|
Nike's decision to
stick with Tiger Woods through his messy sex scandal may have paid off - at
least in terms of golf-ball sales, university researchers have concluded.
Nike lost 105,000 golf-ball customers in the six months after the golfer's
philandering went public. But the losses would have been even greater had they
ditched him and would have cost the company $1.6 million in profits, according
to the study released Thursday by Carnegie Mellon University's Tepper School of
Business.
The scandal hurt Wood's ability to attract customers, but "it wasn't so bad it
eroded all his endorsement effect," said Timothy Derdenger, assistant professor
of economics and strategy and a study co-author.
"So they did make the correct decision to stand by Tiger," he said.
But the study also illuminates how the downfall of one endorser can drag down an
entire industry. Some people simply stopped playing golf in reaction to the
scandal, leading to a loss of $7.5 million in profits for all golf-ball
companies, researchers concluded.
The study - which used advance techniques to isolate Tiger's endorsement effect
on consumer behaviour - found that Nike gained 4.5 million golf ball customers
and $60 million in profit since 2000, when Woods first endorsed the golf balls.
Researchers did not look at Nike's other Tiger-endorsed products, but concluded
that if Nike got similar returns across product lines, the company has more than
recouped the estimated $200 million in endorsement fees it has paid the golfer
in the past 10 years.
Still, golf ball sales trends - used partly because data was readily available -
are not necessarily a good measuring stick for the Wood's many endorsement
deals, many of which ended in the wake of the scandal.
Woods brought value to golf equipment because his game is highly respected, even
post scandal - although his on-course struggles of late might dampen even that
effect.
By contrast, other non-golf brands were "using the goodwill of association and
positive image associated with Tiger to sell products that Tiger really had no
role in developing," said Marc Ganis, president of SportsCorp, a Chicago-based
sports business consulting firm.
That goodwill, of course, faded after Tiger's affairs came to light, and
endorsers were "better off [moving on to] positive-imaged athletes," Mr. Ganis
said.
The companies dropping Woods include Gatorade, AT&T and Accenture, costing the
golfer an estimated $22 million.
Source:
Advertising Age | December 02, 2010 |