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Skins
March 2014

Meet Skins

the naughty schoolboy

Skins chairman Jaimie Fuller explains how marketing campaigns that gave it a unique identity grew the compression brand from an Australian therapeutic product for elite athletes to a global brand popular with all athletes across most sporting codes.

Agood brand is a living thing and has a personality, says Skins chairman Jaimie Fuller. Skins would be the naughty schoolboy: funny, interesting, intelligent, not afraid to challenge the teacher, but with an understanding of traditions and values ... as personified by the outspoken, witty and straight-talking chairman known for his crusades against doping and bad governance in sport (see article: Responsible Sponsorship on p42).

Fuller was in Cape Town at the end of last year as a speaker at the I Play Fair Sports Law Conference. He took time off to talk about how Skins grew from a single therapeutic product sold through physios and doctors to elite athletes, into an international brand with mass appeal and more than 100 products across most sporting codes.

When Fuller bought the Australian brand in 2002, Skins was making one compression tight in three versions with different coloured stitches. “My involvement came as a fluke,” he recounts. Skins needed an investor to help them expand into the US market. Fuller, who was in the printing industry, reluctantly attended a meeting on request of a friend of a friend who used to manage the Australian soccer team.

While listening to the presentation, he paged through a file with about 100 testimonials praising the benefits of the compression tights worn by elite athletes since 1998. “These were not just testimonials from athletes, most of them came from people like the doctor of the Australian cricket team, doctors of other top teams, coaches of top teams. They were all serious guys,” he says.

While realising that it was pretty obvious that the brand owners had problems with running the business, it was also clear from the testimonials that the product they developed worked and had huge potential. Fuller therefore decided to invest in the whole company (he bought 49%) instead of just buying the US rights. He didn’t want to run the company, but knew he could make a business contribution.

But, he soon realised that guys who are creatively brilliant, are not necessarily good at running a business. After it became obvious that he would have to continue to invest money, Fuller bought all the remaining shares.

In 2003 he embarked on the eventful journey from the printing industry, where everybody just sold on price, to brand building. They expanded the product range and registered some technological patents.

They pay us

The first couple of years their main customers were elite athletes in Australia and the UK. “None of the hard-core group in management came from the sports industry and none of us knew that you didn’t sell products to top athletes and elite teams (instead of sponsoring them — ed). We just gave them 10% off the retail price,” he says.

“These athletes were saying that when they trained hard and wore Skins after training, they felt great. The coach would say, we’ve got to have this for the whole team. We’d give products to teams to try and within a day we’d get calls: ‘I need 100-150 units’.” At one stage 15 of the 16 teams in Australian Rules were playing in Skins. Cricketers Steve Waugh and Brett Lee were early adopters.

“In the 2005-6 Super 12 series there was a strong relationship between Skins and South African rugby players who bought our products,” says Fuller. Cricket players like Sean Pollock, Morné Morkel, Mark Boucher and others bought Skins during Australian tours.

Word of mouth about the benefits of compression spread the demand for Skins from the elite, to serious amateurs, and eventually the mass market.

Building the brand

By September 2004 the brand was in 120 outlets in Australia and Fuller promised his sales manager a AUS$1-m advertising campaign if he could show him a client list of 300. In June-July 2005 they aired their They pay us TV campaign.

The cheeky ads set an irreverent tone with lines like: To all those baby-faced, multimillionaire sports stars that get paid too much, live in huge houses, have ridiculous haircuts ... We ain't gonna pay you a penny to wear our product, you can carry on paying us.

This was followed by a print campaign featuring a grumpy-looking guy with an upside down Nike swoosh where his mouth would have been, above the tag line: We don't pay sports stars to wear our product. They pay us." Nike was unhappy, but the Australian advertising authorities didn’t share their concerns.

These and subsequent marketing campaigns set the tone for the Skins image they wished to portray: humorous, edgy, challenging beliefs, but delivering on performance promises. Sales skyrocketed. In Australia Skins currently has 70% of the compression market share. A major Australian retail chain, Rebel, sells up to 13 000 units of Skins per week. “We created that market in Australia, because we were the first to produce compression with a therapeutic aspect to it. “

The high visibility of the brand also turned the spotlight on them in other ways — which resulted in valuable lessons for the marketing team, Fuller admits. During the Tour de France in 2006 Skins was offered an opportunity for cheap TV airtime and they decided to rerun the They pay us ads.

But, in the interim, about ten of their 100-odd relationships with elite athletes and teams had been converted into sponsorships. Skins had given them some products in exchange for equal-value marketing rights, although the athletes and teams still bought product from them. The Australian advertising authorities, however, considered this to be false advertising, and fined them.

