Big-Time Sensuality: A record-breaking SIMA Surf Summit 5 focuses on love, sex, and magic.

Don’t Miss The Quicktime Slide Show Of All The SIMA Surf Summit Hijinks! Click on “Calling All The Crazy Gringos” on the right!

For the fifth year in a row, key members of the surf industry bolted down to Cabo San Lucas to network, learn, surf their brains out, and take a hard look at the state of the surf business. The Surf Industry Manufacturers Association (SIMA) Surf Summit 5 came together May 16-19 at the new Royal Solaris Resort. The event, which was produced by TransWorld SURF Business, brought together more than 200 attendees and covered topics as wide ranging as licensing, advertising, the juniors’ business, and skateboarding’s affect on the surf business.

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While the event lacked the type of verbal jujitsu seen in past years (with a few exceptions), the depth of information and the caliber of both attendees and panelists were never higher.

The Summit kicked off with a keynote address by Reef Chairman Fernando Aguerre, who talked about death, love, sex, and surfing — and the threat posed by mainstream companies like Hollister Co. who are glomming on to the surf lifestyle.

“They’re going to take the fruit of our love,” Aguerre told the hushed audience gathered near the hotel’s beach. “They are going to take our lifestyle. Remember, you’re going to defend it like an adult or cry like a baby when it’s gone. They will take these things if we don’t fight. So my call to arms is to fight the poseurs. There’re plenty around, not only in America, but the world. We are the real shit, let’s make that part of the branding of our sport.”

Aguerre also wasn’t afraid to take a few shots at the surf industry: “If I were a Martian — and some of you guys might think I am — and I were dropped in this country and this world to report back to Mars central scrutinizer on the state of the surfing industry and the surfing sport, I would have to summarize it as of today in two words: complacency and fear.

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“We’ve been complacent for too long, and we’ve been scared of rocking the boat for too long,” continued Aguerre. “You know what? Maybe we did grow bald, fat, and slow, but we shouldn’t grow dumb and stupid not to have the guts to defend what we built all these years.”

Aguerre’s challenge to the surf industry was to become a hot bed of new ideas, new companies, and new brands. “If securing our turf is the objective and the means of securing the turf is to be scared to change, be scared to take risks, and be scared to disregard the traditions, we are just going to see the fruits of our love taken away by these forces,” he said.

Jay Wilson’s Luncheon Address
If there were an underlying theme in Vans Vice President Of Global Marketing Jay Wilson’s lunchtime address on day two of the summit it was the notion of being inclusive. Wilson encouraged companies to band together, to look at other companies as allies, not competitors.

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“You don’t look at Reef as a competitor,” Wilson said. “You look at Reef as your brother in helping you get to where you want to be.”

Wilson gave attendees insight to Vans’ operation, which views the action-sports market as a pyramid where the elite group on top influences the active participants just below it and the large pod of emulators at the base. He encouraged the industry to work together to harness all three of these groups, because otherwise corporate America — which has become enthralled by the marketability of the action-sports lifestyle — will grab them.

“You’re a pimple on the global economy,” he said. “You’re a pimple they can get rid of next week. All they do is think. They don’t come from the heart. They come from business. They find people that will tell them secrets, and eventually they’ll get it.”

Wilson said we shouldn’t fear these outside companies, but rather utilize their resources. Wilson drew on the success of Vans’ Triple Crown franchise as an example of how the industry can partner with large non-endemics to growhe sport. “Now Ford, Mountain Dew, Xbox, and G-Shock are going to take these sports worldwide. That’s good news,” he said. “That means if we can get organized, if we can help them, they will help us. They will give us money.”

Wilson said the industry must do three things in order to grow: find surfing’s Tony Hawk and spend money on him, get the media involved, and form endemic and non-endemic alliances. “When you start thinking you’re the greatest, that’s when you’re the most vulnerable,” he said.

Branding And Licensing
A common flaw of many small brands is the lack of a specific and measured approach when it comes to international branding and licensing. Company owners get blinded by what appears to be a lucrative opportunity to expand their brand overseas, but don’t develop a game plan, understand the specifics of licensing deals, nor even know how these agreements will affect their brand.

