Some brands define their product category. iPods (portable MP3 players), Kleenex (facial tissues), and Band-Aids (brand adhesive bandages) are all examples of brands that are used colloquially to replace proper product names. Since its foundation in 2008, Beats by Dre has created and fueled the rapid growth of the premium headphone industry, which in 2013 was estimated to have a market value of over $1 billion in the US. During the holiday season of 2012, Beats by Dre accounted for 70% of all premium headphone sales (+100$US) and 40% of total headphone sales in the United States. This dominance in market share drew the attention of Apple, who validated the premium headphone industry by purchasing Beats Electronics for a reported $3 billion in 2014.
To the chagrin of other headphone brands like Bose, Sony, and Samsung, as well as, major sport properties like the Olympics, the FIFA World Cup, and the NFL, Beats by Dre has utilized athlete endorsement and strategic ambush marketing to promote an image of both elite performance, and elegant style.
Ambush marketing can be defined as creating a marketing campaign that allows a non-sponsor to associate with a property, therefore gaining benefits of association with the property and weakening the impact of competing, official sponsors (Sandler and Shani, 1989). Ambush marketing is not unique to Beats by Dre, it is a tactic used by a handful of prominent brands, most notably Nike.
Nike’s first inadvertent ambush occurred during the 1992 Olympics in Barcelona, when several Nike sponsored members of the US Men’s Basketball Dream Team, most notably Michael Jordan, covered the Reebok logo on their jackets with American flags during the medal ceremony. Nike has since used their numerous athlete and team sponsorships to ambush major sporting events for which the brand is not an official sponsor (including the 2012 London Olympics and the 2014 FIFA World Cup).
Beats by Dre has adopted similar strategies, using high-profile athletes and their recognizable logo to ambush major sporting events for which the brand is not an official sponsor. Three instances where Beats has successfully used ambush marketing are the London 2012 Olympics, the NFL, and the 2014 World Cup in Brazil.
London 2012 Olympics
In the lead up to the 2012 Olympics in London, Beats sent out customized headphones to select, high-profile athletes including the US Men’s Basketball Team, the Chinese Swimming Team, and the entire British contingent. Despite the best efforts of the IOC and official sponsors Panasonic and Samsung, athletes were seenwearing Beats throughout the games.
Through endorsements with NFL players (including Richard Sherman and Colin Kaepernick) Beats has associated itself with the NFL and the NFL playoffs despite an official partnership between Bose and the NFL. The marketing battle between Bose and Beats came to a head when Colin Kaepernick arrived at a press conference this past October wearing pink Beats with tape covering the logo. Kaepernick was fined $10,000 but the story went viral and was a major win for Beats. The message was clear; NFL players would rather wear Beats and pay a fine than sport the free Bose headphones. More recently, Beats strategically released a series of ‘Hear What You Want’ videos before the NFL Divisional playoff games, as part of their social media campaign around the 2015 NFL Playoffs.
2014 FIFA World Cup in Brazil
FIFA and official sponsor Sony were proactive in banning players from wearing Beats in World Cup stadiums. However, Beats endorsed athletes like Neymar, Luis Suarez, and Wayne Rooney were consistently seen wearing their Beats during off-pitch training and events. The fact that the athletes wore Beats in their downtime, and by choice only amplified the brand’s appeal. During the World Cup, Beats also released a 5-minute video featuring Beats sponsored athletes entitled ‘The Game Before the Game.’ The video, which has over 26 million views, was the flagship of a successful Beats social media campaign around the World Cup.
Other premium headphone brands have begun to adopt Beats’ marketing strategy of utilizing athlete endorsements to ambush sport properties. Skullcandy is now activating sponsorships with NBA athletes like Kevin Durant, James Harden, and Derrick Rose, as well as NBA teams like the Oklahoma City Thunder, Chicago Bulls, and Miami Heat. By activating against these partnerships, Skullcandy hopes to associate with the NBA, despite the fact that Samsung is the official partner of the league.
Major properties like the Olympics, FIFA World Cup, NBA, and NFL currently find themselves in a precarious position. These properties have contractual obligations to their official sponsors who pay millions of dollars for their sponsorship rights (including exclusivity). If the threat of ambush continues to loom large, and properties cannot provide exclusivity, they risk devaluing their sponsorship propositions. One way in which these properties may be able to maintain the value of their sponsorship is by providing support in generating creative activation opportunities in cooperation with their sponsors.
Beats by Dre has used ambush marketing to stake its claim as the defining brand in the premium headphone industry. Other brands are following suit. In the future, major sport properties will need to create innovative solutions to protect the rights of official sponsors, or risk losing the value that these sponsors bring to the property.
Sandler, D.M. and Shani D. (1989). Olympic sponsorship vs ambush marketing: who gets the gold?. Journal of Advertising Research 29(4). p. 9-14.