t sure which route to take with the next campaign. Another topic he grappled with: should Under Armour keep paying famous athletes to be part of its advertisement campaigns or should it use more everyday people? 33 Rachel Bachman, \u201cWhy a Few Minutes of Exercise Can Show Results,\u201d Wall Street Journal, April 18, 2016, http:\/\/www.wsj.com\/articles\/why-afew-minutes-of-exercise-can-show-results-1460993589?mod=djem10point (accessed May 2, 2016). 34 Rebecca Riffkin, \u201cSo Far in 2015, More Americans Exercising More Frequently,\u201d Gallup, July 29, 2015, http:\/\/www.gallup.com\/poll\/184403\/far-2015-americans-exercising-frequently.aspx (accessed May 2, 2016). 35 Kerri Krom, \u201cThe Health & Wellness Market is the Next Trillion Dollar Industry,\u201d Women\u2019s Marketing (blog), November 4, 2014, http:\/\/www.womensmarketing.com\/blog\/2014\/11\/health-and-wellness-market\/ (accessed May 2, 2016). 36 \u201cFitness Market in the US,\u201d Business Scoot, http:\/\/www.businesscoot.com\/fitness-market-in-the-us-9\/ (accessed May 2, 2016). 37 Bradley Seth McNew, \u201cCan Nike Inc and Under Armour Inc Survive an Athletic Apparel Bubble?,\u201d Motley Fool, April 12, 2015, http:\/\/www.fool.com\/investing\/general\/2015\/04\/12\/can-nike-inc-and-under-armour-inc-survive-an-athle.aspx (accessed May 3, 2016). 38 \u201cAthletic Lifestyles Keep Apparel Sales Healthy,\u201d Morgan Stanley, October 30, 2015, http:\/\/www.morganstanley.com\/ideas\/global-athleticwear-geared-for-growth (accessed May 3, 2015). 39 http:\/\/www.certona.com\/hitting-a-home-run-in-the-athletic-apparel-industry\/; and John Kell, \u201cNike Makes a Big Push into the Fast-Growing Women\u2019s Segment,\u201d Fortune, October 22, 2014, http:\/\/fortune.com\/2014\/12\/25\/athletic-apparel-top-performer\/ (accessed May 3, 2016). 40 http:\/\/fortune.com\/2014\/10\/22\/nike-women-business\/ 41 \u201cWorld Sports Apparel Market Is Estimated to Garner $184.6 Billion by 2020 \u2013 Allied Market Research,\u201d MarketWatch, October 8, 2010, http:\/\/www.marketwatch.com\/story\/world-sports-apparel-market-is-estimated-to-garner-1846-billion-by-2020\u2014allied-market-research-2015-10-0882032519 (accessed May 3, 2014). 42 http:\/\/www.fastcocreate.com\/3050420\/behind-the-brand\/how-under-armour-uses-a-scrappy-outsider-will-to-get-what-it-wants. 43 Bruce Horovitz, \u201cUnder Armour Has Over-the-Top 2014,\u201d USA Today, http:\/\/www.usatoday.com\/story\/money\/business\/2014\/12\/22\/underarmour-sports-apparel-sporting-goods-kevin-plank\/20243203\/ (accessed May 3, 2016). Page 5 of 5 Business Horizons (2016) 59, 293\u2014302 Available online at www.sciencedirect.com ScienceDirect www.elsevier.com\/locate\/bushor What\u2019s new about new media? How multi-channel networks work with content creators Jacob Gardner, Kevin Lehnert * Seidman College of Business, Grand Valley State University, L. William Seidman Center 3116, 50 Front Avenue SW, Grand Rapids, MI 49504-6424, U.S.A. KEYWORDS Content creation; Content creator; Multi-channel networks; New media; Consumer creation strategies Abstract With the rise and rapid proliferation of digital and online marketing, increased cord-cutting by consumers, and new content being created online, Internetbased advertising is the single fastest-growing ad expenditure category, outstripping TV, radio, and other more traditional media formats. With the rise of new media and the increased content creation, the ability of content creators to manage and guide their brand has become more important than ever. This article investigates one such mechanism for managing the new media phenomenon, the Multi-Channel Network (MCN) model. An MCN is any entity or organization which either partners with content creators or directly produces a variety of distinctive content and works to perform business and marketing functions on the platform in which said content is released. This article investigates the MCN phenomena as itspecifically addresses the needs of content creators in the new prosumptive consumer culture that helps inform and create new media content. It highlights strategies for managing and navigating the new media and MCN domain. # 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. 1. The multi-channel network It is a good time to be a new media entrepreneur, as the talent behind Nerdist Industries will attest. What began as a single podcast has grown into a small empire that includes a YouTube channel, a * Corresponding author E-mail addresses: gardjaco@mail.gvsu.edu (J. Gardner), lehnertk@gvsu.edu (K. Lehnert) network of podcasts, and even a TV show produced and aired by BBC America. The Nerdist represents a brand new way of looking at media and entertainment content\u2013\u2014a system where the audience and consumer are as integral to the success of a brand as the content itself. With the rise and rapid proliferation of digital and online marketing since the mid-1990s, Internet-based advertising is the single fastest-growing ad expenditure category, outstripping TV, radio, and other more traditional media formats (IAB\/PwC, 2014). Along 0007-6813\/$ \u2014 see front matter # 2016 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. http:\/\/dx.doi.org\/10.1016\/j.bushor.2016.01.009 294 with Web 2.0 and the concept of new media, the Internet has entered a period of what has been referred to as a \u2018participatory culture,\u2019 where the new media output is created alongside and often in collaboration with the viewers of that output. Many diverse creators of content and the consumers of that content have come together to form a new system of media consumption. As Adam Rymer, president of Nerdist Industries put it, \u2018\u2018It feels like the evolution of television, the evolution of media\u2019\u2019 (Castillo, 2014). Content creators have a very intimate connection with their audiences\u2013\u2014especially with the millennial generation, which has grown up with the Internet and intuitively understands digital distribution and the value it holds. These brand relationships are capitalized on both as part of the community and with individual consumers (Christodoulides, 2009; Simmons, 2008). By capitalizing on this intimacy, content creators\u2013\u2014and by extension, the brands they develop\u2013\u2014can create value for audiences by providing them with a type of content that is more trustworthy, genuine, and timely than that of traditional media. At the same time, these creators are showing that they have a level of referent power over large, definable markets\u2013\u2014something that is very attractive to advertisers. In addition to a new system of media consumption, new business models and methods of monetizing content on the Internet have formed as well. This article will examine one such business model\u2013\u2014 the multi-channel network (MCN)\u2013\u2014and assess its uses, structure, and revenue-generating capabilities and the wider implications it has on new media forms and the creators who make their livelihood in new media. We will give some recommendations to content creators and marketing professionals on facets of MCNs and what they should consider when evaluating joining or creating an MCN. We specifically address what the MCN can do for content creators, focusing on its role in navigating legal and ethical challenges, building audiences, and implementing other business structures, allowing content creators to do what they do best: create. 1.1. What are MCNs? The term multi-channel network was first coined by YouTube, the platform used by the great majority of these networks. An MCN is any entity or organization that partners with content creators or directly produces a variety of distinctive content and works to perform business and marketing functions via the platform whereby said content is released. An MCN\u2019s repertoire can include self-created content and J. Gardner, K. Lehnert management, broad studio-created content, or even hubs or portals for created content. Content creators, or online personalities, generally join an MCN in order to gain audiences, cross promote, develop branding strategies, connect with \u2018mainstream\u2019 money and content, and utilize digital rights management and other legal services. Effectively, any entity that produces a wide variety of encapsulated content or otherwise serves as a hub for those who create content can be considered an MCN. This can go beyond simply creating a lot of shows or varying the content they create and can include providing news, blogs, or audio content. A good example of a single company that produces content in the vein of an MCN is Monocle (2015), a magazine and 24-hour online radio station that provides content \u2018\u2018on global affairs, business, culture, design and much more.\u2019\u2019 As a part of the larger Monocle media brand, the online radio station (and podcasts of the station\u2019s content) functions as a network of individual shows that each have their own style, content, contributors, and editors and all operate underneath one brand umbrella. 