New Balance is investing in a video-on-demand (VOD) cable network dedicated to fitness, sports instruction and motivational programming -- a unique venture to promote its apparel and footwear to consumers.
The company will join Comcast and Time Warner and workout guru Jake Steinfeld of Body By Jake fame in forming exercisetv, an on-demand network that will be available on both operators' cable systems. According to reports, the deal represents one of the deepest commitments an advertiser has made to on-demand, a relatively new cable service that enables viewers to watch programs whenever they want simply by pressing a button on their remote control.
New Balance did not to disclose what it was investing in exercisetv, other than saying it was a "multimillion dollar, multi-year deal." Comcast will own a controlling stake in the channel. During a pre-launch trial period with Comcast, exercisetv video-on demand reached more than 2 million views per month and 20 million workouts viewed over the course of the trial.
Exercisetv's programming lineup initially will consist primarily of numerous varieties of exercise workouts -- like yoga, Pilates, cardio, sculpting and toning, walking, to name a few -- for all fitness levels, interests and demographics. Eventually the network will add videos on subjects like shooting basketballs, playing golf or pitching curve balls.
Rather than airing conventional 30-second ads on exercisetv -- because on-demand services allow viewers to fast forward through both the programs and the commercials -- New Balance will promote its products by getting many of the video participants to wear the company's shoes and clothing. New Balance also will sponsor graphic overlays that will run during the videos, giving viewers advice on subjects like the best way to warm up for a workout.
With its smaller ad budget, New Balance's push into video-on-demand television reflects the company's longstanding effort to find unusual ways to stand out. For the first 10 months of 2005, for example, New Balance ad spending was $17.3 million, compared with Nike's ad expenditures of more than $141 million, according to TNS Media Intelligence, a New York ad-tracking firm. New Balance said it is boosting its marketing budget to help pay for its on-demand foray, as well as using monies from other places such as traditional TV and magazine advertising.
Since its start five years ago, video-on-demand availability and usage has greatly increased. About 45 percent of cable subscribers pay about $15 a month extra for a digital tier, which is needed for on-demand. While viewers usually have to pay to watch recent movies on-demand, companies like Comcast and Time Warner have increased the amount of free content on their services. More than 12 million homes use on-demand more than once a month and it is expected to rise to 30 million by the end of 2009, according to Leichtman Research Group, a market-research firm.
Advertisers are also getting more data. Comcast and Rentrak, an information-management company, last year began making monthly usage reports available to programmers providing on-demand content. Also, Nielsen Media Research plans to measure on-demand audiences later this year and work those numbers into its standard ratings.
SNEWSÂ® View: We have to wonder how New Balance Fitness Equipment, manufactured under license by Fitness Quest, will fit into this new VOD format. We expect Jake and others may spend some time on these pieces too. That kind of exposure is something that will mean a lot not only to the brand, but also, of course, to the retailers selling it.