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DAREDEVILS: HOW MONSTER ENERGY FORECAST THE RISE OF A FRINGE SPORT TO A BILLION-DOLLAR TUNE

January 27th, 2015 by

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For marketers in sports and entertainment, one of the best strategies to capture core consumers is to identify a hot trend before its audience and value is formally established.

Monster Energy is a prime example of this. The brand capitalized on an emerging sport in the late 1990s, when it began to sponsor athletes in the then little known sport converting daredevils and alternative crowds across the U.S.: motocross. They were guided to the world of motocross by Mark Hall, who became the president of Hansen’s (Monster Energy’s parent company) in 1997. At the time, the company was struggling to grow as a soda and sparkling juice brand with under $20M in revenue. Today, Hansen’s is generating over $2B in annual revenues and is one of the biggest success stories in beverage history, largely resulting from their ability to capture a massive audience in sports outside the mainstream. With that in mind, let’s go back to the beginning….

When Hall launched Monster, Red Bull energy was its largest competitor, with a massive market in Europe and a strong launch in the U.S. In order to compete, Hall needed to reach a rising tide of potential energy drink consumers by differentiating his product—associating it with sports perceived to be counter-culture. Monster Energy could have taken on any number of identities. But through aggressive branding and sponsorship, it shaped itself into a public reception as more rebellious and anti-establishment than Red Bull.

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Photo via bikephotomusic on Flickr CC

According to Jason Belzer, Forbes contributor, “No one tactic that companies and organizations use to reach consumers has undergone more transformation than sponsorship.” He argues that sponsorship has changed from a novelty, when only the largest companies could afford national airtime sponsorship, to more accessible options on TV and the Internet. As a result, growing companies like Monster Energy can localize ads specific to their demographic. In other words, sponsorship—dollar for dollar—is arguably the most important tool for sports and entertainment in the $100B world of advertising.

Hall understood a crucial tenet of successful branding: that lifestyle marketing was essential to creating a consumer connection to his core audience—young, blue-collar males. Hall was able to reach them through motocross, an extreme sport with a fervent but not yet mobilized fan base. Here, Hall saw an opportunity for growth, as the X-games, which debuted in 1995, were beginning to bring these sports to large audiences on live national TV. First-time viewers watched in awe as riders like Travis Pastrana performed jaw-dropping double back-flips off of giant dirt mounds, getting over 75 feet of air. The sport was dangerous; its stunning feats soon earned respect. Hall decided to focus strictly on the sponsorship of these athletes over expensive media buys. He went to the X-games with $25K in cash.

Monster’s early foray into motocross and other extreme sports was a tremendous success; it landed them a massive and loyal fan base while these events were becoming nationally recognized mega sports. In an industry like beverage, where a majority of new brands fail, they were able to prevail. Today, Monster is deeply rooted in an action sports culture that has become mainstream, with billions of dollars in annual consumer spending. This venture allowed Monster to get into the ring with Red Bull and establish national distributors like Pepsi, Coke and DPSG.

So what’s the next big sport? With $102M in advertising dollars spent in 2012, mainstream exposure to endurance sports like marathons, triathlons, and 5ks is growing. Also reaching a broader audience is a rising tide of adventure racing sports such as The Spartan, Ultra-Trail, and timed trials such as CrossFit. Last year, 1.5 million Americans participated in the three largest obstacle companies (Tough Mudder, Spartan Race, and Warrior Dash). If you are leading a brand chasing today’s next big sports market, look out for the rapidly developing strength of endurance sports and opportunities to get behind them.

 

According to Jason Belzer, Forbes contributor, “No one tactic that companies and organizations use to reach consumers has undergone more transformation than sponsorship.”

 

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