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What’s the Deal with Peloton?

American exercise and media company Peloton has seen a drastic decrease in ad spend from last year to this year, according to data from ad sales intelligence platform MediaRadar. Last year, Peloton’s average monthly marketing budget was $26.8 million. This year, however, that number has shrunk to only $15.2 million – a 57% decrease.

So what’s going on with Peloton? In August, CEO and president of Pel Barry McCarthy questioned the validity of the business, saying that “naysayers will look at our fourth-quarter financial performance and see a melting pot of declining revenue.” It looks like McCarthy’s words may have been prophetic – Peloton’s ad spend for the rest of the year is expected to be even lower, at $11.6 million per month on average.

Granted, it’s easy to Monday morning quarterback when you’re not in the thick of things. And I’m sure the team at Peloton meant well. But there are some important lessons to be learned from their missteps. So, without further ado, let’s take a look at what NOT to do when your brand finds itself in hot water.

  1. Don’t try to ignore the problem.
    When the Peloton ad started picking up steam online, initially, the company tried to shrug it off and act like nothing was wrong. They issued a statement saying they were “disappointed” that people had misinterpreted the ad, but stopped short of issuing an apology. Big mistake.

The first rule of crisis management is to acknowledge there is a problem and take responsibility for it. Trying to sweep it under the rug will only make things worse. As IBM CEO Virginia Rometty once said, “A crisis is actually an opportunity in disguise.” And that’s true—but only if you handle it correctly.

  1. Don’t make light of the situation.
    Once people started really sinking their teeth into the ad and its implications, someone at Peloton must have realized they needed to do something more than issue a half-hearted statement—so they decided to release a follow-up video featuring spokeswoman Monica Ruiz.

In the video, Monica tries to play down the whole thing with a smirk and a wink, saying things like “I’m just here promote fitness.” But instead of making light of the situation, this approach only served to fan the flames and reignite public outrage.
Some might say that laughter is the best medicine, but not in this case! In a crisis situation, you need to be sincere—people can see right through insincerity, and it will only make them angrier.

  1. Don’t try to turn the tables on your critics
    After days of negative press and social media backlash, Peloton finally issued an apology… sort of. Former CEO John Foley released a statement saying he was “sorry for how some have misinterpreted” the ad—which sounds an awful lot like another non-apology apology we’ve all heard before (cough Tiger Woods cough). But that wasn’t even the worst part—the company then took shots at its critics, saying “We know how important health and fitness is year-round.” Ouch.

    Taking shots at your critics is always a bad idea—you’ll never come out ahead. The best thing you can do is own up to your mistakes and move on.

All’s well that ends well? Not quite. Despite issuing an apology (of sorts), firing its agency of record (Wieden+Kennedy New York), and pulling the ad from TV rotation, Peloton is still feeling heat from consumers and analysts alike—and its stock price has taken a beating as a result. For now, it seems safe to say that Peloton will be feeling the consequences of its actions for some time to come.
Crisis management is never easy—but hopefully by learning from others’ mistakes (like Peloton’s), you’ll be better equipped to handle whatever comes your way.

Pesach Lattin
Pesach Lattinhttp://www.adotat.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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