Knight Ridder/Tribune Business News
May 29--Given the heady sums that shoe companies spend on endorsements, you might expect them to spare no expense on market research, pollsters and consultants to ensure they make the right decisions.
But Nike and most of the rest of the footwear industry scorn advice from outsiders. Instead, they dispense hundreds of millions of dollars -- Nike alone spent more than $300 million last year -- largely on gut instinct. Like educated horse pickers at the track, their decisions often come down to seat-of-the-pants hunches.
'We don't have a bunch of people here in an office in Beaverton making these decisions,' said Tom Fox, Nike's director of U.S. sports marketing. 'We've got guys out in the real world. They are as wired into the street as you can possibly be. That's our research.'
Nike and other shoe companies know what they want from an endorser, but they find it more difficult to determine whether they're getting their money's worth.
The sneaker-makers live with this uncertainty because they can afford to. Athlete endorsements operate somewhat like venture capital investments. Nine of 10 of their deals will be lukewarm successes or outright failures. But they hope the 10th will be such a monumental success that it will pay for the other nine and then some.
'When these things work, they are ... magic,' said Helen Rockey, a former Nike manager who now runs Brooks Sports in Bothell, Wash. 'It makes it easier to gamble.'
But trying to measure the effectiveness of a single endorser can be frustrating.
Grant Hill, whom Fila signed as its marquee athlete when he entered the NBA in 1994, surely deserves a great deal of credit for Fila's two-year surge from $617.4 million to $1.3 billion in sales. Likewise, Tiger Woods played a big role in the growth of Nike's golf sales from $50 million to $200 million.
But exactly how much? Both companies had other endorsers and other marketing programs.
Stephen Greyser, a Harvard Business School professor who teaches a course in sports marketing, said it's difficult if not impossible to measure the effectiveness of a 'generic' endorsement.
Bob Dorfman, senior writer and sports analyst at Foote Cone & Belding advertising agency in San Francisco, said endorsements are every bit as ephemeral as advertising. 'There's no way to prove anything about their efficacy,' he said. 'That's why the business has flourished.'
Even if the companies don't measure the effectiveness of endorsements, they do have some criteria for selecting athletes and celebrities.
The entire industry uses the same basic checklist. The best endorsers must be elite performers, preferably attractive and charismatic as well. A bit of anti-authority attitude can be helpful in moderation. And, most important, the athlete must be in a position to get exposure.
The glamour players on the glamour teams in the glamour cities command the largest endorsement contracts.
Regional representation also is important to the companies, Greyser said. For instance, Adidas earned a higher profile in New England when it signed Boston Celtic star Antoine Walker. Similarly, Nike aggressively went after Chilean tennis player Marcelo Rios two years ago in part because it felt underrepresented in Latin America.
Exposure, or the lack thereof, played a key role in the disparate experiences of Jerry Lawson and Mike Cowan.
Lawson is arguably the best marathoner in the United States. He left Nike for New Balance in December after a dispute about a $10,000 increase in his bonus payments.
Cowan, a hefty PGA golf caddy who probably would need significant help from a golf cart to cover 26 miles, has remained happily in the Nike family. He's even become a bit of a commercial icon, doing bits for ESPN and Days Inn hotels.
How does Cowan reap such treatment?
He's not just any caddy. He carries the clubs and reads the greens for Tiger Woods, second only to Jordan in popularity among Nike's endorsers. Whenever Woods competes in a PGA tour event, the bewhiskered caddy, sporting a Nike cap to match Woods', will get plenty of precious network television time. Nike's contract with Woods stipulates that his caddy wear Nike gear.
Lawson, for all his achievements and promise, will get virtually no national coverage until the day he competes well in the Olympics or World Championships.
'This business starts with eyeballs,' Harvard's Greyser said. 'The first step or primary purpose of these sponsorships is exposure.'
(c) 1998, The Oregonian, Portland, Ore. Distributed by Knight Ridder/Tribune Business News.
