Adidas revamps global brand structure and tops €2bn marketing spend

Adidas is setting up individual global brand teams for all its sporting categories to align innovation closer to communications as it plans to push its marketing spend beyond the €2bn barrier for the first time in several years to accelerate demand in Europe and Northern America.

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At the forefront of the plan, is a move toward having one brand marketing team in each category and away from its previous global team managing all sports categories structure. General managers will now oversee all marketing for each sport, spanning research and innovation all the way through to advertising and sports marketing. The multi-skilled marketers will sit within the newly developed brand marketing units for each category.

The company said the changes, which come into affect tomorrow (1 August) will lead to faster decision-making and more effective consumer-focused strategies. Despite the overhaul, a vertical team, led by recently appointed board-level marketer Eric Liedtke, will still shape the long-term strategies for each category and develop the Adidas master brand.

Marketing spend over the next 18 months will increase beyond the 12 to 13 per cent of sales the business normally allocates to fuel the changes. Group revenues are expected to hit around €16bn this year, which will push its marketing outlay past €2bn (£1.6bn). It marks the first major increase in Adidas’ marketing budget since 2010 when it funnelled 25 per cent of its total sales to help leverage its presence as the sponsor of the World Cup in South Africa. Sales growth of 15.5 per cent in the period covered the $1.75bn (£1.04bn) marketing expenditure.

The company said its recently announced shirt sponsorship deals with Manchester United and Juventus football clubs signalled its first steps to increasing marketing spend.

The wholesale changes come after the sports maker revealed it was abandoning its plan to generate roughly €17bn (£13.5bn) in sales by the end of the year. It cited poor demand for its TaylorMade Adidas Golf products as well as reduced expectations for retail growth in Russia for the reversal.

The switch comes despite the business being on track to hit its €2bn (£1.6bn) sales target for football products this year off the back of a successful World Cup marketing campaign. Much of the company’s marketing outlay for the year has focused on protecting its dominance of the football market, forcing it to invest less promoting its lucrative running and apparel products.

Adidas said it now expects “mid-to-high-single digit” sales growth in comparison to the “high-single-digit” prediction at the start of the year. A series of initiatives are being prepped to gear the business up for a new five-year strategic plan, which will be detailed in full next week when it posts its latest financial results. 

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