Advertisers Kick it Up For the World Cup

With Germany and the world gearing up for the soccer championships, makers of everything from TVs to soft drinks are racing to cash in

By Stanley Holmes

Just weeks before the June 9 kickoff in Germany, World Cup mania already is spurring sales of a variety of products from TVs to cell phones to beverages, not to mention soccer jerseys and other sports-related items. Japanese electronics makers Matsushita, Sharp, and Toshiba (TOSBF) all have reported spikes in their most recent earnings -- thanks in large part to rising demand for flat-panel TVs from soccer fans. Sharp may even push up the opening of a new LCD TV factory, originally scheduled for October, so as not to miss out on the summertime sales bonanza.

It's all part of the build-up to the largest soccer World Cup ever. Soccer is the universal sport. It’s played in nearly every country on the globe. A cumulative 28 billion fans watched the 2002 World Cup 2002 in Korea and Japan, and FIFA officials expect 32 billion cumulative viewers to tune in to the upcoming month-long tournament. Vying for their eyeballs -- and their wallets -- are companies from Coca-Cola (KO) to Nike (NKE) to Samsung. Companies are expected to spend more than $1 billion on advertising -- not including sponsorship fees, and marketing and hospitality -- during the 2006 World Cup. "There is no real sporting event like this in the world in regard to massive global exposure," says Salvatore Galatioto, president of Galatioto Sports Partners, a New York investment firm. "It's going to spur sales of all kinds."

For the likes of Adidas and Nike, the World Cup is a bonanza. The two sporting-goods giants are waging their own competition off the pitch, launching their broadest and most comprehensive marketing campaigns ever. Germany's Adidas-Salomon (ADDYY) is shelling out close to $200 million, while Oregon-based Nike (NKE) is spending more than $100 million on various campaigns to peddle sneakers, soccer boots, jerseys, soccer balls, and T-shirts.

FAMOUS NAME.

Although Adidas remains the global leader in soccer footwear with 38% of the market, according to NPD Sports Tracking Europe, Nike now controls 31% and is intent on supplanting the German company in the only athletic sneaker category where it is No. 2. That’s why Nike has spent billions since 1994 to grow what then was a miniscule $40 million soccer business to one approaching $1.5 billion in sales today. Part of Nike’s strategy has been to sign some of the world’s most celebrated soccer players, such as Brazilian star Ronaldhino, voted the world’s best player, to help spread the Nike message to soccer-obsessed young people around the globe.

Nike also has teamed up with Google (GOOG) to create the world's first social network for soccer fans, Joga.com. The site, which launched on Mar. 15, will roll out to 140 countries in 14 languages (see BW Online, 4/3/06, "Adidas' World Cup Shutout").

The marketing push is already paying off. Sources at Nike say sales of soccer gear are booming. Adidas, meanwhile, expects to ring up $1.5 billion in soccer sales this year, up from a previous estimate of $1.27 billion. The German giant is leaving nothing to chance: it continues to be one of the event’s official sponsors, which means its name will be plastered on perimeter boards on the soccer pitches at every stadium. It also will supply the match ball in all 64 matches. Adidas has bought up all of the billboards to blunt typical Nike guerrilla marketing efforts and it has livened up its advertising.