2. Advantages of the MCN 2.1. Audience, collaboration, and branding MCNs provide a framework for what has long been considered an amateur, unstructured, and mysterious medium. YouTube is filled with everyday users who post vlogs, skits, video edits, and, of course, cat videos. If they attract an audience, these content creators begin to create a social network around themselves that can spill outside of YouTube and into other forms of online and offline interaction. One example of such a community is the Nerdfighters. Inspired by John and Hank Green\u2019s (a.k.a., the \u2018Vlogbrothers\u2019) content and message, Nerdfighters are \u2018\u2018a community that sprung up around our videos, and basically we just get together and try to do awesome things and have a good time and fight against worldsuck\u2019\u2019 (Green & Green, 2009). The community grew and eventually developed into a very loose organization existing in libraries, high schools, and college campuses all over the world. This community goes beyond sharing a love of nerdy things. Chapters of the group are involved in charitable work, artistic endeavors, and fighting against bullying. The audience, these Nerdfighters, pushed the work of one of the Vlogbrothers\u2019 collaborators, John Green, into the mainstream, resulting in the creation of the hit movies The Fault in Our Stars and Paper Towns. What\u2019s new about new media? How multi-channel networks work with content creators These examples are evidence of a phenomenon marketers have begun calling prosumption, a portmanteau referring to \u2018\u2018the interrelated process of production and consumption\u2019\u2019 (Ritzer, 2015). Prosumption occurs when those who are consuming and engaging in the product are also integral to the production of the product. Prosumption goes beyond the concept of co-creation (Prahalad & Ramaswamy, 2004). Where co-creation looks at the creation of experiences and value, prosumption looks at both the creation of value and the mechanisms by which it is consumed and integrated into a greater social context. Due to this extended context, new media content creators engage with their audience, a community develops, and this community both consumes and influences the content at the same time. Furthermore, this community evolves and develops into a stronger social form whereby the prosumer continues to influence and guide the overall new media product. This creates a new problem for content creators. Not only are they responsible for creating content and keeping their audiences interested, but now they also must try to manage the communities that arise around their work. As the communities grow larger, more and more content creators also face legal issues such as larger companies trying to control their copyrighted material despite fair use laws, managing ad-based and other sources of revenue, ethical issues about disclosure of paid promotions, and more. This is where MCNs come in (Mills, 2014): Multi-channel networks tap into specific markets, gamers, teens, etc., and generate fan bases for \u2018\u2018creators\u2019\u2019\u2013\u2014the people making videos. MCNs make money by selling ads that run before their videos, and most of their talent makes money from YouTube directly and from the advertisers who run content before their videos. Maker Studios, currently the largest MCN on YouTube with over 11 billion video views per month among its channels, is \u2018\u2018dedicated to developing talent, creating premium programming, and building lasting brands with engaged audiences\u2019\u2019 (Maker Studios Inc., 2015). Gaining audience share is another reason that many YouTube channels join an MCN. Each content creator who joins an MCN begins pooling its audience with those of similar channels. George Strompolos (2014), CEO of the MCN Fullscreen, put it like this when talking about collaborations between channels: It\u2019s all about audience building. . .we may have some audience overlap, but for the most part, chances are we have different fans. And so 295 when we come together and make a video we\u2019re going to share audience. So there is a mutual incentive to want to do that. This competitive collaboration speaks to the new media mindset, where the success of one MCN contributes to the success of another while at the same time fostering continued development and production of new content. This cross-pollination of audiences not only helps grow the individual audiences of each channel, but also strengthens branding efforts. It allows for the exploration of personality types and expression between consumers, creating these participatory web cultures filled with users, consumers, and content creators (Beer & Burrows, 2010). For example, Polaris, a sub-brand of Maker, focuses on gaming content and general \u2018nerd culture\u2019 topics. The larger personalities within Polaris often co-create content for its various channels. An example of content that Polaris members collaborate on is the Co-Optional Podcast, a video and audio podcast in which three regular personalities talk about gaming news, ethics, business strategies of game publishers, and more. This podcast also has rotating guests who bring a fresh perspective and can showcase what their own YouTube channels have to offer. The Polaris MCN gives this type of content a reach that no individual channel or casual relationship between content creators can achieve on its own. The implication is that by engaging in this dynamic, creative, and constantly changing content, the MCN is able to build on not only a core market, but also a continually changing and diverse extended market simultaneously. Even in situations where content is produced separately but is under the umbrella of one company, a networked approach to content distribution has value. The production studio Rooster Teeth is the hub for extremely successful shows such as Red vs. Blue (the longest-running web series and longest-running American sci-fi series), The Gauntlet, and Achievement Hunter. The company has grown so large and influential that it hosts its own annual convention called RTX in Austin, Texas (Rooster Teeth Productions, 2015). This model is valuable because it allows outreach to diverse consumer groups under distinct channels while maintaining a streamlined and efficient distribution mechanism. 2.2. Business models and value creation As a business, an MCN provides support and guidance to its constituent partners, creating value in the 296 Figure 1. J. Gardner, K. Lehnert Distribution of ad revenue on YouTube Source: Suster (2013) form of expertise, resources, and audience access. In return, the partner channels split ad revenue with their members, providing a mostly stable stream of income. As highlighted in Figure 1, ad revenue on YouTube is standardized with the channel receiving 55% of the money generated and YouTube taking the remaining 45%. In addition, \u2018\u2018the Google-owned video site will give partners 100% of the revenue for ad inventory they sell that exceeds YouTube\u2019s rate card\u2019\u2019 (Spangler, 2013). An MCN helps manage the placement and targeting of these ads, taking some of the burden off of content creators. The 55% of the ad revenue that belongs to the content creator is then split between the MCN and the owner of the channel, with the exact nature of the split varying from channel to channel. This allows for focused strategies or created content that can increase overall revenue and drive focused product\/ branding strategies. Revenue models for podcasters are a little behind the video-on-demand format of YouTube, due in part to the medium\u2019s slower growth rate and its largely audio-only focus. Generally, podcasters make money in three ways: advertising, donations, and merchandizing. While these mechanisms are valuable for podcasting, they can be implemented by any content creator and facilitated by the MCN. The first mechanism for revenue generation is advertising. There are a number of companies that heavily sponsor podcasts and other content in exchange for an included sponsorial or short advertisement read out by the host(s) of the program. This strategy is reminiscent of traditional sponsored programs (e.g., Orson Welles\u2019 classic Campbell\u2019s Radio Playhouse) where programs are funded by corporate patronage. For example, Audible, the leading provider of digital audiobooks, provides podcasters in its affiliate program a $15 commission every time a listener signs up for a free trial. Needless to say, podcasts are a perfect medium for Audible because the majority of podcast listeners are already in the market for high quality, entertaining audio content. A second method of revenue generation is via donations. With easy-to-implement donation portals such as PayPal and Patreon, content creators can simply ask for donations to help fund their work. Fans want to support their favorite personalities. They want to give because they see these MCNs as an extension of themselves (Belk & Coon, 1993) and are grateful (Gouldner, 1960) for the value they receive from them. These MCNs provide value beyond just information and entertainment: They are a portal of expression for the viewers, and as part of this co-creation, the viewers want to support them (Prahalad & Ramaswamy, 2004; Ritzer & Jurgensen, 2010). This is a particularly interesting development in MCNs and new media, and there have been recent discussions of YouTube providing a tiered pay structure (Shaw & Womack, 2015). Finally, some content creators are able to supplement the previous two forms of income with the sale of merchandise. Some networks have the clout and trustworthiness to curate a shop full of goods and services from bespoke and artisanal craftspeople, as such networks are able to build their brand and increase revenues by creating physical products that extend the branded message. Once an MCN\u2019s partner base has grown large enough, it can begin to move beyond affiliate-style programs and attract brands that are looking for ways to reach particular audiences. The MCN can coordinate branded deals with its partners, allowing for bigger sponsorships, product placements, feature videos, coverage of a product, and more. Previously mentioned Monocle uses its status as a worldwide brand- and design-focused network to promote its own store of travel products, clothing, stationery, and more. By enabling such partnerships, an MCN can increase the value it provides to both customers and brands by establishing a sense of lifestyle among the network, the brands and companies it supports, and the customer. In particular, this allows networks to get a piece of the growing bespoke and premium product markets. These brand deals offer a valuable way for companies to engage with potential customers. Because of the personal connection, audiences\u2013\u2014 especially younger demographics\u2013\u2014can feel a level of trust in what a YouTube personality says and the products, services, opinions, and lifestyle the YouTuber espouses. This allows for a level of brand awareness and interest that surpasses even celebrity endorsements. A figure who addresses consumers weekly, shares their interests and values, and connects with them on a personal level will What\u2019s new about new media? How multi-channel networks work with content creators Figure 2. Comparison of brand\/product recommendation between TV\/Movies & YouTube Source: Adapted from Defy Media (2015) have more referent power than even a liked and respected celebrity. As a result, the brands that choose to partner with the new media networks will experience higher sales and customer engagement, and the authority and trustworthiness of the networks will increase in the eyes of the consumers. In a DEFY Media (2015) report, 13- to 24-year-olds used the following phrases to describe YouTubers: \u2018\u2018just like me,\u2019\u2019 \u2018\u2018understands me,\u2019\u2019 \u2018\u2018someone I trust,\u2019\u2019 \u2018\u2018has the best advice,\u2019\u2019 \u2018\u2018doesn\u2019t try to be perfect,\u2019\u2019 \u2018\u2018genuine,\u2019\u2019 \u2018\u2018someone I feel close to,\u2019\u2019 and \u2018\u2018likes the same things I do.