The fist seminar at SIMA Surf Summit 5 gave the packed house tips on trademark protection, the need for consistency when building an international brand, the most-common mistakes owners make, and the importance of trust in the international branding equation.

“The biggest weakness is that we think the whole world is a clone of America and what works here should work there,” Reef Chairman Fernando Aguerre told the audience. “In these situations, trust in your partner is never more important.”

Tom Brady, VP of marketing for O’Neill International, explained how many of O’Neill’s licensing agreements were signed long before the current wave of globalization and the problems that produced. “The world is smaller,” he said. “Kids in Europe are looking at what’s happening in the U.S. and Australia. Brand consistency on an international level is mandatory and relies on keeping the lines of communication open.”

Part of O’Neill’s solution to this challenge was the development of a guideline book for all of its licensees and distributors and an intranet where international distributors can access logos, ads, and photos. “Left unchecked, your licensees can do crazy stuff,” said Brady.

Attorney Bryan Friedman offered up at least a 500-dollars’ worth of legal advice. The specifics of his advice would fill this page, but in a nutshell he told the audience to be on the lookout for these common mistakes: never allow the potential licensee to draw up the agreement, have a specific outline of the agreement before you sit down to discuss the deal, never allow the licensee to register the trademark, never grant too big of a territory to a licensee, never ignore early signs of trouble — no matter how slight — and don’t hire someone unless they have the capability to mature with you and your company.

Retail Distribution
Distribution is one topic that will always draw interest from retailers and manufacturers alike. This year’s discussion was no exception as it focused on finding the balance between expanding distribution and selling out — and not alienating the ‘core customer base.

Sun Diego Owner Dave Nash said retailers can be put into different boxes — mom and pop stores, core shops, specialty stores, department stores, and more. “Every time a brand moves into a new box it’s a gamble,” he said. “As one of our brands grows into these other boxes, it then becomes imperative that we look for new lines. If the lines that we are growing with and doing well with do not expand out of the box, then the necessity to be out searching the market isn’t there. Whether it’s a new line or an existing line, the current distribution as well as future distribution plans have to go into the formula of whether to purchase or how much to purchase from that brand.”

Laguna Surf And Sport Owner Eric “E.J.” John said the deciding factors for carrying a line are based more on marketing and brand positioning than distribution. “I don’t want to buy 100 dollars’ worth of stuff and get a 500-mile exclusive on it,” said E.J. “It’s your company, you guys do what you want with it. We’re like a puzzle. When the pieces fit it’s great, and when we don’t fit anymore, then we move on.”

Nash said if a brand won’t hold price, he’d be unlikely to carry it because it would dilute the image of the brand and also his shop. “The perceived value of the product is the lowest price it’s sold for on the market,” he said.

E.J. touted companies like Quiksilver and Billabong for their long-term relationships with teamriders because he said it shows they’re committed to the sport. However, E.J. said he’s weary of companies that are encouraging kids to wear their product head-to-toe. Instead, he suggested companies should start other brands to cover different categories.

It’s no secret some brands must broaden distribution to maintain growth. When they do go down that road, Mitch Kummetz (VP of investment banking and brokerage firm Wedbush Morgan Securities) said they must continue to offer the best service to their ‘core retailers: “To stay relevant with retailers you have to bend over backward to service them. Have good reps, ship on time, ship complete, give them terms, and take returns — because there’re a lot of other brands they could go to if you don’t provide them service.”

Additionally, retailers are looking for new brands to introduce into their store. “Kids want new stuff,” E.J. said. “We’re not talking about throwing out the old stuff, but we have money for it a new line, and we need it. We need the magic.”

Understanding The Teenage Demographic
An understanding of the teen psyche is one of the cornerstones of the surf industry, but too often the conclusions we reach about our consumers are based more about “gut” than any formalized research methodology. But wouldn’t it be nice if we could bounce our gut instincts off of actual research?

That’s exactly what Michael Wood, VP of Teenage Research Unlimited, gave Surf Summit 5 attendees when he broke down the teen market in a multimedia presentation.

