It was only a matter of time before we saw another big money buy out of a running app. With the Adidas Runtastic deal following hot on the footsteps of Under Armours snaffling up of Endomondo, MyFitnessPal and Map My Fitness, the battle lines are being drawn and the big sports and fitness brands are tooling up with tech.
But to say these guys are just buying apps is a big misunderstanding of what’s actually happening. Both Adidas and Under Armour both had their own tracking apps. What they’re actually buying are communities. Vast, loyal, engaged and valuable audiences. That’s right, you runners out there.
With the $240 million (around €220 million) acquisition of Runtastic, Adidas has added a whopping 70 million runners to its own existing miCoach user base. Under Armour scooped up around 100 million registered users for a $560 million (around €512 million) when it did its big deals.
These numbers are big enough to worry the likes of Nike who in 2013 Nike boasted 18 million signed up members on the Nike+ platform. So much so that Nike bolstered its own position in January this year announcing a deal with Garmin to allow its users to pump their watch-tracked data into Nike+.
Future-proofing
I spend a lot of my time talking to the people making the latest fitness technology and the people making our latest running and fitness gear. Over the next five years, the influence of technology on elite and amateur sports is going to be huge. Smart garments are coming. More intelligent ways to monitor calorie intake are likely and the Average Runner on the street will understand a whole lot more about their own fitness than we do today as things like heart rate tracking becomes the norm.
Sorry all you guys who hate Facebook braggers and to all you minimalists who love to run free but our fitness world is only going to become more connected. The big boys know this and they smell an opportunity.
Every time I’ve interviewed a Nike or Adidas exec I’ve asked the same question. Are you a sports company or a technology company? The answer has always been a polished media response. Along the lines of “We’re an innovative company, we always have been.”
But as technology becomes part of everyday sport, they can’t afford to fall behind. What Adidas and Under Armour get from buying Runtastic and Endomondo isn’t just a new set of customers to sell to, they also get a whole load of fascinating insights into how these people behave. They can spot patterns. Perhaps people in London tend to run less than 10km on average compared to Colorado’s 25km? Maybe they all run at 6.15pm on the commute home. It’s all added intelligence for more targeted marketing.
Not to mention they also get the platforms pair up with their smart garments, smart shoes, and whatever else may be on the horizon.
But we are not a number
One word of caution though, just having a big pool of people to send emails to and hit with marketing messages doesn’t guarantee success. Each of these communities command fierce loyalty but only as long as you don’t mess with what they like about your app and big part of that can be how your brand has been built.
Under Armour is battling with this dilemma right now. How do you get the three communities from MapMyFitness, MyFitnessPal and Endomondo to work together without losing what people love about each of those brands. Change too much too fast and you risk alienating people. Do too little and you can’t reap the rewards of having all that lovely data connected.
Adidas and Runtastic will arguably have a slightly easier job to do with just MiCoach and Runtastic to hook up. But they’re still tricky waters to navigate.
So where does that leave Strava?
Strava is without doubt the biggest fitness tracking success of the past three years. With it’s clever twist turning our towns and cities into virtual competitions, its growth has been impressive. So why then has no one bought them up? The answer it would seem is that its got other plans.
Speaking to StrictlyVC.com, Strava co-founder Mark Gainey revealed that Strava wants to get into commerce in its own way, offering direct to athlete retail. He also commented on the Under Armour deal.
“When you listen to Under Armour CEO Kevin Plank, he’s very clear. His business is selling apparel and shoes, and he needs channels to do so. And he has figured out that he can get 100 million email addresses when he pulls together these sites.
“At Strava, we have a strict definition of community. Community is about getting our customers to interact with one another. That’s when community happens, [that’s] when you have network effect. I’m not judging. Under Armour has a loyal customer base, Nike has a loyal customer base, Apple has a loyal customer base. I’m not saying that community is the way to go, but in our case, we’re a community-based business.
“We’re akin to a LinkedIn or a Facebook, and our business is very much predicated on the way the network interacts. And when you look at things like MyFitnessPal and Endomondo, the challenge they’ve had is there’s tremendous churn with them because there isn’t network effect. So it’ll be interesting to watch how it plays out.”
