Discovering New Ways to Market Armstrong

In the weeks before what would be Lance Armstrong’s final ride in the Tour de France, Discovery Communications launched a media blitz across its cable channels for the cycling champion.

Discovery Health aired a show featuring cancer survivors telling how they were inspired by Armstrong’s bout with the disease. On TLC’s car makeover show “Overhaulin’,” his rocker girlfriend Sheryl Crow had his Pontiac GTO souped up for him. TLC even aired a profile of his mother, titled “Raising a Champion.”

But with Armstrong retired after his seventh straight Tour victory and with two years left on a three-year endorsement deal, Discovery must decide how to use its star now that he has stepped off the winner’s podium for good.

“They went into this realizing there was going to have to be a life after this sponsorship,” said Paul Swangard, managing director of the University of Oregon’s Warsaw Sports Marketing Center. “They are banking on Lance remaining a piece of popular culture in the absence of him competing.”

Armstrong and his cycling team signed a deal worth a reported $10 million annually with Discovery last year after the U.S. Postal Service dropped its contract. Discovery only required Armstrong to ride in one more Tour and knew he likely was going to retire before the contract expired, company spokesman David Leavy said.

It initially seemed an odd move. The closest thing Discovery had to a star athlete was the Crocodile Hunter, Steve Irwin, best known for flinging himself onto wild animals. Discovery’s brands such as Animal Planet, TLC and the Travel Channel do not carry sports programming and the company does not sponsor other athletes or sports.

However, Discovery channels are now available in 160 countries, including regions of Europe where cycling is much more popular than in the United States. Despite limited domestic interest in the sport, choosing a cyclist fit Discovery’s market, according to Leavy.

“To have Lance as a global icon, to be an on-air personality for us, opens up a lot of possibilities,” Leavy said.

The three-week Tour gave Discovery broad global brand exposure. The yellow leader’s jersey Armstrong wore for most of the race bore a big Discovery logo. His teammates wore white and blue Discovery jerseys and shorts. News photos of Armstrong, arms raised as he celebrated his last Tour victory in Paris, all captured the Discovery symbol across his chest.

The network is now marketing cycling gear, including racing hats, shorts, watches, a DVD and a replica yellow jersey that sells for $149.95.

Armstrong said he planned to continue his television work with Discovery and the Outdoor Life Network, which broadcasts the Tour. Discovery still will sponsor the racing team and, after the contract expires, it will decide whether to continue with the sport, Leavy said.

Even as he retires, Armstrong has broad appeal to sponsors. He earned about $17.5 million last year on endorsements, according to Sports Illustrated, on deals with companies such as Nike, Subaru and Coca-Cola. As a sign of his marketing power, Nike has sold more than 50 million of the $1 yellow LiveStrong bracelets to raise money for Armstrong’s cancer foundation.

“Lance as a brand means a lot of things to a lot of people,” Swangard said. “He doesn’t necessarily need to be competing to reinforce that. He has built a lot of equity in the last seven years that will carry him forward.”

Discovery plans to develop programming with Armstrong as an on-air personality, building on his inspirational appeal as a cancer survivor, for example. Leavy said there are no current plans for specific shows.

Discovery already has tried to weave Armstrong in with its stars through guest appearances and other promotions. The day after his victory, the network ran full-page ads in The Washington Post and USA Today with congratulatory notes from the likes of Irwin, Stacy London of TLC’s “What Not to Wear” and the crew from the Discovery Channel’s “American Chopper.”

However, shows featuring Armstrong have not generated much extra attention from viewers. The string of Armstrong-themed shows Discovery aired before the tour, called “Lance Week,” posted ratings only even with the averages for their time slots, Leavy said.

Having Armstrong signed on may not be a guaranteed money maker.

The Postal Service spent $25 million sponsoring Armstrong’s team in the last four years of its contract and claimed it generated $18 million in revenue. But a 2003 audit by the Postal Service’s inspector general only verified $698,000 of that $18 million claim.

Leavy said the Postal Service deal was aimed at only the U.S., a market with a limited appetite for cycling, whereas Discovery hopes to use Armstrong to build its brand globally.