How Nike’s Bold Gamble Paid Off

How Nike’s Bold Gamble Paid Off

Nike’s business success has always depended on being a part of the culture. While the company may speak of being innovative and having cutting-edge marketing campaigns, Nike has always thrived when thrown into the national spotlight.

Last year, Nike lost the title of most popular sneaker in the United States for the first time in a decade. Adidas overtook Nike’s Jordan brand in U.S. sales this past August.

Nike also had its worst quarter for revenue growth since 2011, which was surprising considering major sporting events like the EuroCup often drive sales upwards. To make matters worse, Nike lost significant shares in the teen market, which drives its next generation of consumers.

Nike has faced all of this before. Back in 1987, Nike was doing well, but their competitors started catching up to them in terms of sales.

Reebok began diversifying its sneaker lines, catering to female consumers in a way most brands had never attempted. At the time, Nike was seen as the brand of well-to-do male collegiate and professional athletes. In order to compete with rising companies like Reebok, Nike needed to widen its brand appeal.

Nike’s brand sought a new campaign that would speak to the role that fitness plays in people’s lives and the experience of working out—one that would appeal to a wider group of people. They became a “significant network television advertiser” and focused their energy on presenting everyone as a potential athlete. From there, the “Just Do It” campaign was born.

Nike’s sales jumped from $877 million in 1988, when the campaign launched, to a whopping $9.3 billion by 1998. That increase was not because their product was any better than that of their competition. Nike’s success relied on selling an idea, not selling the product itself.

This has been their ethos ever since. It’s no surprise, then, that they turned their sites towards one of the biggest controversies today.

 

Brand Purpose and the Kneeling Controversy

 

2018 marks the 30th anniversary of the “Just Do It” marketing campaign launch. This year, Nike once again tapped into the zeitgeist of the times and decided to feature ex-NFL quarterback Colin Kaepernick as the center of their “Believe in Something” campaign launched this year.

Nike signed Kaepernick for endorsement deals in 2011, but they had no idea what to do with him after he dove into activism. They decided to make him the centerpiece of their new ad campaign after several other athletic shoe companies made a play for him.

Back in 2016, the ex-San Francisco 49ers quarterback began kneeling during the national anthem of NFL games to protest the police killings of African Americans. He began kneeling after consulting with Army veteran Nate Boyer who suggested Kaepernick kneel because “people kneel to pray; we’ll kneel in front of a fallen brother’s grave.” Despite the initial gesture, many have conflated the idea of protesting police brutality with a lack of patriotism and support for U.S. troops.

Since Kaepernick protested during football games, the most popular and patriotic sport in the United States and the one most linked with patriotism, the issue quickly blew up. The protest spread quickly across the NFL as other players chose to participate. Even President Trump decided to weigh in on the controversy, adding fuel to the fire.

At first glance, it seemed that Nike may have goofed. A small but vocal minority of consumers and celebrities started the #JustBurnIt counter-campaign to protest Kaepernick’s supposed disrespect towards the American flag and the military. Other consumers advocated for donating Nike apparel instead of burning it in protest.

This ad is part of a larger trend in marketing. Brands have seen a consumer attitude shift toward supporting brands that have something meaningful to say beyond just selling their products.

When CVS took a stand against smoking and stopped selling cigarettes, their brand preference increased by 50 percent. Some people even stopped smoking altogether.

In today’s politically charged world, such polarizing issues as Kaepernick’s stance can be lightning rods for marketing campaigns. One may ask why Nike would want to dive headfirst into such a divisive issue. Why do they want to take such a huge gamble?

Nike is playing the long game.

 

How Nike’s Bold Gamble Has Already Paid Off

 

Nike knows what it is doing. The sneaker company did not hire Kaepernick because of his exceptional play in the NFL—for all intents and purposes, his football career was over when he decided to start protesting in 2016. Nike hired an activist.

Kaepernick’s new deal was a strategic decision to stoke this particular controversy because it resonates with their core demographic. Nearly two-thirds of Nike’s customers are men under the age of 35. Nike’s target demographic also skews younger, urban, more culturally diverse, and liberal. Through the Kaepernick ad, Nike was communicating with its target audience in a way that’s authentic, culturally relevant, experiential, and emotionally engaging.

Recent data shows that Nike’s Colin Kaepernick ad is seriously smart marketing. Despite a two percent dip in stock prices the day after launching the ad campaign, Nike’s stock has risen 35 percent over last year and has acquired over $6 billion in market value. Some attribute the dip in stock to the ad campaign, but similar companies like Adidas and Puma experienced similar losses the same day due to the uncertainty regarding NAFTA and tariffs.

Nike is seeing record engagement across the board too. The company’s Instagram account gained over 170,000 followers since the ad launched, and their post on Instagram about the ad was their second most popular post ever. Online sales have surged since the ad’s debut. When asked, most consumers said they were buying Nike apparel in support of Kaepernick’s message.

 

Being Socially Conscious in Today’s Business World

 

Consumers expect brands to be more socially conscious in today’s world. Nike took a huge risk by making such a divisive figure their centerpiece of a new marketing campaign. Nevertheless, this campaign was indicative of Nike’s commitment to making a difference in the world.

Smaller brands can take note of Nike’s approach to political causes. Whether standing up for a cause is right for your brand depends on the kind of audience you want to attract. If you, like Nike, market to young, liberal-leaning urban dwellers, you risk getting left behind if you don't stick up for your beliefs.

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