Friday, September 18, 2009 | Modified: Saturday, September 19, 2009, 3:00am CDT
A brand built around a band
Already steeped in pop culture, Livestrong concept branches out
Austin Business Journal - by Tripp Mickle Contributing Writer
Lance Armstrong and his agent, Bill Stapleton, laughed when Nike executive Scott MacEachern approached them five years ago with a proposal to sell 5 million rubber bracelets ahead of the 2004 Tour de France. Great, they joked, we’ll sell 100,000 to friends and family and have 4.9 million left to shoot at each other across the room.
“I thought it was a stupid idea,” Stapleton said. “I’ve learned over the years Nike has a lot of crazy ideas, but most work.”
This idea worked better than anyone could have imagined.
The Livestrong wristband gave birth to a brand that has spread like ivy during the last five years, planting itself on laptops, sunglasses, cycling helmets and Nike apparel. This month, the brand’s strength will be on display at Dick’s Sporting Goods across the country when a Livestrong line of fitness equipment built by Horizon Fitness makes its debut and promises to yield even more revenue to the Austin-based nonprofit.
Livestrong’s growth has been unprecedented and illustrative of what can happen when a dominating sports figure is combined with a simple product concept and an inspirational message. The blend led to the emergence of sport’s first commercial philanthropic brand, a name that sells and gives simultaneously the way that no other has.
“It’s not an apparel and footwear brand,” said Jeff Hennion, chief marketing officer at Dick’s Sporting Goods. “It’s a movement and a cause around which people have great passion.”
The emergence of Livestrong as a brand also has transformed the Lance Armstrong Foundation. The nonprofit, which was founded in 1997, spent its early years raising an average of $7 million annually, but it now expects to raise more than $40 million this year, even with a weak economy. Of that, some $17 million is expected to come from licensing the Livestrong name.
The brand’s success has allowed the Lance Armstrong Foundation to create its own endowment and raise more than $300 million to fight cancer. Last year alone it contributed more than $27 million to cancer patient support, programs and research. It also has spawned the Livestrong Global Cancer Summit, Livestrong Day and the Livestrong Global Cancer Campaign.
Ultimately, Livestrong has become more than Armstrong, Stapleton or anyone at Nike ever imagined.
“Anybody who tells you it would be like this years from now is full of ,” Stapleton said. “The genie got out of the bottle, and everyone was like, ‘Oh, my God, what do we do with this?’”
To understand the brand’s history, one must go back to 2003. MacEachern, who signed Armstrong with Nike in 1996, was searching for a way the company could recognize the cyclist ahead of his bid to win an unprecedented sixth Tour de France. That year, Nike had begun selling Baller Bands, silicon rubber bands with messages on them that NBA players wore for inspiration.
MacEachern thought: Why not make a wristband for Armstrong?
The concept was kicked around by a Nike brand marketing team. MacEachern believed the bracelet should be yellow because of Armstrong’s association with the Tour de France’s yellow jersey. He also wanted it to feature the words “carpe diem” and retail for $1, so that proceeds could benefit the Lance Armstrong Foundation.
That plan changed when one of Nike’s marketers researching Armstrong’s foundation came across the word “Livestrong,” which was being used for an educational program for people diagnosed with cancer. Livestrong replaced carpe diem.
Livestrong “was what was needed in order to get [the idea] over the top,” MacEachern said.
The wristbands debuted May 17, 2004, and made their first major public appearance on the “Today” show when Armstrong’s then-girlfriend, singer Sheryl Crow, wore one. But it wasn’t until Nike athletes like American Justin Gatlin and Moroccan Hicham El Guerrouj wore them during victories at the Athens Olympics in late August 2004 that they became a cultural phenomenon.
During the September after the Athens Games, the wristbands exploded in popularity. Nike and the foundation went on to sell more than 46 million bracelets for $1 in the first year. Some weeks the sales were so high that the wristbands outsold all other commercial merchandise in the U.S., said Doug Ulman, president of the Lance Armstrong Foundation.
The brand’s appeal extended from athletes to politics — Sen. John Kerry wore one throughout the 2004 presidential campaign — and pop culture. Oprah even hosted a show about the bracelets and the foundation in February 2005.