\u2019\u2019 This implies that these viewers see YouTubers and content creators similarly to celebrity endorsers. Essentially they are celebrities within their markets, highlighting the increased trust and transferability of product associations that comes with such celebrity (McCracken, 1989). As a result, the stronger personal connection makes audiences much more likely to try a product or brand recommended by a YouTuber than one advertised in a TV show or movie (DEFY Media, 2015), as Figure 2 clearly shows. In a report for REDEF (an industry-focused, curated news website), writer Liam Boluk (2014) explains this unique connection: In many cases, videos are simply a single YouTuber speaking directly to their followers. The intimacy of this relationship makes product placements and native advertising particularly effective and enables production decisions to be shaped by audience interests (Epic Rap Battles of History) and tested via direct dialogue. It is this dual effect of focused market penetration and unusually high audience engagement and trust that makes MCNs so powerful. New media has also helped address one of the primary concerns of traditional media sources such 297 as TV networks and music companies: that of copyright infringement. While YouTube\u2019s content ID system (implemented in 2010) helps protect audio and video content from being shared and monetized by those other than the owner, there will always be a certain amount of piracy of such content. Traditional media companies have responded in a variety of ways. For instance, the Recording Industry Association of America (RIAA) has engaged in over 20,000 lawsuits targeting file sharers and music pirates (Ellenberger, 2014). MCNs can help protect content creators and their brands against legal trouble like this by networking ethical, experienced people together and creating an environment where original content is celebrated. In the case of a questionable copyright claim, an MCN can provide funding and support to help fight the claim. These networks not only help reduce copyright infringement but also serve as a deterrent to the \u2018patent trolls\u2019 of the Internet. 2.3. Connection to traditional media Traditional media and new media affect each other in a mutually beneficial cycle. Jin Kim (2012, p. 61) states: The evolution of YouTube from an amateurdriven medium to a professional-dominated channel coexists with the market expansion of the TV industry into the web. Networks and cable were challenged by the new mediascape and entered this new realm in order to protect their materials and to tame new territory by reinforcing traditional \u2018rules of the game.\u2019 The shift from amateurish content being uploaded as a hobby to regular, semi-professional content being uploaded by users who consider new media to be a part- or full-time job resulted in one of the biggest changes in traditional broadcasting rules. Now, even media companies whose products are made primarily for other formats\u2013\u2014such as movie studios and television networks\u2013\u2014use YouTube to promote their content through short video clips, web series, music videos, and even full-length movies or television shows. As such, we see lucrative agreements between traditional networks and online content providers such as Netflix, Hulu, and Amazon, and we see networks providing content in new media outlets, such as HBO\u2019s strategy in utilizing YouTube to help drive viewers to its comedic news show Last Week with John Oliver. In addition, within the new media mindset, other companies and content creators have embraced the open and free new media culture and have begun 298 utilizing it to their advantage. For example, the musician Macklemore\u2013\u2014whose hit Thrift Shop became a chart topper without the support of a label\u2013\u2014stated on The Nerdist (2013) podcast: YouTube has obviously completely replaced that. It doesn\u2019t matter that MTV doesn\u2019t play videos. It matters that we have YouTube and that has been our greatest resource in terms of connecting, having our identity, creating a brand, showing the world who we are via YouTube. That has been our label. As such, with the growth of new media and the technological outlet, content creators are able to protect and build their brand without relying on the vast machinery of traditional media to create, promote, and define what that artistic product should be. Younger audiences are certainly agreeing with Macklemore. Millennials ages 13 to 24 watch an average of 11.3 hours of online video a week and an additional 10.8 hours of paid video a week through subscription services like Netflix, Hulu, and Amazon Instant Video (Smith, 2015). One reason that both YouTube and subscription services do so well is that they bring the content that people\u2013\u2014especially younger audiences\u2013\u2014want to watch and listen to onto mobile devices. Videos viewed on mobile devices are the fastest-growing category of digital video, and thus they are the fastest-growing category of video ad revenue as well (Hoelzel, 2014). 3. Criticisms and creator pushback Not everyone is pleased with how MCNs have established themselves on YouTube and in other media. There have been several ethical concerns raised about whether MCNs really offer something of value, the level of control these networks exert over their members, and also how the money is split among creators, YouTube, and the MCN (Gahan, 2015; Gutelle, 2012; Shields, 2015). As such, content creators need to be careful and well-informed when it comes to selecting an MCN. MCNs do not always have the best reputations with content creators. In one of the most public member\u2014MCN feuds, Ray William Johnson, a YouTuber partnered with Maker Studios, split from his MCN after disagreements over Maker\u2019s level of involvement in his creative process (Gutelle, 2012). This example highlights the importance of cultivating strategic partnerships that address not just the outcomes of the venture but also its dissolution. J. Gardner, K. Lehnert Other creators are simply unsatisfied with the level and nature of the support that MCNs offer. Michelle Phan is one of the most successful rising stars of YouTube, and she doesn\u2019t like the MCN model. \u2018\u2018I\u2019ve never really believed in the MCN model,\u2019\u2019 she said. \u2018\u2018That never resonated with me, and they are not well liked in the universe of creators. And I want to mentor and nurture talent, and help them build their powerful brands\u2019\u2019 (Shields, 2015). Ms. Phan has gone beyond creating content that simply exists on one channel among many and has launched her own lifestyle network. Indeed, Michelle Phan embodies a growing realization among content creators: It is not enough to build a YouTube channel and join an MCN. You must move beyond producing videos on YouTube and consider the world\u2019s largest video delivery platform as just that: just one way among many to deliver your content. This requires that you continue to develop and manage your brand in a larger sense. It is not enough to believe that a single distribution channel will be sufficient, or permanent. Instead, you must diversify beyond that delivery mechanism and explore all that is available. Many of the large MCNs have few employees compared to the number of channels they partner with. For example, Maker has 1 employee for every 48 channels, while Fullscreen has 1 employee for every 79 channels. Although it depends on the MCN and the level of support they claim to provide, at some point the returns begin to diminish and smaller channels will find themselves being served less. YouTube marketing expert Brendan Gahan (2015) says: \u2018\u2018Smaller creators within these networks are not getting the ad dollars for brand integrations (paid brand placements within videos) for a reason\u2013\u2014it\u2019s not profitable for the MCN.\u2019\u2019 He goes on to state that the relative amount of effort an MCN has to put into securing something like a brand deal for its creators varies little based on whether the deal is a small or big one. This leads MCNs to only pursue brand deals with more money behind them and involve only their bigger talent, leaving smaller channels out in the cold. One entrepreneur, Jason Calacanis, has been an extremely vocal critic of the MCN system and the way that YouTube is being run. He believes that there is little point to creating a business based around YouTube because in the end the video platform takes too much revenue and also gains the audience that your hard work has generated. YouTube is looking to engage your viewers as much as you are. If it can move the viewers that you brought to the platform onto other channels, its revenue increases while yours does not. Calacanis is a proponent of using YouTube as the \u2018\u2018top end of the What\u2019s new about new media? How multi-channel networks work with content creators funnel.