According to Wood, there are four teen truths: the quest for fun, the search for identity, the compulsion to rebel, and the desire for things they don’t have — especially to be older. In addition, he said teens currently control 170-billion dollars in spending and by 2010 there will be 32-million teens in the U.S. — more than ever before.

While making it clear that his research encompasses all teens in all regions and not necessarily the teens the surf market most often courts, Wood still surprised many in the audience when he revealed the top three retailers where teens shop most. Seventy-three percent of the teens polled said they had shopped at Wal-Mart in the past month, 60 percent said Target, and 51 percent listed Kmart.

“The stigma associated with discounters is receding,” said Wood. When he asked teens what the number-one thing a company could do to maintain their loyalty to it, “lower the price” was the landslide winner. “However, teens are worried about lower prices if it adversely affects product quality or if it lowers the barriers that makes it exclusive to them,” said Wood.

A welcome shocker in Wood’s presentation was the widespread appeal of Tony Hawk, who ranked just behind Michael Jordan and Vince Carter on the ranking of favorite athletes, beating out guys like Marshal Faulk, Allen Iverson, and Kobe Bryant.

The Internet: What Now?
SIMA President Dick Baker introduced Jason Calacanis as a Nostradamus of the Web — and rightly so. He did, after all, predict the demise of the dotcom boom two years ago at Surf Summit 3.

This year Calacanis’ message was simple: companies should build an e-mail database and learn how to use it. “This is how you build marketing intelligence,” he stated.

Calacanis urged companies to collect as many e-mail addresses as possible. And along the way they should also find out as much as possible about their customers: How old are they? Where do they live? How many times a week do they surf? How m guys do what you want with it. We’re like a puzzle. When the pieces fit it’s great, and when we don’t fit anymore, then we move on.”

Nash said if a brand won’t hold price, he’d be unlikely to carry it because it would dilute the image of the brand and also his shop. “The perceived value of the product is the lowest price it’s sold for on the market,” he said.

E.J. touted companies like Quiksilver and Billabong for their long-term relationships with teamriders because he said it shows they’re committed to the sport. However, E.J. said he’s weary of companies that are encouraging kids to wear their product head-to-toe. Instead, he suggested companies should start other brands to cover different categories.

It’s no secret some brands must broaden distribution to maintain growth. When they do go down that road, Mitch Kummetz (VP of investment banking and brokerage firm Wedbush Morgan Securities) said they must continue to offer the best service to their ‘core retailers: “To stay relevant with retailers you have to bend over backward to service them. Have good reps, ship on time, ship complete, give them terms, and take returns — because there’re a lot of other brands they could go to if you don’t provide them service.”

Additionally, retailers are looking for new brands to introduce into their store. “Kids want new stuff,” E.J. said. “We’re not talking about throwing out the old stuff, but we have money for it a new line, and we need it. We need the magic.”

Understanding The Teenage Demographic
An understanding of the teen psyche is one of the cornerstones of the surf industry, but too often the conclusions we reach about our consumers are based more about “gut” than any formalized research methodology. But wouldn’t it be nice if we could bounce our gut instincts off of actual research?

That’s exactly what Michael Wood, VP of Teenage Research Unlimited, gave Surf Summit 5 attendees when he broke down the teen market in a multimedia presentation.

According to Wood, there are four teen truths: the quest for fun, the search for identity, the compulsion to rebel, and the desire for things they don’t have — especially to be older. In addition, he said teens currently control 170-billion dollars in spending and by 2010 there will be 32-million teens in the U.S. — more than ever before.

While making it clear that his research encompasses all teens in all regions and not necessarily the teens the surf market most often courts, Wood still surprised many in the audience when he revealed the top three retailers where teens shop most. Seventy-three percent of the teens polled said they had shopped at Wal-Mart in the past month, 60 percent said Target, and 51 percent listed Kmart.

“The stigma associated with discounters is receding,” said Wood. When he asked teens what the number-one thing a company could do to maintain their loyalty to it, “lower the price” was the landslide winner. “However, teens are worried about lower prices if it adversely affects product quality or if it lowers the barriers that makes it exclusive to them,” said Wood.

