How Peloton is Marketing a $2,000 Bike Beyond the Rich
R2C Group, mentioned below, is now Rain the Growth Agency
When Carolyn Tisch Blodgett joined fitness startup Peloton as its brand marketing lead a year-and-a-half ago, the company’s executives were focused on promoting the functionality of their product — a $1,995 stationary bike with an attached tablet and a $39-a-month subscription service for access to live and on-demand classes.
What they were missing, however, was a compelling brand story about the bike’s convenience and its role in connecting riders around the country, largely through a leaderboard that displays rider data, said Ms. Blodgett.
“My challenge over the last year-and-a-half has been telling this brand story,” she said. “We wanted to bring the product to life but also the brand.”
Ms. Blodgett also conducted research showing that the company had been targeting a core, affluent audience, but overlooking a less affluent consumer who was willing to splurge on a convenient fitness habit.
Peloton is now shifting gears with a new financing program ($97 per month for 39 months for both the bike and subscription service), an ad campaign that’s more relatable to a diverse consumer base and an NBC Olympics sponsorship. Peloton counts NBCUniversal among its investors, and has raised nearly $450 million in total funding to date.
“We had this idea of a very affluent rider who many of our early adopters were,” she said. “We realized, through conversations with our community, that there was a huge opportunity with people who thought $2,000 was a huge investment but were [buying] it over and over again because the product is so important to them.”
The company also has been partnering with Westin Hotels & Resorts to get its bikes and classes in front of more of its target audience, as well as expanding its showroom footprint across the country. This is all to boost growth ahead of a rumored IPO down the road.
Peloton has emerged as a player in a crowded fitness space, which already includes spinning studios like SoulCycle and Flywheel. But there are certainly risks for fast-growing fitness startups like Peloton, such as the potential for copycats and the volatile nature of fitness fads.
The company’s early TV ads were meant to show people how the product worked, said Ms. Blodgett. An ad called “This is Peloton” featured a fit woman taking a virtual class in her home, with the camera zooming in on the bike’s user interface. After her workout, she walks downstairs to have breakfast with her family, all in a modern, luxurious home.
A more recent campaign, called “Hello. Let’s go,” was more focused on the Peloton experience and the way that users are competing and connecting virtually than the bike itself. The ad featured a number of riders in a variety of homes, making the experience more relatable to a broader consumer base.
The new campaign, launching in early November, will also feature a variety of riders, including an older man who loves outdoor biking and a mom whose young daughter comes in on a small tricycle while she’s biking. The mother and daughter “share a moment,” said Ms. Blodgett, adding that she also has young children and can personally relate to the ad. “It’s teaching your kids values they’re seeing firsthand.”
Like the “Hello. Let’s go” spot, the November holiday campaign will also be more focused on the experience than the product. Peloton works with ad agency Mekanism, as well as media buying agency R2C Group.
“It doesn’t matter what the household income, age or marital status is,” she said, “but if you’re working out and you’re able to fit this into your life, you’ll find a way to make Peloton happen.”
The company is spending $40 million on its holiday marketing effort, and targeting an annual marketing spend level of between 20% and 25% of net sales, said Ms. Blodgett.
Peloton generated $170 million in revenue in 2016, up from $60 million in revenue in 2015.
But ad spending will also depend on what’s driving people to the showrooms sprinkled throughout the country, and what’s driving bike sales.
While she said Peloton is not using rider data for ad targeting, it’s using it to make decisions for its business, such as whether to add longer or shorter classes depending on the popularity of the various classes.
Since joining the company, Ms.Blodgett said that Peloton has learned a lot about its core consumer.
One surprise in the research, she said, was the “huge urban opportunity,” especially as the boutique fitness class movement in cities — think SoulCycle and Barry’s Bootcamp — has given Peloton a boost. “We thought that it skewed more suburban,” she said. The company was also surprised to learn that its consumers weren’t only on the coasts or around major hubs like New York, Los Angeles and Chicago.
“It speaks to the opportunity we have,” said Ms. Blodgett. “We sell a bike to every state every day.”