How might Peloton’s viral ad have helped boost sales during the pandemic?

At the end of 2019 thousands of people took to Twitter and other platforms to mock an ad for the Peloton exercise bike. In a past post, I suggested that the ad went viral for all the wrong reasons, but maybe I was the one that was wrong. Boosted by the pandemic, in September of this year Peloton announced a doubling of sales over the previous year.

In December 2019 I missed the Tweet storm and instead got to hear about the ad as the butt of jokes on the Wait Wait Don’t Tell Me https://www.npr.org/transcripts/785814899 podcast. If you never heard about the ad, here is the show’s host, Peter Sagal, to describe it to you,

“So, the idea is, like, she's making a video diary of her year of Peloton workouts. And at the end of the ad, we see that her husband and her are watching this Instagram story, and they're celebrating her progress from being a ridiculously fit model to being a ridiculously fit hostage to her husband's demands…Seriously, she looks so terrified as she's doing these Peloton workouts. You expect her to be holding up today's newspaper while she pedals.”

Searches on the Peloton name and Peloton ad/commercial hit an all-time high and the company’s share price dropped by 10% soon after, so it appears that I was not alone in assuming that video might have a negative impact on Peloton. However, as the chart above suggests, the furor was short-lived. As is often the case, searches for the terms Peloton ad or commercial dropped off rapidly from its December spike.

But then came the COVID-19 pandemic. Social distancing and lockdowns meant that many people now wanted to work out at home and US-based searches for Peloton rose by almost 80% in March and April compared to the 10 weeks at the beginning of the year. And a rough calculation based on prior years suggests that searches for Peloton were up over 70% compared to what might have been expected without the pandemic.

Now without more data than is available to me right now, it is impossible to prove that the Peloton viral ad played any part in the increase in searches or sales. What is clear, however, is that Peloton’s salience – people’s mental association of that brand with at home exercise – was far higher than the other brands, because people were much more likely to search for Peloton by name than say NordicTrak or Bowflex. And while advertising has an immediate influence on salience, searches, and sales, it also has longer-term effects.

The short-term influence of advertising typically decays away over time, with a rough rule of thumb being a decline of 10% from week to week for memories that the brand has advertised, and higher declines for search and sales (and in the absence of any further ad support). The longer-term effect comes when ad memories become ingrained in people’s heads. And whereas the short-term sales response to advertising is only observed among people ready to buy now, the longer-term influence is observed as new people become ready to buy and the advertised brand comes to mind during search and shopping. During the pandemic there has been a strong shift to digital commerce and advertising in many different categories. And that means an increasing reliance on digital search. Many companies have doubled down on buying specific search terms related to brand and category, but the biggest opportunity is if you can make your brand the one people search for by name.

In this context, the advent of the pandemic triggered a massive increase in the number of people ready to buy home exercise equipment, and Peloton benefited as a result. In May 2020, searches for the Peloton name more than doubled and according to this review the company reported a 64% increase in subscribers and revenue up 66%. In retrospect, it seems highly likely that Peloton’s viral ad did help boost its salience and so drive search and sales later.

What intrigues me now is whether Peloton can maintain its positive momentum. Will the brand be able to fend off new competitors? Will people stick with their at home exercise regimen once the threat of COVID ebbs or will eBay become inundated with second hand bikes? Please share your thoughts.