April 3, 2008

American Apparel Sports a Woody: Madness is the Method

by Freddy J. Nager, Founder of Atomic Tango LLC

American Apparel CEO Dov Charney acts like he’s missing his calling. The controversial and flamboyant entrepreneur could parlay his promotional genius and predilection for the prurient to become one hell of a porn producer. (The San Fernando Valley, the porn capital of the world, is just over the hill from American Apparel’s headquarters.) It would certainly suit his notorious lifestyle…

Charney even looks the part, with his oversized 70s glasses and facial hair. Instead, he makes T-shirts. And sweatpants. And underwear.

Charney’s very proud of his underwear. I know, because as an MBA student, I visited his company along with several classmates. In his office, in the middle of a profanity-filled rant about how all good marketing is about sex, Charney dropped his pants to show us the American Apparel briefs he was wearing. He wasn’t threatening about it — it seemed spontaneous and, coming from Charney, almost natural. Considering some of the stories of his alleged misbehavior, it could have been worse. (See the comments in this blog for an infamous article from Jane Magazine.)

Now, I say it’s a good thing that a CEO uses his own products. Perhaps all American companies — from cars to airlines to fast food — would be much better if the CEO’s were forced to use their own products on a regular basis. Daily even. And although Charney in his briefs wasn’t a pretty picture, it was cool to get a backstage look at the mindset that’s made American Apparel a hot brand…

For the uninitiated, American Apparel sells basic clothing — colorful, but nothing that would look out of place in a Target. The clothing doesn’t even bear artwork or flaunt the company’s logo, like, say, Abercrombie & Fitch shamelessly does. And yet American Apparel has become a trendy and profitable brand with its own stores. Here’s how inspired marketing turned an ordinary product into a hot item:

1. Made in the USA. Unlike all the other mass-market clothing brands, which have sought out lower and lower manufacturing costs in third-world countries, American Apparel clothing is made in downtown L.A. — and always will be — since that’s an essential cornerstone of the brand. The workers receive above average wages and benefits — far better than what Wal-Mart offers its serfs — which is also something that Charney is rightfully proud of. I saw the factory in action, and it appeared to be a far better workplace than most of the dotcoms I endured.

2. Sex. American Apparel’s ads feature scantily clad young amateur models, many recruited and photographed by Charney himself. The photos are stark, flatly lit, with no make-up or other embellishment. They appear jarringly honest and some could qualify as softcore. Charney then places these photos on full-page ads in alternative papers and fashion mags across the country. (How can I not love a guy who sees the value of a big marketing investment?) The look has since been copied by other fashion brands.

3. Branded stores. Every cult brand needs a church or some other venue for its minions to gather without intrusion from non-believers. Trekkies have conventions. Harley-Davidson has rallies. Apple built its own stores. And American Apparel launched branded boutiques in hip, sometimes gritty neighborhoods around the world. The brightly lit stores are filled with the colorful clothing on racks, throbbing music, and more of the notorious photos plastering the walls.

The combo is working: according to The Economist, American Apparel’s T-shirts (as plain as they are) generate an 80% profit margin, while the industry average is 60%. Who says you can’t make money by manufacturing in America?

But American Apparel wanted more.

American Apparel Woody Allen billboard

Recently, the company began running billboards in New York and L.A. featuring Woody Allen in an image from his film “Annie Hall”. That’s right, Woody Allen, the 72-year-old director — not exactly a sex symbol. And American Apparel allegedly ran these billboards without Allen’s permission. Allen has since sued American Apparel for $10 million (case pending).

Now, why would American Apparel stray from young amateur models to a celebrity senior citizen who isn’t even wearing American Apparel attire? The official explanation (from Zap2it.com):

The company claims “the image of Allen dressed as a Hassidic character alongside Yiddish text was meant strictly as a social parody” and that the company sometimes uses billboards “for non-commercial social and political commentary.”

True, on the American Apparel website, there is a slideshow featuring a Hassidic clothing store. However…

The Cool Rules Pronto conspiracy theory:

You could say that Charney and Allen share a lot in common: they’re two successful, egomaniacal Jewish intellectuals who love young women. Allen’s best films were made in the 70s, an era that Charney appears to still be living.

Allen is also an interesting choice, while an overexposed cliché like Paris Hilton would have interested nobody. He is a favorite of New York’s media intelligentsia, which enabled the L.A.-based apparel manufacturer to turn heads in New York’s snotty fashion circles.

