Peloton ad spend plummets due to fewer new users, analysis reveals

Dive Briefs:

  • According to a new MediaRadar report, Peloton spent $294 million on advertising across all platforms in 2021, a 300% increase over the previous year. The fitness company’s advertising strategy has changed significantly as of 2022, with advertising spending down 22% in the first quarter to $47 million.
  • Video remained the brand’s largest investment segment in Q1, with 64% allocated to TV and 30% to digital. YouTube Music and Facebook were the top channels. Printing received 6% and almost all quarters of investment were made in February. After investing little in the first quarter two years ago, digital displays saw spending up over 1000% in the first quarter compared to the same quarter last year.
  • MediaRadar’s report arrived days after Peloton posted its dismal quarterly financial report showing a loss of $757 million in the first quarter and a 15% decline in sales from a year earlier.

Dive Insights:

Exponential growth during the pandemic will allow Peloton to capitalize on the at-home fitness boom and increase its advertising investment by 300% in 2021. Now the company appears to adjust the course as the gym reopens.

The company cut its overall ad spend in Q1, which is likely to be related to a drop in new users. While overall membership is up 29% from a year ago, Peloton sees new users at around half the number added this time last year. According to the most recent earnings statement.

Video across TV and digital continues to receive the largest share of Peloton’s advertising investments, with TV networks TNT, Fox, ION and WE receiving the most. The company slightly reallocated advertising spending in the first quarter to free up space for entry into the print market, with 99% of print ads running in February. According to MediaRadar, the top print placements include The New Times, The Wall Street Journal, and Harper’s Bazaar.

As consumers return to the gym, Peloton has struggled to sustain soaring growth from the early days of the pandemic. Bike sales and subscriptions have stalled. The company’s monthly workout metric fell 28%, potentially suggesting that existing users are less interested in working out at home.

Earlier this year, Peloton stopped production of some equipment as its warehouses filled with excess inventory. Co-Founder and CEO John Foley retreated In February, it was replaced by Spotify and Netflix veterinarian Barry McCarthy.

However, MediaRadar’s ad spend report arrived as the company is shifting gears in terms of messaging as well and could again increase its media investment. In a new campaign coming out this week, the brand relies on the appeal of its instructors to maintain long-term motivation among its user base.

MediaRadar reviewed Peloton’s ads from January 1, 2020 to March 31, 2022, covering national TV, 3,000 magazines and newspapers, podcasts, and digital channels such as Snapchat and YouTube.

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