Global Game

Nike and Adidas are using the planet's grandest gathering, the WORLD CUP, to kick sales--and each other. Inside the fiercest rivalry in business.

No way. No expletive-of-choice way. Those are the only possible human reactions to viewing Ping Pong, the underground Nike soccer ad that has dribbled around the Web faster than Pelé in his prime. In the spot, Ronaldinho, a Brazilian considered the world's best soccer player, laces up his new Nike cleats, the Swoosh as golden as his game, and then, from the top of the 18-yd. box, fires a soccer ball off the 4-in. crossbar. Before the ball touches the ground, he corrals the rebound on his chest, juggles the ball with his feet and repeats the feat three more times. It's the soccer equivalent of hitting four straight half-court hook shots in basketball or knocking four pitches off the top of the right-field scoreboard in baseball. Just Can't Do It.
To Nike, it's even better that--as many have suspected--the spot is digitally altered. It turns out Ronaldinho is somewhat mortal, even in his new boots. Fans have debated the clip endlessly, and Ping Pong has been viewed 12 million times since its October Web-only release, one of the most popular viral videos on the Internet today. Even for a company known for its winning, edgy marketing, that is a hat trick. By creating a youth-driven buzz so crucial to its leadership in the multibillion-dollar sneaker wars, Nike, based in Beaverton, Ore.the largest sporting-goods company in the world, with $14.7 billion in annual revenueshas kicked its $9.5 billion German rival, Adidas, in the shins.
Think the World Cup is contested just on the pitch? With the finals less than a month away--on Adidas' German front lawn no less--Nike and Adidas have launched their broadest, most expensive marketing campaigns in the history of sport, all tied to a single event. (Nike is spending more than $100 million, Adidas closer to $200 million.) Some 32 billion cumulative viewers are expected to tune in to the World Cup, and an additional 3 million people will be taking in the tournament in 12 German cities. For both companies, it is the setting for another epic chapter in their ferocious rivalry.
Neither outfit is running up the score. Nike's übercool jock culture, led by its monklike chairman, Phil Knight, just spit out another CEO, William Perez, who lasted only 13 months. Net income rose 21%, to $1.4 billion, for the full year ending Feb. 28, but Nike's stock has slipped 5.3% in 2006. Adidas, which nearly imploded in the 1990s, is working through another restructuring. The company last year spun out its ill-fitting Salomon ski business and bought Reebok, the perennial No. 3 brand. Adidas profits rose 25%, to $537 million, over the past year, but its stock has slipped 1.4% off its 52-week high of 175 euros ($223) a share in late January.
Nike leads Adidas in every major sport, except the one that matters the most to the planet. So the Oregonians are obsessed with claiming one last victory, in the beautiful game. For Adidas, a company started nearly 60 years ago by fussball fanatic Adi Dassler, a Nike victory on its home turf would be like the Swoosh-clad U.S. team knocking off Adidas-draped Germany in the finals. "Soccer is the lifeblood and the backbone of our brand," says Adidas brand president Erich Stamminger. "It's very, very emotional for us."
Adidas is defending its soccer business the way the Italians do their goalmouth--tenaciously. "I don't think it's a question of whether we have to win this battle," says Günter Weigl, Adidas' global soccer chief. "We can comfortably say that we are going to win this battle." Besides having home turf, the company is an official World Cup sponsor and will pay $350 million over the next eight years to extend that privilege to the 2010 and 2014 World Cups. Those billions of eyeballs will see only Adidas signage in the stadiums, and the company's black-and-gold Teamgeist (Team Spirit) match ball will be passed around the pitch. What kind of revenue can official sponsorship deliver? One example: the company says it has already sold 10 million World Cup balls, priced from $15 to $130, since December, and expects to ship an additional 5 million by year's end.