\u2019\u2019 As the world\u2019s second-largest search engine, YouTube is a great place to gain customers and get them to enter the \u2018funnel.\u2019 But in order to actually make a good profit, a content creator or business should move said customers off of the YouTube platform and to some other platform, such as a private website, which is more profitable. 4. The future of the MCN MCNs are changing, rebranding themselves into talent and audience development agencies for a new, integrated media industry\u2013\u2014one where large media companies utilize the creativity and nimbleness of independent creators and those same creators leverage the resources and mass market reach of traditional media. Many in the entertainment industry have realized this and begun to explore the possibilities of such a synthesis. One example of an integrated media presence is Annoying Orange, a series of short videos created by Dane Boedigheimer on YouTube thatquickly became very popular. The show\u2019s primary character is an anthropomorphic orange who makes jokes and generally irks other types of anthropomorphized food in a kitchen. After joining with a digital distribution company called The Collective Digital Studio, \u2018\u2018Annoying Orange has expanded laterally across YouTube and vertically across media platforms to create an intertextualcommodity and a community that coalesces around it to provide both social and economic value\u2019\u2019 (Morreale, 2014, p. 123). The show has led to a video game, merchandise, a website, a spinoff series, and even a full 26episode run on the Cartoon Network. Similarly, while Michelle Phan\u2019s negative perception of MCNs might be on the harsh end, she is another creator who has realized that in order to continue growth and profitability you must move beyond simply creating videos for YouTube. The Nerdist Industries network is perhaps the most progressive MCN today and the closest to realizing the value that lies at the convergence of traditional and new media. Nerdist doesn\u2019t look to group a large number of partners together. Instead, it looks for already strong talent that can add value to the organization and that can be leveraged across many platforms from digital video, podcasts, blogs, and television (Castillo, 2014). This mirrors the acquisition strategies of other industries and follows the resource-based view (Amit & Shoemaker, 1993) of choosing to integrate only those firms that complement the resources and capabilities already possessed. Nerdist, by being selective in its partnerships, maintains a lean organization with a sharply focused goal. 299 Some MCNs focus on a niche strategy rather than the broad appeal of Maker Studios or Fullscreen. The Nerdist is one such network, but there are others. Tastemade is an MCN that concentrates on food, eating, and the travel lifestyle. MCNs such as these are trying to avoid the pitfalls that come with the scale of larger networks. By creating value for a very narrowly defined yet deep market, MCNs using this strategy can serve their partners better and provide more value to potential sponsors. This approach not only allows an MCN to maintain a high level of member responsiveness and support but also helps reduce costs, makes its cost structure and revenue generation more efficient, and differentiates the channels within the organization from each other. 4.1. MCNs: An acquisition platform Converting audiences from platforms like YouTube, iTunes, or Stitcher is a daunting proposition. Acquisition is easy on those services because they dominate the new media marketplace. The majority of customers want to get content from the websites and companies with which they are most familiar. Suster (2015) recommends achieving at least a 5% to 15% conversion rate from your acquisition platform to your owned and operated content (generally a website or store) where your content exists on a platform that you completely control and receive all the revenue from. These customers represent your most loyal fans, the people most likely to buy merchandise, and those willing to make donations or purchase premium content. MCN Rooster Teeth takes this conversion seriously. Although it produces many web series distributed primarily on YouTube, co-founder Matt Hullum doesn\u2019t like to rely on ad revenue alone (Jones, 2014): For example, the weekly Rooster Teeth podcast\u2013\u2014where staff discuss movies, video games and upcoming projects\u2013\u2014earns money through a premium subscription service for livestream access, integrated ads that air during the show, YouTube ads when the show becomes available there and merchandise. The podcast gets hundreds of thousands of YouTube views and a new episode of a Rooster Teeth show often sees 1 million or more. Hullum illustrates a great example of using an MCN to acquire an audience, bringing them to wholly owned and operated content, and then redistributing that content back onto the same acquisition 300 platform, creating a cycle of customer movement throughout the organization. One example of a very successful method of conversion is the website Twitch.tv. Acquired by Amazon.com in 2014, Twitch.tv is a live-streaming service that allows gamers to broadcast their gameplay in real time to the audience. YouTubers have found this to be an extremely easy transition for their existing audiences to make as well as a method for creating videos with little editing required. Twitch.tv makes money by doing pre-roll ads, and although its Cost per Thousand\u2013\u2014a measure of the cost of placing an ad\u2013\u2014is lower than YouTube\u2019s, it supplements this revenue with a $5\/ month premium subscription that gives access to a chat room and high-definition content. YouTubers focused on gaming are easily able to convert audiences from YouTube to Twitch and vice versa because the two platforms are very similar (Trefis Team, 2014). 5. Integrating an MCN with your brand Although a powerful tool, the MCN model does not always guarantee success or profitability. How can content creators determine whether joining or creating an MCN will add value to their work, increase their exposure, or generate more revenue? How can companies that create large amounts of varied content packaged together in one network determine whether new products will appeal to existing customers? The first step in utilizing an MCN relationship is to create a sustainable business model, audience, and array of content before you even begin thinking about creating or joining a network. The content you produce must be consistent and you need to have a sizeable audience already established from which to grow. If your channel or podcast isn\u2019t already making it on its own, joining an MCN is unlikely to fix this problem. This is reflected by the hard fact that MCNs like to partner with talent that they know can land bigger brand promotion and advertising deals. Ultimately, MCNs are businesses, too, and must make investments that they feel confident they can get a sizeable return on. This means constructing your content and business model in such a way that it engages your viewers (customers) with what they want and initiates their entry into activities that are created by both you and your viewers (Ritzer & Jurgensen, 2010). These activities are the tangible evidence an MCN needs to see that you can provide a valuable and interested audience. Keep in mind the exchange that takes place between an MCN and a content creator. If you are J. Gardner, K. Lehnert considering a partnership with an MCN, you need to consider many things: \u2022 Who is my audience? What are the demographics? What value do these people see in my content? \u2022 What value can I bring to the MCN so that they will support me with time, money, and effort in bringing in advertising, brand deals, etc.? \u2022 What new audiences does an MCN give me access to? Do those audiences desire a similar value proposition to what I\u2019m offering? \u2022 Can I use the MCN to help me move my audience to the platform where I make the most money? The unique nature of the connection between content creators and their audience is one of new media\u2019s biggest strengths. Using this metric is one way to gauge the effectiveness of your content and your reach with the audience. Creators need to watch the sales levels and interest those advertisers and brands that sponsor them. If advertisers see a good ROI\u2013\u2014or at least increased activity around their brand\u2013\u2014based on the ads and support they give a channel, you know your content is having an impact on your audience. Advertisers take notice of such successes and will value your content more highly. For example, video games developer Dan Pearce said in reference to his game 10 Second Ninja, \u2018\u2018As far as I\u2019ve seen, we haven\u2019t had a significant spike from written press, but we have seen spikes from YouTube. Specifically, getting covered. . .gave us a sales spike that roughly mirrored the game being on sale for a week\u2019\u2019 (Rose, 2014). Another consideration with MCN integration is how compatible the different audiences in a network are with your content. If the network does not offer enough potential customers or is extremely lackluster in its efforts to connect those customers with its members, then where is the value? An MCN is only helpful if it allows you access to an audience that values your content and allows you to move that audience past the acquisition stage and onto a more lucrative platform. Venture capitalist Mark Suster (2013) says that YouTube \u2018\u2018is the world\u2019s best customer acquisition for video consumers to get them to come to your O&O (owned and operated).