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March 21, 2014

Under Armour's Olympic Experience Is Textbook Case For How to Handle Crisis

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From AdAge, Michael McCarthy. Published on March 10, 2014.

As apparel sponsor of the U.S. speedskating team, Under Armour collaborated with aircraft firm Lockheed Martin to create what it trumpeted as the fastest, most aerodynamic speedskating "skin" ever: the Mach 39. With the eyes of the world on the Winter Olympics in Sochi, the suit was to be UA's global coming-out party as it expanded internationally against rival Nike. Nearly 20 years after its founding, the $2 billion apparel and shoe company still generates 90% of its revenue in North America.

But the party almost didn't get started. When the U.S. long-track speedskating team started to lose, skaters and critics blamed UA's high-tech racing suits, questioning whether vents in the back were actually slowing the skaters down.

UA put technicians to work, patching the vents for panicky U.S. speedskaters. That didn't improve the team's performance. So Team USA tried switching to older UA suits. That didn't work, either. U.S. long-trackers failed to medal for the first time since the Sarajevo Games in 1984.

A Wall Street Journal article detailed the criticism and the company's attempts to fix the suits. UA executives on the ground in Sochi were bewildered, but knew they had a crisis on their hands. The athletic company had touted the Mach 39 as a game-changer, and that was now being interpreted in the worst way.

The company considered its options. Going into full lockdown mode ran counter to UA's reputation as a scrappy underdog challenging Nike. UA was built around athletic-performance wear, and the Sochi allegations went to the heart of the brand. Painting U.S. team members as a bunch of losers looking for excuses wouldn't wash either -- that could boomerang with the American public.

So Diane Pelkey, UA's VP-global communications and entertainment, devised a middle strategy. Since UA unequivocally believed the Mach 39 gave Team USA the best chance to win, the company put CEO Kevin Plank and Matt Mirchin, exec VP-global marketing, front and center, vigorously defending the suit in multiple TV and print interviews. The company was exhaustive in giving reporters access to executives, and it forwarded statements from U.S. Speedskating saying the federation didn't believe the suits were to blame. That helped stem the bleeding.

It then enlisted other UA endorsers, such as gold medalist ski racer Lindsay Vonn and 18-time Olympic gold medalist Michael Phelps, to defend their sponsors' technology on social media without directly mentioning the speedskating controversy.

Ms. Pelkey said she worked out the UA's crisis-communications strategy with top company executives and used its PR agencies on retainer, Edelman and Catalyst, as a "sounding board."

The coup that brought UA's PR counterattack full circle was the announcement on the Friday before the Olympics ended that UA was renewing its sponsorship with U.S. Speedskating through 2022. The initial three-year deal was set to expire this year. The eight-year extension would keep UA as the official outfitter of U.S. Speedskating through the next two Winter Olympics.

The announcement was a stake in the ground that shifted the media narrative from speedskating fiasco in Sochi to UA's refusal to give up on Team USA and its commitment to helping it fuel a U.S. comeback during the 2018 Winter Olympics in South Korea. "This wasn't a PR play as much as a cultural play," Mr. Plank told CNBC, explaining that the company offered enough money that renewing the deal would be a no-brainer. Said Ms. Pelkey: "We wanted to stand up and show our support and tell the world that we believe and are committed to U.S. Speedskating. … We are going to double down on speedskating."

Landor Associates Managing Director Allen Adamson said UA's brand damage was short-term and applauded its strategy of fighting back. "They were smart not to go under a rock and disappear."

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