“The ad campaign was right — what we did wrong was to run it in the second year when the situation had changed,” says Fuller. In another incident a sales agent asked a retail customer to remove the 20% discount sign from Skins garments. Because they were selling so fast, it was not necessary to offer customers any enticement to buy. A competitor reported Skins to the Australian Advertising Authorities for price fixing.

“A lesson I learnt was that I was accountable, no matter who did wrong. Legally, we did make the statement, but it was a question of intent. If I had said sorry, I’ll put a programme in place for our sales staff to prevent this happening in future, and offered to pay the difference in sales price, I would have been fined something like Aus$25 000 instead of $1-m.”

World brand

He wildly over-invested in the Australian media campaign, Fuller freely admits. But, he needed to build a brand and considered the Australian market as a testing ground. “I thought that if I’m investing in the Aussie market, I’m actually investing in the world. If the model worked there, I could take it anywhere.”

The campaign did set a solid platform for launching a global brand. Skins’ international headquarters moved to Switzerland, which not only has a government that is inviting to and understanding of international business, but has a cosmopolitan culture and some of the most spectacular scenery in the world, says Fuller. Which makes it a pleasant place to live.

They also have offices in Australia, the UK, US, France, Germany and China as well as 14 distributorships in other countries. In 2010 they expanded East and partnered with Li-Ning in China with a range of co-branded products. “They had over 7 000 stores in China, and it looked like a good opportunity, but it became clear that the relationship was never going to work because we represented such a small percentage of their sales,” he explains.

After a false start in South Africa — a bad fit with the first distributor and a challenge to their trademark registration, which the court overturned with a ruling in Skins’ favour after a 5-year delay — the brand has been distributed locally by Super-Brands since 2012. “I feel very comfortable with what they are doing. These are great guys, they are really good,” says Fuller. “I haven’t done a formal analysis of numbers yet, but I believe we are going to see really big growth for 2013 (in South African sales).”

When selecting international distributors, he believes it is very important to partner with the right guys, who share their vision and not only have an understanding of their own market, but also understand the Skins brand identity — “especially the humour and wit”. They will also have to deliver on sales. “My job is now to ensure that we maintain a professional standard across the world. When we sit down with retailers, we want them to say we got to have Skins. When they only have room for three brands, Skins must be one of the three,” he says.

Sponsorships

The majority of UK Premier League clubs, including Manchester United, Chelsea, Arsenal, etc. had been playing in Skins for years, without marketing contracts, but in 2006 they launched the brand into the UK retail market, which required bigger market exposure. Especially when they moved into the US the following year.

Subsequent sponsorship partnerships with the Australian Rugby Union, Australian soccer, Cycling Australia, USA Cycling, PGA UK, Rory McIlroy, cycling’s Team Europcar, the International Triathlon Union, NSW Athletics, Netball NSW, etcetera, etcetera introduced the brand to athletes and their supporters in just about every sporting code.

But, while he enjoys straight-talking, Fuller is also uncompromising about straight-dealing. Shortly after they signed a contract with the #1 Rugby League team in Australia, it became known that they had been involved in cap cheating. Skins immediately ended the relationship.

“It was such a good relationship to be in — they were the top team with a massive following — and I wondered if this was the right thing to do,” says Fuller. “But then I thought, no, these are our values, this is what we stand for, no matter how good the opportunity, we can’t continue the relationship.”

The same applied when players who said they loved the product so much that they would endorse it for nothing, but whose values didn’t fit, approached them. “We told them where to go.”

New structures

Their global expansion in 2007 created the need for private equity investment, and this briefly changed the brand, says Fuller. The board demanded a much safer approach, especially in advertising, which convinced him to raise money to buy back the brand in 2012.

“We wanted to focus on building consumer demand, not change the culture of what and how we do it. We want investors who can buy into it.”

Had he not bought back the brand, he wouldn’t have been able to embark on his new role, travelling the world and blogging to advocate responsibility in sport governance through campaigns like the Skins-sponsored Pure Sport movement. He also wouldn’t have had the freedom to play a role in toppling the former world cycling regime (See p42).

Never happy with the nitty-gritty of the day-to-day running of the business, Fuller began looking for someone with strong operational abilities to take over his role as CEO in 2010 — and eventually found the right person in Nic Versloot in April 2012.

While still involved with some operational functions and using his experience and high profile to contribute towards brand building, he says he’s now doing what he loves: bringing accountability to sport.


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