\u2019\u2019 Owned and operated platforms, those that you fully control and keep the bulk of the revenue from, provide a greater share of advertising revenue and allow for much greater control and brand development. This is why Monocle\u2019s network of podcasts, short videos, and editorial content does so well. What\u2019s new about new media? How multi-channel networks work with content creators \u2018\u2018Monocle deploys a comprehensive blend of online\/off-line \u2018directly owned\u2019 and \u2018indirect partner\u2019 channels to communicate with and reach its global subscriber customer segment\u2019\u2019 (Percy, 2011). Tyler Bru\u0302le\u0301, the founder of Monocle, uses his podcasting network and digital content to put a premium on the company\u2019s magazine, forging a successful strategy in the otherwise declining print industry. Monocle is able to get great overlap among its readers, listeners, website visitors, and store patrons because it understands how to move customers from an acquisition-focused platform to a profit-focused one, and then back again, keeping them within the cycle. For a creator on a new media platform with a large enough following and engaging content, joining an MCN might be exactly the stepping stone needed to continue development of its brand. MCNs offer a number of advantages ranging from production resources, help with legal issues, finding valuable brand deals for their partners, and, perhaps most importantly, pooling audiences to allow for growth. However, as valuable as they can be, MCNs are not an end to themselves. The ad rates on YouTube, where most MCNs operate, are notoriously low and don\u2019t provide enough revenue to sustain a brand that exists on only one platform. In order to achieve higher revenues, better customer relationships, and a stronger brand, content creators must view an MCN primarily as an assistant in the audience gathering function of whatever new media platform they are releasing their work on. Furthermore, creators must move their audience to owned and operated platforms where they are able to get a higher price for their ads, sell premium content, solicit donations, and sell merchandise. Strategically, this is very comparable to a simple purchase funnel model, although there are a couple of differences (Edwards, 2011). The products and services you could endorse or sell may not necessarily be created by you, such as in the case of curated shops. You are relying on your audience\u2019s good experiences with the products of others to increase your own positive brand associations and loyalty. A secondary function of an MCN should be to help partners negotiate details such as brand deals and product placements. MCNs do not always succeed in giving this kind of support to all their partners. Some analysts feel that an MCN can grow too large and become bloated and slow, efficiently serving only their most important partners (Gahan, 2015). Because smaller partners don\u2019t attract a large amount of investment and yet take a similar amount of time to manage, some MCNs are leaving money on the table and not passing it on to the very people they are supposed to be advocating for. 301 The future of MCNs lies in specialization. The largest MCNs tried to achieve a superior audience reach and attract large companies for brand deals, but many of the small to mid-sized partners of these MCNs got lost in the shuffle. Now more focused, more specialized MCNs have begun cropping up, such as Nerdist and Tastemade, which are \u2018\u2018management focused, and, most importantly, owning a clearly defined vertical role\u2019\u2019 (Gahan, 2015). While focusing on the quality and style of content rather than the scale of the network may result in a smaller network with less audience pooling, it could perhaps be the solution to the issue of bad service. New media is continuing to grow and advertisers are spending more on digital distribution platforms than ever before. MCNs attempt to capitalize on this trend by taking the important middleman position between creators and advertisers. So far these MCNs have been successful; however, there is a growing pushback from creators who believe their interests are not being served by the current model. Any business model must be willing to change or become obsolete. For creators, this means considering their personal brand and making sure that their content exists on multiple platforms with multiple revenue sources. And for MCNs, it means ensuring that they maintain the balance between serving their partners and providing value to advertisers while still making a profit. Regardless of the direction that MCNs and new media in general take, they are here to stay, and creating sustainable, profitable business models that serve the interests of all involved must be an important consideration at the forefront of industry leaders\u2019 minds. References Amit, R., & Schoemaker, P. J. H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14(1), 33\u201446. Beer, D., & Burrows, R. (2010). Consumption, prosumption, and participatory web cultures: An introduction. Journal of Consumer Culture, 10(1), 3\u201412. Belk, R. W., & Coon, G. S. (1993). Gift giving as agapic love: An alternative to the exchange paradigm based on dating experiences. Journal of Consumer Research, 20(3), 393\u2014417. Boluk, L. (2014, December 15). How YouTube MCNs are conquering Hollywood. REDEF. Retrieved August 24, 2015, from https:\/\/ redef.com\/original\/how-youtube-mcns-are-conqueringhollywood Castillo, M. (2014, August 13). Nerdist wants to create a larger network, \u2018Like a Viacom or a Disney.\u2019 AdWeek. Retrieved March 1, 2015, from http:\/\/www.adweek.com\/news\/ technology\/nerdist-wants-create-larger-network-disney159493 Christodoulides, G. (2009). Branding in -internet era. Marketing Theory, 9(1), 141\u2014144. 302 DEFY Media. (2015). ACUMEN report: Constant content. Retrieved August 31, 2015, from http:\/\/cdn.defymedia.com\/ wp-content\/uploads\/2015\/10\/Acumen-Report-ConstantContent.pdf Edwards, S. (2011). A social media mindset. Journal of Interactive Advertising, 12(1), 1\u20143. Ellenberger, K. (2014). The MP3 fiesta: Party like it\u2019s $9.99. Retrieved September 10, 2015, from http:\/\/www. kurtellenberger.com\/Ellenberger_MP3.pdf Gahan, B. (2015, March 30). MCNs and the business of servicing creators. VideoInk. Retrieved April 20, 2015, from http:\/\/ www.thevideoink.com\/features\/voices\/mcns -businessservicing-creators\/#.VTcQmCFVikp Gouldner, A. (1960). The norm of reciprocity: A preliminary statement. American Sociological Review, 25(2), 161\u2014178. Green, J., & Green, H. (2009). How to be a nerdfighter: A Vlogbrothers FAQ. Retrieved January 28, 2015, from https:\/\/www.youtube.com\/watch?v=FyQi79aYfxU Gutelle, S. (2012, December 11). Maker and Ray William Johnson still feuding as backstory is revealed. Tubefilter. Retrieved February 18, 2015, from http:\/\/www.tubefilter.com\/2012\/ 12\/11\/maker-studios-ray-william-johnson-feud\/ Hoelzel, M. (2014, December 9). Mobile video advertising is taking off, as ad buyers pile billions of dollars into small-screen ads. Business Insider. Retrieved April 23, 2015, from http:\/\/www.businessinsider.com\/mobile-video-is-thegrowth-area-2014-10 IAB\/PwC. (2014). Internet advertising revenue report: 2013 full year results. Retrieved August 31, 2015, from http:\/\/www. iab.net\/media\/file\/IAB_Internet_Advertising_Revenue_ Report_FY_2013.pdf Jones, L. A. (2014, April 18). Rooster Teeth rules the YouTube roost. Silicon Hills. Retrieved September 1, 2015, from http:\/\/www.siliconhillsnews.com\/2014\/04\/18\/rooster teeth-rules-the-youtube-roost\/ Kim, J. (2012). The institutionalization of YouTube: From usergenerated content to professionally generated content. Media, Culture, and Society, 34(1), 53\u201467. Maker Studios Inc. (2015, January 14). About Maker. Retrieved August 31, 2015, from http:\/\/www.makerstudios.com\/about McCracken, G. (1989). Who is the celebrity endorser? Cultural foundations of the endorsement process. Journal of Consumer Research, 16(3), 310\u2014321. Mills, E. (2014, November 25). Multi-channel networks: YouTube\u2019s big break. Marketplace. Retrieved February 18, 2015, from http:\/\/www.marketplace.org\/topics\/business\/screen-wars\/ multi-channel-networks-youtubes-big-break Monocle. (2015, January 12). About Monocle. Retrieved January 12, 2015, from http:\/\/monocle.com\/about\/ Morreale, J. (2014). From homemade to store bought: Annoying Orange and the professionalization of YouTube. Journal of Consumer Culture, 14(1), 113\u2014128. The Nerdist. (2013, March 18). Podcast #334: Macklemore [Audio Podcast]. Retrieved September 10, 2015, from http:\/\/nerdist. com\/nerdist-podcast-macklemore\/ Percy, G. (2011, March 29). The art and science of Monocle\u2019s media publishing alchemy. Alchemy of Ideas. Retrieved August 31, 2015, from http:\/\/alchemyofideas.com\/blog\/the-art-andscience-of-media-publishing-alchemy J. Gardner, K. Lehnert Prahalad, C., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of Interactive Marketing, 18(3), 5\u201414. Ritzer, G. (2015). Automating prosumption: The decline of the prosumer and the rise of the prosuming machines. Journal of Consumer Culture, 15(3), 407\u2014424. Ritzer, G., & Jurgensen, N. (2010). Production, consumption, prosumption: The nature of capitalism in the age of the digital \u2018prosumer\u2019. Journal of Consumer Culture, 10(1), 13\u201436. Rooster Teeth Productions. (2015). About Rooster Teeth productions. Retrieved September 1, 2015, from http:\/\/ roosterteeth.com\/about\/index.php Rose, M. (2014, June 18). Is YouTube killing the traditional games press? Gamasutra. Retrieved February 6, 2015, from http:\/\/ www.gamasutra.com\/view\/news\/219122\/Is_YouTube_ killing_the_traditional_games_press.php Shaw, L., & Womack, B. (2015, April 8). Google plots new YouTube subscription service as soon as this year. Bloomberg. Retrieved August 30, 2015, from http:\/\/www.bloomberg.com\/news\/ articles\/2015-04-08\/google-plots-new-youtubesubscription-service-as-soon-as-this-year Shields, M. (2015, April 1). YouTube star Michelle Phan partners with Endemol to launch the anti-MCN. The Wall Street Journal. Retrieved April 20, 2015, from http:\/\/blogs.wsj. com\/cmo\/2015\/04\/01\/youtube-star-michelle-phan-partnerswith-endemol-to-launch-the-anti-mcn\/?mod=djemCMOToday sponsored Simmons, G. (2008). Marketing to post-modern consumers: Introducing the internet chameleon. European Journal of Marketing, 32(3\/4), 299\u2014310. Smith, A. (2015, March 11). 