“Clearly, the [athlete and celebrity exposure] were things we never could have paid for or imagined,” Ulman said. “The bottom line was that none of the advertising or promotion was, ‘You should go wear this.’ It just happened organically, and that’s why it succeeded.”
The bracelets were sold to people in all 50 states and more than 60 countries. Livestrong, once just the name of a cancer education program, gained the same familiarity and traction many sports brands have in their infancy. It also became the first brand Nike had launched that the sports behemoth didn’t own. Instead, the foundation controlled the name and brand, and today its 75 employees run the brand and numerous cancer programs out of the foundation’s local offices.
A study commissioned by the foundation in 2005 showed that 53 percent of adults were familiar with the name Livestrong and 96 percent of those were aware of its connection to Lance Armstrong. Of the people familiar with the brand, 80 percent associated it with inspiration, 70 percent with cancer and 41 percent with living each day to the fullest.
A brand with a single purpose — raising money and awareness in the battle against cancer — had morphed into something far richer and deeper because of its association with Armstrong.
“The core is the people who buy these things because their uncle has cancer,” Stapleton said, “but there was this broader group that wanted to quit smoking, wanted to exercise, wanted to be a better parent — and the band reminded them of that.”
Beyond the bands
It appeared Livestrong had life as a brand beyond the wristbands, but its power wasn’t clear until Armstrong sponsor and computer chip maker AMD licensed the brand in 2005 for a special line of Hewlett-Packard computers. The laptop, which featured the Livestrong logo and Armstrong’s signature, sold out, and Hewlett-Packard contributed $50 for every laptop sold, generating approximately $2 million for the foundation.
Its success coincided with other Livestrong product launches by the Lance Armstrong Foundation, including dog collars and vitamins, that raised a red flag for Stapleton.
“There were some things produced that weren’t well thought out,” Stapleton said. “Our view was that if you do a product, it needs to be a high-quality product with scalability, not every knickknack that comes to you.”
Stapleton became the chief marketer for Livestrong, giving him responsibility for pitching and weighing licensing opportunities on behalf of the foundation. Most deals would have an Armstrong component and a foundation component that would give the foundation a minimum licensing fee at the outset and royalties in future years.
The first deal to be signed based on that philosophy was with American Century Investments. Chief Marketing Officer Mark Killen saw strong similarities between Armstrong’s battle with cancer and American Century founder Jim Stowers’ fight against the disease. American Century ultimately struck a three-year deal with Armstrong and a 10-year deal with the foundation. The partnership with Armstrong gave the company image rights, while the partnership with the foundation allowed it to license the Livestrong name for a portfolio of mutual funds. The investment company agreed to pay a minimum royalty and licensing fees at the outset to the foundation and make future contributions based on the profitability of the portfolios.
The funds now have $1 billion in assets under management and have contributed $6.5 million to the foundation since 2006.
Oakley, already a sponsor of Armstrong, was the next to jump on board. It took existing sunglasses lines, added yellow accents and charged $10 extra for them. Today, it contributes $20 to the Lance Armstrong Foundation for every pair of Livestrong sunglasses purchased. The program has donated more than $3 million off of proceeds of more than 150,000 sunglasses to the foundation since its inception in June 2007.
Nike, which trademarked the Livestrong brand for the foundation, was the last to license the name. The company launched a line of signature apparel in 2005 called 10/2 in recognition of the date that Armstrong was diagnosed with cancer — Oct. 2, 1996. But it waited until 2007 to switch the product line name to Livestrong and committed to donate 100 percent of all profits from the line to the foundation. Nike executives declined to disclose the total profits the company has donated from the line to the foundation.
Despite five years of surprising growth, Livestrong licensees say the brand is still nowhere close to its potential. They expect Armstrong’s return to cycling to fuel further growth. The only question for them is how broad and how fast its growth will be.
Stapleton has his own answer for that, and it’s far different today than it was when Nike approached him about the wristbands.
“If you’d asked me that in 2005, I might have said, ‘I don’t know. He might just take the money and go to the beach,’” Stapleton said. “But Lance is a man of extremes. It’s either the beach or full gas. I think this is a lifetime journey for him, and so long as he chooses to be that iconic guy — fit, healthy, inspirational — the Livestrong brand will thrive.”
Street & Smith’s SportsBusiness Journal
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