when large force Released its 2019 holiday ad, which depicted a husband gifting his wife a stationary bike for Christmas, was widely criticized as sexist, dystopian and reminiscent of hostage videos.
People took issue with the ad’s characters — an upper-middle-class white family — and said it sent a range of dangerous messages about everything from gender norms to body dysmorphia.
While the controversy eventually faded from the headlines, the public still remembers it. The ad cemented Peloton’s nascent identity as a high-end bike company reserved for a certain type of person at a certain income level.
Now, the company is poised to change that perception.
Peloton launched a new marketing campaign on Tuesday that pitches the retailer as a company for everyone, regardless of age, fitness level and income — or whether they’re paying thousands of dollars for an expensive piece of equipment.
The relaunch of the brand comes just over a year after Barry McCarthy took over as CEO. He’s committed to transforming Peloton from a company focused on hardware to one that’s equally invested in its app and the high-margin subscription revenue it brings.
The company has been on the defensive since former Netflix and Spotify executive McCarthy replaced founder John Foley in February 2022.
It has struggled to rein in huge costs, remedy recalls and find new revenue streams as demand for its connected fitness products slows and consumers become more cautious about discretionary spending.
While the company has yet to return to profitability, it has managed to stop the bleeding. With a new marketing executive at the helm, Peloton says it’s ready to reintroduce itself to the world and shake off the image holiday ads have left on some people’s minds.
“We know that perceptions don’t match who we are,” Peloton’s chief marketing officer, Leslie Berland, who started at the company in January and led the relaunch, told CNBC in an interview. “The company has historically been thought of as a home bike company for the fitness enthusiast, but over the years it has grown into something much bigger and broader than that.”
Peloton focuses on apps
The relaunch comes with a new tiered app strategy, including unlimited free membership options (no credit card required) and $12.99 and $24 per month tiers.
What people can access varies by level, and in some cases older users will have reduced access when the grace period ends in December. Currently, people who pay $12.99 a month to use the Peloton app can take daily cycling lessons, but in December, they will be limited to three lessons a month.
The reboot includes a “gym” feature that allows users to bring Peloton’s app into a gym and create custom workouts.
Peloton is also saying goodbye to its signature fire truck red and black, replacing it with a new hue combination that it says will better capture the “energy” of a workout and the “afterglow” that comes with it. New branding materials include purple, pink, green and light red.
In a compelling 90-second marketing video shared with CNBC, Peloton’s app takes center stage. It showcases people of all shapes, sizes, fitness abilities and ages using it for strength and yoga classes at home as well as at the gym, This has long been seen as a threat to Peloton’s business.
While Peloton shows off its Bike, Tread, and Row machines in the clip, it doesn’t reveal the hardware until about 30 seconds into the video.
The message is a far cry from Peloton’s earlier commercials and marketing materials, which featured ultra-fit athletes using its equipment.
“[We]tend to think, for the first time now, that not everyone is going to bring home good Peloton hardware,” Tom Cortese, Peloton’s co-founder and chief product officer, told CNBC in an interview. phone, we’re on their phone, they take the phone where they want to go, if you want to put (the Peloton app) on someone else’s hardware, that’s fine, if you want to take it into someone else’s Gym, that would be great.”
Peloton insists that its focus on selling subscriptions doesn’t mean it has given up on the hardware business, saying the company is on a dual track on both fronts. The company said the new campaign is focused on the app because it has little advertising and market research shows only 4% of consumers are aware of it.
“When we first started coming out of Covid, the media liked to get tough on Peloton, it was ‘everyone back to the gym,’ but we knew our members were using our products in the gym,” said Peloton’s Jennifer Cotter. Chief Content Officer.
She noted that Peloton’s strength-training content, as opposed to cycling or running classes, is the first class of class for digital members and the second class for those with Peloton hardware. It shows how eager users are to consume Peloton content independent of their device.
“We’re excited when it comes to this initiative, number one, our members will feel responsive and new members will feel that Peloton is right for them,” Cotter said. “Then, you know, the layered structure allows us to welcome people uphill.”
Briana Deserio, 32, has been a member of Peloton since the early days of the pandemic. She said the brand’s competitiveness and desirable appeal initially led her to buy a bike.
When told about the company’s new marketing strategy, she told CNBC that she supports the move and its focus on inclusivity. But she said making Peloton accessible to everyone could weaken its brand.
“It’s kind of like a club, and everybody’s in the club now,” DeSerio said.
Berland, Peloton’s new head of marketing, isn’t worried about the brand losing strength. She said the new marketing strategy reflected the company’s current situation.
“Our members, our instructors, our courses, our content. None of that has changed. The company has grown into all of that,” Berland said. “Now is the time for branding and marketing to represent all of this and all of its dynamism.”
Liz Coddington, Peloton’s chief financial officer, said creating different entry points for the company’s content will lay the groundwork for the company’s long-term growth.
“What we’re doing is we’re opening up Peloton’s entire potential market to people who might not have considered us in the past because we haven’t really talked to them,” Coddington said.
“The real goal is really just to get more people into the Peloton ecosystem, whatever they want to be in, and then help how they consume our content over time, whether it’s through the free option, or through the lower tiers or through The higher tiers either end up buying or leasing our hardware,” she said.
The company has not factored the potential benefits of the app and marketing strategy into its financial outlook, and said some paid app memberships may be downgraded to a free membership option.
In the past, she said, when Peloton changed prices, churn rates spiked briefly, but quickly returned to normal levels.
“We’re optimistic about it,” Coddington said. “But it’s hard to know until we know it.”