13-24 year olds watching moreYouTube than TV\u2014To the surprise of no-one. ReelSEO. Retrieved April 20, 2015, from http:\/\/www.reelseo.com\/13-24watching-more- youtube-than-tv\/ Spangler, T.(2013, November 1). YouTube standardizes ad-revenue split for all partners, but offers upside potential. Variety. Retrieved January 23, 2015, from http:\/\/variety. com\/2013\/digital\/news\/youtube-standardizes-ad-revenuesplit-f or- all- part ners -but -off ers -upside- pot ent ial 1200786223\/ Strompolos, G. (2014, September 8). Will multi-channel networks disrupt the traditional TV model? Entrepreneur. Retrieved March 14, 2015, from http:\/\/www.entrepreneur.com\/ video\/236488 Suster, M. (2013, September 15). Why the media has been wrong about YouTube networks. Both Sides of the Table. Retrieved August 31, 2015, from http:\/\/www.bothsidesofthetable.com\/ 2013\/09\/15\/why-the-media-has-mostly-been-wrong-aboutyoutube\/ Suster, M. (2015, January 19). The most misunderstood facts about building a business on YouTube. Both Sides of the Table. Retrieved August 31, 2015, from http:\/\/www.bothsidesofthe table.com\/2015\/01\/19\/the-most-misunderstood-facts-aboutbuilding-a-business-on-youtube\/ Trefis Team. (2014, August 28). How Twitch fits in Amazon\u2019s strategy. Forbes. Retrieved August 20, 2015, from http:\/\/ www.forbes.com\/sites\/greatspeculations\/2014\/08\/28\/ how-twitch-fits-in-amazons-strategy\/ How I Did It\u2026 HBR.ORG Kevin Plank is the founder and CEO of Under Armour. Under Armour\u2019s Founder On Learning to Leverage Celebrity Endorsements Kevin Plank by Kevin Plank PHOTOGRAPHY: GETTY IMAGES THE IDEA Celebrity endorsements used to be fairly straightforward: a face in an ad, a logo on the TV screen. But that world is rapidly changing, and Under Armour\u2019s CEO is nimbly navigating it. I started Under Armour in 1996, when I was 23 years old and just out of college. The idea for the product was pretty simple. I had played football in high school and college, and I\u2019d hated how the T-shirts I wore under my shoulder pads became soaked with sweat. It wasn\u2019t just uncomfortable\u2014I really believed the extra weight hurt an athlete\u2019s performance. I saw the need for a shirt that would stay dry. I looked at all sorts of fabrics and eventually settled on one that would wick away moisture and stay light even if the wearer sweat heavily. I asked a tailor to turn the material into a T-shirt, and I produced a bunch of prototypes. Then I set out to sell them. To do that, I turned tomy network. I had attended St. John\u2019s College High School, in Washington, DC, which has a powerhouse football program. At least eight of my high school teammates went on to play Division I football at places like Syracuse, Wake Forest, and Virginia, and two of them made it to the NFL. After high school I spent a year at a prep school called Fork Union Military Academy, which was another factory for athletes. Among my Fork Union teammates, 23 signed to play Division I football in college, and one of them\u2014Eddie George\u2014won the Heisman Trophy. Four years after we graduated from Fork Union, 13 of my former teammates were drafted May 2012 Harvard Business Review 45 How I DID It into the NFL. In college I walked on to the football team at the University of Maryland, and 20 or 25 of my teammates during my four years there went on to play professional football. This is a piece of the Under Armour But knowing these guys didn\u2019t necessarily make navigating the world of celebrity endorsements any less complicated. What began as an informal word-of-mouth brand-building strategy has evolved into a multimillion-dollar expense item that requires elaborate negotiations and constant attention to the return on investment. But it\u2019s also a lot of fun. Managing Freebies Simply getting my first products into players\u2019 hands was challenging. This was preFacebook, and I had to work to track down the guys I went to high school or college with. When I did reach them, I was careful in my approach. A lot of people ask these guys for help, and I didn\u2019t want to sound like the obnoxious third cousin who tries to borrow $500. So I wouldn\u2019t say, \u201cDo me a favor and wear this shirt.\u201d Instead I\u2019d say, \u201cI have this neat product and this cool company I\u2019m working with\u2014you should check it out.\u201d If they sounded interested, I\u2019d say, \u201cHey, let me send you a couple of shirts. If you like them, wear one\u2014and give the other one to the guy with the locker next to yours.\u201d It was a grassroots approach. I tried to emphasize that if an Under Armour shirt could help these athletes improve their performance just a little bit, they\u2019d be able to earn even more money. I positioned wearing it as a tool to help them rather than a favor to me. 46 harvard Business review May 2012 Among Under Armour\u2019s endorsers (clockwise from right): NFL quarterback Tom Brady, NBA point guard Brandon Jennings, UEFA midfield Sheran Yeini I thought that once a few players on a team began wearing the shirts and talking them up, the team would feel obliged to buy them for everyone, the way it buys other equipment. That was the business model I had in mind, and in fact, that\u2019s what happened. Our first order came in 1996, from the Georgia State football team, and soon after that we made big sales to the Atlanta Falcons and the New York Giants. I was still giving free shirts to individual players in the hope that they\u2019d spread the word, but I made the money back with sales to teams. Then, in the summer of 1997, the equipment manager for the Miami Dolphins called. \u201cHey, Kev,\u201d he said, \u201ca couple of our guys have your shirts, and we love them. If you do me a favor and send me 150 of them, I\u2019ll make sure every Dolphin\u2014including Dan Marino\u2014is wearing one on Sunday.\u201d I told him I couldn\u2019t give away that many shirts for the promotional value: It wasn\u2019t in my budget. \u201cAre you crazy?\u201d he said. \u201cThe exposure will be unbelievable.\u201d He was right\u2014the Dolphins game would be nationally televised, and with the Under Armour logo visible on the neck of every shirt, our brand would be in front of millions of people. That was a defining moment, one of those decisions that determine the future of a company. \u201cLook,\u201d I said. \u201cI like you very much, and I do have the shirts in stock. But I can\u2019t send them to you free\u2014I just can\u2019t. We make a good product, we charge a fair price, and other teams are paying for them. If I give them away to you, I\u2019ll need to do it for everybody, and I can\u2019t keep up with that game.\u201d He was apologetic, but he said he didn\u2019t have the money, and he hung up. I was kicking myself. Had I done the What began as a word-of-mouth brand-building strategy has evolved into a multimillion-dollar expense item. But it\u2019s a lot of fun. PhotograPhy: Courtesy of under armour, getty Images story that most people don\u2019t appreciate. They focus on the innovative product. But I wasn\u2019t just a guy who created a new kind of athletic wear. I had friends inside the locker rooms of more than a dozen professional football teams. Although Under Armour has become a $1 billion brand by selling to consumers, I created it as a product for elite athletes. And when I was laying plans for the business, my contacts among these NFL players were a vital part of my strategy. HBr.org right thing? I considered sending the shirts down anyway, despite what I\u2019d said. That phone conversation took place on a Wednesday, and the game was on Sunday. On Thursday he called me back. \u201cOkay, I have an idea,\u201d he said. \u201cWe\u2019ll pay for the shirts, but you\u2019ll bill us on a 45-day cycle, which will help me take the money out of next month\u2019s budget.\u201d We shipped them overnight. When you deal with products for which endorsements are important, you have to make decisions like that all the time. When is it worthwhile to give away your product, and when do you stand your ground and demand a fair price? As Under Armour grew, that calculation became even more difficult. Star players began asking to be paid to wear our gear. By 1998 Barry Bonds had become a big advocate of our product. We didn\u2019t know how he was getting the shirts (we weren\u2019t sending them to him), but he was wearing them all the time, and he really liked them. Some of our guys asked him if he\u2019d be willing to do a photo shoot for us. \u201cYou know, I love your product\u2014I\u2019d love to,\u201d he said. It was a very big deal for us. We flew a photographer down to spring training to do the shoot, and I went with him. Barry came down to the set that morning and said, \u201cI\u2019m not going to do it.\u201d He had his manager with him. I pleaded with him: \u201cBarry, it will take five minutes\u2014let\u2019s just get a picture of you in the shirt.