What sets Nike (NKE) apart from its peers? Brand recognition. Kids from New York City to Beijing recognize the iconic Nike 'swoosh.' With its latest cleat campaign, Under Armour (UA) is looking to make its stamp on the sports performance world and make its brand just as recognizable to young athletes and sports fans as its rival.
On Monday, the Baltimore-based sports apparel company launched its "It Comes From Below" campaign featuring MLB all-star Bryce Harper and NFL all-pro Cam Newton.
To celebrate the launch of the campaign, Under Armour -- which is a key holding of the Growth Seeker portfolio --released a new cinematic commercial featuring Harper ahead of this week's Major League Baseball All-Star game. The ad features Harper taking batting practice as the narrator rattles off a list of Harper's career accomplishments, before ending with a glamour shot of the right fielder's black and gold cleats emblazoned with Under Armour's signature intersecting arches.
Under Armour has seen its annual revenue grow from $17,000 in its debut year of 1996 to $3.96 billion in 2015, a 29% increase from the previous year. The company is now the second leading sportswear maker, behind Nike.
Helping lead these gains is the company's investment in its burgeoning footwear segment. Following the blueprint Nike has set, Under Armour has invested heavily in athlete endorsers across the major American sports like Harper, 2015 NFL MVP Newton, two-time defending NBA MVP Steph Curry and 2015 PGA Tour Player of the Year Jordan Spieth. Earlier this year Harper signed a reported 10-year contract extension with Under Armour. If those reports are true -- Under Armour traditionally does not disclose the particulars of its endorsement deals -- it would represent the largest endorsement deal in MLB history.
Those investments have started paying off for Under Armour as the company's footwear division saw first-quarter net revenue increase 64% year over year to $264 million.
"Under Armour originally started as an apparel company that focused mainly on athletic performance, but even from the beginning (CEO) Kevin Plank was a firm believer in the power or sports so it always had an aspirational perspective to it as well as performance," Growth Seeker co-manager and Cocktail Investing co-author Chris Versace said in a phone interview.
To that end, Under Armour's new ad campaign seems to attempt to connect consumers to the idea that they can be Bryce Harper or Cam Newton if they put in the hours those superstars do -- while wearing Under Armour apparel, of course. The timing couldn't' be better for Under Armour as Harper's visibility is at an all-time high following his MVP season in 2015.
Nike's ascension to the top of the sportswear heap over the past couple of decades has coincided with its efforts to cement its brand as synonymous with athletics. "Nike has created superior value by utilizing celebrity endorsers, such as Michael Jordan, to represent their brand. The idea is that the celebrity image is embedded into the consumer's mind and will cause the consumer to associate the endorser with Nike's products, making the brand more desirable and valuable," branding firm ConceptDrop said in a write up.
It is a tried and true blueprint that sports and sports adjacent brands like Nike and Gatorade established years ago in ad campaigns like the ubiquitous "Be Like Mike" commercials in the 1990s. "Nike without a doubt wrote the playbook that Under Armour is currently following," Versace said.
The biggest potential obstacle to Under Armour's master branding plan is an unexpected drop off in the performance of its athlete endorsers. But so far, the athletes they have picked and the timing of their endorsement deals has been impeccable.
After losing out on Kevin Durant to Nike in the summer of 2014, Under Armour signed Curry and watched the young star rocket to NBA superstardom from relative anonymity over the next two seasons. After signing Speith to a 10-year extension in early 2015, the 22-year old golfer went on the have one of the best years ever, placing fourth or better in all four major tournaments on his way to being named player of the year. Cam Newton signed his deal with Under Armour as a rookie in 2011 and led his team to the Super Bowl this past season.
So far luck has been on Under Armour's side. Mix that with the company's stated vision and Under Armour's pursuit of Nike's top-dog status is sure to get more heated in the coming years.