Still, American Apparel has avoided celebrity anything to date, so it’s a bit disappointing to see it start down this route away from the amateur models that built the brand.

And why would American Apparel use Allen’s image without permission? Charney’s an intelligent, informed businessman living in L.A. — he knows about celebrity-image rights issues. Well, consider this: Allen’s lawsuit is for only $10 million. And if you see that as a marketing expenditure, that’s not a lot for an international brand with 2006 sales of $300 million. Super Bowl ads now run $3 million just for the time slot, and they don’t guarantee the kind of press coverage and controversy that this Woody Allen imbroglio is scoring.

I’m speculating that Charney took a calculated risk — let’s get sued, because the publicity will be worth millions of dollars in media placement, and it will thrust American Apparel back into the limelight, now that journalists are bored writing about our sex angle. It enhances our bad-boy-with-a-golden-heart image, and it’s far less risky and more creative than going even more pornographic to score attention.

Now here’s an even more devious angle:

What if Woody Allen were in on this? Imagine this scenario: Allen and Charney are talking on the phone about some of American Apparel’s latest young models, and they strike a deal — Allen appears in the ads with an old photo, acts offended, files a very public lawsuit, and then they “settle” later. Sounds crazy, but consider who the two men are — and what Allen is working on.

Woody Allen has a film coming out in September, Vicky Cristina Barcelona, featuring a love scene between Penelope Cruz and Scarlett Johansson. Hmm, I wonder if either of the actresses will be wearing American Apparel underwear in the scene?

Then again, I’m not sure that using the American court system to promote clothing and a movie is the safest possible idea, particularly with Neocon fascists running the government. (Unless the White House is in on it, too…)

But there’s no question that the campaign and ensuing lawsuit might benefit both men. There’s a lot more money in using sex and controversy to sell mainstream products than in actually making yet another boring porn film. Ethical? You be the judge. Effective? All the way to the bank.

Update 4/15/9: I wrote this post a year ago, but the lawsuit is finally going ahead. (If our justice system worked any slower it would be going backwards.) Looks like American Apparel is milking this trial for all the publicity it can get. Initial reports are that it’s trying to drag Allen’s sex life into the discussion. It all sounds rather lowball to me (how appropriate for American Apparel).

Update 5/18/9: The Woody Allen-American Apparel lawsuit was settled today, with Allen reportedly collecting $5 million. While that might be “the largest reported amount ever paid under the New York right to privacy law,” according to Allen, it’s also an incredibly small amount for all the publicity that both Woody Allen and American Apparel garnered from this case. Think about it: Coca-Cola paid more for one 60-second Super Bowl ad.

Related Article: Bankruptcy is the Fashion? Mervyns Fails to Declare Its Style

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Freddy is the Founder & Creative Strategist of Atomic Tango. He also teaches at the University of Southern California (go Trojans!), shoots pool somewhat adequately, and herds cats. Freddy received his BA from Harvard and his MBA from USC.

6 Responses

  1. What a great read! I love the theory. As a former AA employee myself, I can definitely see Dov doing whatever it takes to keep himself and his brand relevant.

  2. no such thing as bad publicity?

    Freddy: It depends. In the Spitzer case, it was bad for the governor, pretty lucrative for the prostitute.

  3. I was just in American Apparel for the first time the other day. Very hip store. The first thing I noticed is how well designed their print material was. I grabbed a catalog and a few cards they had lying around. I didn’t look at the catalog for a few days but when I did I thought… man these guys are pushing the edge. All of the woman looked in their teens (very young) and in some of the pics you could clearly see their nipples. Don’t get me wrong, I thought it was sexy but for a product catalog I thought it was a bit much. I mean, they obviously weren’t trying to sell their products to my mother! Also, while the catalog featured all women’s clothing I think they were selling something else to men!

  4. America Apparel clearly made a mistake…But this could have been solved by the parts friendly agreeing. Allen as a good jew he is abusing of his power to take advantage of the situation and gaining from if. I feel the moral was lost here.

  5. In comparing beards, I’d say the Joaquin Phoenix rap marketing skits stole from this AA/Woody idea.

  6. The story is quite involving and reaffirms that if a company has the faith in the deliverables of the brand both on materialistic and emotional front the below the line activities do create a long lasting building block for the Brand.

    Manufacturing in America and still showing good profits in Apparel Industry. Definitely, it’s a job well done. The brand did put forward its belonging to the region and the Brand ownership displayed by the CEO i would like to believe is due to the deliverable he was enjoying as individual of Comfort , Style and the brand image.

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