\u201d He told me he wanted $5,000 to let us take the photo. At the time, we weren\u2019t paying any players to wear Under Armour, and I told him that. We came up with a compromise: We\u2019d give him $5,000 in merchandise and a promise that if we ever began paying players to wear the brand, we\u2019d pay him whatever we were paying our top-earning athlete. (In 2001 we gave him $5,000 for his charity as well as $5,000 in merchandise; he was still our top-earning athlete that year.) He looked at me, grabbed hold of his manager, and said, \u201cKevin, if you ever screw with me, I\u2019m going to kill this guy.\u201d Everyone laughed. We took the photos and put one in our catalog. It was cool. But as time went on, we were constantly dealing with things like that. Celebrities became even more important to our business after 2000, when we began selling apparel at retail. \u201cWhat\u2019s Up with the Stock?\u201d One thing people don\u2019t realize about endorsements is how few athletes are instantly recognizable\u2014and how effective an endorsement can be from someone who\u2019s relatively unknown but has the right personality. Many of the early athletes we used only looked famous\u2014they were big, athletic, strong. Eric Ogbogu was a teammate of mine at Maryland who played with the Jets, the Bengals, and the Cowboys. He looks like a million bucks. But out of 800 players in the NFL, there are only about 10 that most people would recognize with their helmets off\u2014and Eric wasn\u2019t one of Measuring the Payoff By some estimates, 14% to 19% of all U.S. advertisements feature celebrity endorsements, and in 2010 the athletes Tiger Woods, Phil Mickelson, and LeBron James earned seven times as much from endorsements as from playing their sports. But do endorsements really drive sales? In a July 2011 paper, Anita Elberse of Harvard Business School and Jeroen Verleun of Barclays Capital studied the impact of endorsement announcements on stock price and sales\u2014and how an athlete\u2019s subsequent performance affects returns over time. Their paper, which examined 178 athlete endorsers and 95 companies, concluded that endorsements pump up a brand\u2019s sales by $10 million a year, on average, and increase short-term return on equity. And when an endorser wins an athletic championship, the brand enjoys another sales bump. \u201cIn general,\u201d Elberse and Verleun write, \u201cenlisting the help of celebrity endorsers pays off.\u201d them. Nonetheless, we put him in an Under Armour ad screaming, \u201cWe must protect this house!\u201d The catchphrase became really well known, and Eric became famous as the Under Armour guy. The point is that you don\u2019t need to have Tiger Woods in a commercial for it to be effective. At a certain point in our evolution, it began to make sense to pay athletes to promote our brand. Once we\u2019d established a big consumer business\u2014and especially as we\u2019ve expanded into new categories, such as footwear\u2014the value of endorsements became clear. Consumers know that Under Armour is an authentic brand that was built on the field. Athletes\u2019 endorsements reinforce that, and they provide us with a bigger platform to communicate our product stories. We are strategic with our partnerships\u2014our athletes talk about the benefits of our gear because it helps them perform. Today our most prominent athlete is Tom Brady, the Patriots quarterback, whom we signed in November 2010. We\u2019ve never disclosed how much we pay him, but Tom\u2019s deal is unique in that it includes equity in the company. It\u2019s a great arrangement, because I want our biggest partners rooting for Under Armour. One day last summer our stock took a pounding, and I received a text from Tom: \u201cWhat\u2019s up with the stock? I\u2019m buying more tonight.\u201d That\u2019s exactly what I want\u2014an athlete who has truly bought into our success. Sometimes we decide not to spend money on particular athletes, and that can be a hard decision, too. Recently the endorsement market for players selected in the NBA draft has been really high. In 2010 John Wall was the number one pick, and another company paid more than $5 million for an endorsement deal with him. He hadn\u2019t even dribbled a ball in the NBA yet! The number two pick was Evan Turner, out of Ohio State. We wanted to sign him. We figured a deal with him was worth $150,000 a year. Another company came in and paid him more than $2 million a year. To us, that didn\u2019t make sense. Often these deals aren\u2019t just about the money. You need to find out who is on May 2012 Harvard Business review 47 How I dId It hBR.oRg under armour Facts & Financials Founded: 1996 HeadquaRteRs: Baltimore employees: 3,900 Revenue and net Income US$ in millionS 725 38 Once we have a top athlete on board, we look to him for more than just endorsements. Ideally, he\u2019ll help us drive product innovation, too. One of our top athletes is Brandon Jennings, who\u2019s in his third year in the NBA and plays for the Milwaukee Bucks. When the NBA locked out last summer, Brandon didn\u2019t feel like going home cult. But when we enter a new category, we work hard to get it right as quickly as possible. When we launched football shoes, everyone said we couldn\u2019t compete. But within a few years we had Tom Brady winning the Super Bowl MVP in our shoes, and 2011 2010 431 40 2008 Sometimes when we enter a new category, we have to pay more to get athletes to wear our gear. We were signing up baseball players to wear our cleats before we even made baseball cleats, so it was a leap of faith by them. Deals like that are more diffi- 856 47 607 2007 to LA, so we offered him an internship. He had an office at our Baltimore headquarters. He worked out here and ate in the dining hall. His official title was Curator of Cool. He hung out with our designers. A guy like that helped them come up with new ideas. 2006 the other side of the table and whom you should be talking to. There\u2019s the athlete, of course, but sometimes a friend or a handler or the mom or dad is the key decision maker. You have to build trust and explain your story. These athletes have everybody in the world coming after them. Your job is to break through the clutter and the noise and show them why your brand would be a good fit. 1,064 68 revenUe net income 2009 tom Brady\u2019s deal is unique in that it includes equity in the company. It\u2019s a great arrangement, because I want our biggest partners rooting for Under Armour. 1,473 97 Cam Newton, the number one NFL draft pick, led Auburn to the 2011 national championship in a pair. We launched basketball shoes in 2010, and I guarantee that within four or five years our athletes will be winning championships in them, too. When we started out, the way compa- \u201cWhat I lack in experience I make up for in wildly unrealistic self-confidence.\u201d Today social media give us infinitely more opportunities totell our story. Most of our athletes are on Twitter, and our marketing department has social media experts. They\u2019re usually 25, with two years of experience, but they know more about this stuff than anybody else. Looking at how communication has changed in the past few years, with the emergence of Facebook and mobile technology, it\u2019s hard to say how the endorsement business is going to change over the next decade. I do know that we\u2019ll continue to embrace those changes. HBR Reprint R1205A 48 harvard Business Review may 2012 CARtoon: ChRIs WIldt nies used endorsements was fairly simple: You put the athlete in an ad or hoped your logo showed clearly on TV during games. In the past few years that\u2019s changed, too. As athletes continue to build their own brand identities, they seek endorsements that reflect their lifestyle and values. A successful endorsement should facilitate a conversation between the brand and the athlete and between the athlete and the consumer. Harvard Business Review Notice of Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses. Academic licensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any other means of incorporating the content into course resources. Business licensees may not host this content on learning management systems or use persistent linking or other means to incorporate the content into learning management systems. Harvard Business Publishing will be pleased to grant permission to make this content available through such means. For rates and permission, contact permissions@harvardbusiness.org. MARK5810 MARKETING COMMUNICATION AND PROMOTION Dr Haydn Northover https:\/\/www.youtube.com\/watch?v=OLSsswr6z9Y https:\/\/www.youtube.com\/watch?v=c9GFpU2B258 https:\/\/www.youtube.com\/watch?v=1n6hf3adNqk https:\/\/www.youtube.com\/watch?v=JJmqCKtJnxM 4 5 Course Aims 1. To provide students with contemporary knowledge of marketing communication and promotion. 2. To familiarise students with various components of the marketing communication mix that firms practice and customers experience. 3. To enhance students\u2019 ability to apply creatively and critically marketing communication concepts and techniques in developing an integrated marketing communication plan. Understanding Fundamental Marketing Communication Decisions 7 Lets start by setting the scene\u2026\u2026.. What\u2019s the big deal anyway? What is advertising and why do we care if it works? What is it???? \u2724 The lifeblood of the consumer orientated market \u2724 Primary means by which to communicate with customers \u2724 It exists to help sell stuff \u2724 Key role in most organisations, often largest marketing $$ invested \u2724 Seen as necessary for economic growth 9 IMC Overview \u2022 Highly competitive global marketplace \u2022 Wide variety of media available \u2022 Clear communications needed \u2022 Customers bombarded with communications \u2022 Integrated advertising and communications Lean Cuisine \u2022 \u201cDiet\u201d not popular term \u2022 New products, new messages \u2022 \u201cFrozen, How Fresh Stays Fresh\u201d \u2022 Social media \u2013 \u201cWeigh This\u201d \u2022 Goal to shed the idea of a \u201cdiet\u201d food Communication Process Sender Encoding Transmission Device Feedback =Noise Decoding Receiver =Noise Communication noise Talking on the phone during a commercial on television Driving while listening to the radio Looking at a sexy model in a magazine ad and ignoring the message and brand Scanning a newspaper for articles to read Talking to a passenger as the car passes billboards Scrolling past Internet ads without looking at them Being annoyed by ads on a social media site Ignoring tweets on Twitter because they are irrelevant Being offended by the message on a flyer for a local business. 