A welcome shocker in Wood’s presentation was the widespread appeal of Tony Hawk, who ranked just behind Michael Jordan and Vince Carter on the ranking of favorite athletes, beating out guys like Marshal Faulk, Allen Iverson, and Kobe Bryant.

The Internet: What Now?
SIMA President Dick Baker introduced Jason Calacanis as a Nostradamus of the Web — and rightly so. He did, after all, predict the demise of the dotcom boom two years ago at Surf Summit 3.

This year Calacanis’ message was simple: companies should build an e-mail database and learn how to use it. “This is how you build marketing intelligence,” he stated.

Calacanis urged companies to collect as many e-mail addresses as possible. And along the way they should also find out as much as possible about their customers: How old are they? Where do they live? How many times a week do they surf? How many surfboards do they own? Etc. (In order to get responses, offer them something in return like stickers or a sweepstakes entry.)

Then, companies should use this information for viral marketing campaigns, such as personalized e-mails to the customers who they think their campaigns or products would be most appealing. The idea is to establish personalized customer-to-company relationships.

Though it sounds time consuming and expensive, Calacanis maintained it’s cheaper and more efficient than you’d think. E-mails are free to send, and setting up templates for automated responses for the influx of e-mails is relatively inexpensive.

As for the future of the Internet, Calacanis predicts Instant Messaging will be the next wave. Soon, customers will expect to interact with companies in order to get real-time feedback.

Terry McCann Luncheon Address
The ol’ boy network is dead, and in its place is a functional trade association that’s becoming more relevant every month. That was the message many took away from SIMA Executive Director Terry McCann’s luncheon address on the third day of the summit.

“We have an amazing board of directors who leave their business at the door during SIMA meetings,” said McCann. “They’re not in it for their own self interest, they want to see your business grow. They want you to be the next Quiksilver.”

SIMA Marketing Director Sean Smith then gave an update on the dues structure. “We charge dues to fund programs in the industry,” said Smith. “We’re an incredible industry doing incredible things, and we want to fund the right research to tell that story.”

Smith also announced that SIMA members will receive an additional six percent off of FedEx ground rates, bringing the discount to 31 percent.

In addition, Dan McInerney, president of hub 360, gave a brief overview of the features and benefits of his business-to-business Web portal. Now in its third year, hub 360 has more than 100 brands, 600 sales reps, and thousands of retailers involved with the program. It hosted 250,000 dollars in transactions during the month of April.

The New Rules Of Advertising
One conclusion that can be drawn from the advertising seminar is the sense that surf advertising is suffering from a bad case of “sameness.”

“It’s a sea of sameness out there,” said Billy Fried, president of marketing consulting firm Spasmodic, who sat on the panel with Rip Curl Marketing Director Mark Price and TransWorld Media VP Of Sales And Marketing Fran Richards. “There’s nothing new that you guys are doing. The challenge is to take a risk, to do something different.”

Price agreed, adding, “Where we drop the ball is that our ads are art-driven, not conceptual.”

To “think outside the box” is an advertising cliché, but that’s exactly what surf companies need to do, Fried said. Instead of running the standard action-photo-with-logo ad, brands should consider alternative ways to advertise such as insertions, blow-in cards, shrink wrap, co-op ads, and sweepstakes. Running TV commercials or placing ads on the increasingly amount of monitors that are popping up in malls, movie theaters, and convenience stores are other options. And all brands should be aggressive at with their point-of-sales advertising.

Above all, Fried said companies must reward dedicated customers. It’ll keep them loyal. “Leverage your passionate audience,” Fried said. “It’s seven times more expensive to get a dollar from a new customer than from an old one.”

Skateboarding: Friend Or Foe
One of the mandates after last year’s Surf Summit was to bring in more perspectives from people not directly involved with the surf industry. The skateboarding panel sought to do just that, and brought together three different perspectives with more than 50 years of experience between them.

One thing NHS President Richard Novak, Sessions Owner Joel Gomez, and TransWorld SKATEboarding Business Editor Miki Vuckovich established early in the