Quick Take: The Value of Free Advertising
(you can find the original here)
It was on perhaps my favorite sports show, ESPN's Pardon the Interruption, that I first heard about the $100,000 fine levied on Chicago Bears linebacker Brian Urlacher. Why was he fined? Because he wore a hat sporting the logo of Vitamin Water during a Super Bowl week press conference.
That might not seem like a big deal -- except Pepsi's (NYSE: PEP) Gatorade brand pays the NFL $45 million to be considered the league's "drink of choice." And I'm sure Gatorade, whose brands include Propel Fitness Water as well as the namesake drink, doesn't appreciate free advertising for a competitor in a tight marketplace.
Though many might argue that Gatorade is the king of energy drinks, it does a pitched battle with Coca-Cola's (NYSE: KO) Powerade as well as numerous other drink products like Vitamin Water. Making matters worse, some have started to get the idea that drinks like Hansen's (Nasdaq: HANS) Monster, Coke's Full Throttle, and Red Bull, which are all chock-full of caffeine and other heart-bursting goodies, are legitimate choices for drinking during athletic activity.
But back to the real point here. On PTI, the gents spent some time talking about how the $100K fine doesn't seem to fit the crime of wearing propaganda for a competing beverage (whose parent company, by the way, Urlacher is an investor in). All the while, they were tossing around the name Vitamin Water and giving the drink the best kind of advertising it can possibly get -- free advertising!
Even now, as I turn to the NFL page on ESPN.com, the Urlacher fine is one of the top headlines. Better still, a quick search on Google News on the name "Urlacher" brings up 250-plus news articles relating to the incident, all, I imagine, mentioning Vitamin Water by name. And on today's episode of PTI, as a sign of protest against the fine, Mike Wilbon started the show sporting, you guessed it, a Vitamin Water hat. I love it!
And that $100K fine? Vitamin Water should pay it, and pay it happily! From this silly incident, the company is getting the kind of in-your-face exposure that most companies would kill for, and all for a mere 0.2% of what Gatorade spent on its NFL marketing deal.
Unfortunately, glaceau, the parent of Vitamin Water, and Energy Brands, the ultimate parent of glaceau, are both still privately held companies (bit o' trivia: rapper 50 Cent is also a Vitamin Water investor). This, though, is a great lesson to the many small, up-and-coming beverage companies such as Hansen and Jones Soda (Nasdaq: JSDA) about just how effective guerrilla marketing can be. I'm not saying it's easy, but if you get the stars aligned just right, you can end up with this type of fantastic situation.
As for Gatorade, I certainly see the importance of protecting marketing agreements, but sometimes it may pay to do it a bit more quietly.
(for disclosure purposes I don't own any of the stocks mentioned, nor am I an investor in Vitamin Water -- though I would mind the opportunity!)