1\/3 1\/3 1\/3 Talking on the phone during a commercial on television 1-14 Looking at actor and ignoring the message and brand 15 16 17 Integrated Marketing Communications is the coordination and integration of all marketing communication tools, avenues, and sources within a company into a seamless program which maximizes the impact on consumers and other end-users at a minimal cost. The IMC includes all business-tobusiness, channel, customer, external communications, and internal communications. 1-18 19 Using the same creative in Digital as for TV doesn\u2019t always work \u2013 it\u2019s best when it is both integrated AND customized Return on investment by platform\/combination 167 148 100 Non-integrated Integrated campaigns with creative not customized to the media platform (e.g. TV and repurposed online video) Integrated campaigns with creative customized to the media platform (e.g. TV and made for web online video) Integrated (same) Integrated (custom) Source: ARF Ground Truth How Advertising Works, March 2016. Data Source: Kantar Millward Brown CrossMedia TV + Digital CrossMedia studies, 2011-2015. 20 Example of a well integrated and customized campaign https:\/\/www.youtube.com\/watch?tim e_continue=120&v=X7eiyYU1_io TV Commercials Customized State Digital Videos Facebook Videos Political Website Live tweeting during political debates 21 The Marketing Mix All elements communicate to the consumer \u25aa PRODUCT \u2013 product, package, brand symbolism \u25aa PRICE \u2013 price-quality perceptions \u25aa PLACE \u2013 dimensions of store imagery, usage \u25aa PROMOTION \u2013 publicity, advertising All need to work together strategically (i.e.same objectives with price and advertising) and creatively (i.e. consistent colours across platforms) 22 Advertising Public Relations The Components of Promotion Digital Marketing Sales Promotions Social Media Personal Selling Alternative Marketing Direct Response Database Marketing 1-23 Advertising is a huge business!! 24 25 26 SEe AdNews Special Report on website resources 27 28 29 1984 \u2013 introduction of a new brand \u2013 Apple Idea \u2013 saving man from conformity Cost media space US$1.1m Production US$900k Aired only ever once Ad gained millions in publicity Claimed a masterpiece Most talked about ad of all time Yet Apple Board of directors said \u2018no way\u2019 1984, Superbowl ad, by agency Chiat\/Day, copy written by Steve Hayden and direction by Ridley Scott. http:\/\/www.theapplecollection.com\/Collection\/AppleMovies\/mov\/1984.mov History at http:\/\/en.wikipedia.org\/wiki\/1984_(television_commercial) 1984 https:\/\/www.youtube.com\/watch?v=2zfqw8nhUwA Like a Girl https:\/\/www.youtube.com\/watch?v=yIxA3o84syY Doritos https:\/\/www.youtube.com\/watch?v=kNxgxF-7SfA The Showdown https:\/\/www.youtube.com\/watch?v=1shK-j_u6LI Bud https:\/\/www.youtube.com\/watch?v=7p_3lITiK_Q 31 32 PAID OWNED EARNED Display advertising, Google, Adwords, FB ads, Sponsorship Brand website, microsites, company blogs, mobile apps, email, podcasts Reviews, mentions, shares, ratings, forums, retweets 35 But lets be careful with our assumptions about how to access to general public. Ad agency folk are different to the rest Steps of a Marketing Plan Current situational analysis SWOT analysis Marketing objectives Target market Marketing strategies Marketing tactics Implementation Evaluation of performance 1-39 FIGURE 1.5 Trends Affecting Marketing Communications Emphasis on accountability & measurable results Explosion of the digital arena Integration of media platforms Shift in channel power Increase in global competition Increase in brand parity Emphasis on customer engagement Accountability and Measurable Results Economic pressures Want results from marketing budgets Effort led by CEOs, CFOs, and CMOs Advertising agencies expected to deliver results Emerging social media changes communication Emerging alternative methods and media Less reliance on mass TV ads Explosion of Digital Media Emergence of Interactive Web sites, blogs, and social networks Smartphones, tablets Companies shifting expenditures from traditional to digital media Social media allows interaction In this connected \u2018always on but not always receiving\u2019 world with fragmentation and more ways and places to engage, brands are faced with both great opportunities and challenges. 43 Everything changed when digital arrived. Global share of media spend: TV 45 40 Internet 35 30 Newspaper 25 20 Magazine 15 10 Outdoor 5 0 Radio 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f Source: Group M, \u2018This Year, Next Year\u2019, December 2016 44 Average Reach \u2013 Australia & New Zealand 90% 80% 70% 64% 60% 50% 44% 40% 34% 30% 28% 28% 21% 21% 20% 10% 0% TV Online Video Cinema Radio Newspaper Magazine Online Display Facebook Outdoor POS %Reach Based on 127 XM studies, One standard deviation around mean Australia & New Zealand 45 Getting noticed and leaving an impression is more challenging than ever before Consumers cannot keep up with the number of brands vying for their attention Number of unique brands with monitored ad activity 2008 2015 409,563 533,603 up 30.3% Nearly 8x divergence Average number of brands per category consumers are aware of 12.8 13.3 Source: Kantar Media and BrandZ up 3.9% 46 And with the growth in media channels it\u2019s easier than ever for people NOT to engage with advertising People avoid ads using technology (e.g. ad blockers) as well as skipping and engaging in other activity: 66% skip or pay 48% use tech 45% don\u2019t watch\/ to avoid ads to try this website today do something else Source: Kantar Millward Brown\u2019s AdReaction 2017 study. Global data. 39 countries. 47 Digital does have unique challenges. There is currently a major online ad receptivity problem, and it\u2019s even worse among the younger generation. People are less accepting of digital advertising Positive attitude to advertising format Traditional advertising Digital advertising 32 30 26 1 -1 -8 GenZ GenX Source: Kantar Millward Brown AdReaction Gen X,Y,Z study 2017 GenY 48 Limited digital ad receptivity is partly due to different states of mind when we consume media on different devices Live TV On Demand Computer Tablet Smartphone Bored & Relaxed Relaxed Goal Oriented Relaxed & Entertained Bored, Relaxed & Goal Oriented At home At home At work While commuting\/traveling; At school\/ college\/ university In a public building or outdoor; at work; while commuting \/traveling With other people I live with With other people I live with On my own; With people I don\u2019t live with On my own On my own HOW? (Mindset) WHERE? WHO WITH? Source: Kantar Millward Brown; AdReaction Video Creative in a Digital World study, 2016 49 Integration of Media Platforms Consumers integrate platforms 5 hours 16 minutes \u2192 non-television screens 4 hours 31 minutes \u2192 television Ways consumers integrate media formats \u25aa Content grazing \u25aa Investigative spider-webbing \u25aa Quantum journey \u25aa Social spider-webbing 1-50 Pathways Consumers Use to Interact Across Media Devices 80% 70% 68% 57% Percent of Consumers 60% 50% 46% 39% 40% 30% 20% 10% 0% Content Grazing Investigative SpiderWebbing Quantum Journey Social Spider-Webbing Source: Based on Mark Walsh, \u201cMicrosoft Highlights Usage Across Device Pathways,\u201d Online Media Daily, March 14, 2013, www.mediapost.com\/publications\/article\/195786 1-51 Changes in Channel Power Retailers Control channel Control shelf space Have purchase data Determine products and brands on shelves Consumers Internet shifts power to consumers Multiple methods of making purchases 1-52 Increases in Global Competition Information technology and communication has changed the marketplace. Products can be purchased from multiple locations. Customers want both low prices and high quality. Manufacturers and retailers must work together. Increase in Brand Parity Brands viewed as being equivalent Consumers select from a group of brands Quality and characteristics less important Price more important Decline in b\u2026 <\/p>\n","protected":false},"excerpt":{"rendered":"
Individual Assignment Length: 1500 words The Case Study Case Synopsis. In 2013, Under Armour had $2.3 billion in sales yet only $500 million came from its women\u2019s apparel, and the company was ready to expand into the female market segment. The \u201cI Will What I Want\u201d global women\u2019s marketing campaign was the largest Under Armour … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2402","post","type-post","status-publish","format-standard","hentry","category-essaywr"],"_links":{"self":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts\/2402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/comments?post=2402"}],"version-history":[{"count":0,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/posts\/2402\/revisions"}],"wp:attachment":[{"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/media?parent=2402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/categories?post=2402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/academicwritersbay.com\/writings\/wp-json\/wp\/v2\/tags?post=2402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}