Nike Case Study Highlights Themes of Distributed Marketing Management

by | Apr 15, 2013 | Blog, Blog Archive, Featured, Multi-Channel Marketing | 0 comments

The New York Times published an article yesterday regarding some struggles that Nike is facing in its ad campaigns. Numerous themes that I have discussed in this space in recent months were apparent while reading this.

The article noted that Nike is facing a big challenge in driving brand engagement amongst large segments of their potential overall target market. Much of this is a challenge surrounding the new media environment. From the mid 1980s through the early 2000s, Nike was able to create iconic ads that were memorable and talked about, driving not only brand awareness, but also positive brand beliefs and brand engagement. Today, Nike is still strong in terms of brand awareness, but some have openly wondered if brand engagement is there.

In the 1990s, Nike would primarily use TV, print, radio and out of home advertising. The media landscape is much more complex now than it was at the turn of the century. Although cable TV channels were well entrenched by 2000, there’s been even greater fracturing of TV audiences since then. Pretty much all brands using TV as a form of advertising have struggled with this, so this is not a unique challenge to Nike. Print and radio do not have the reach that they did in 2000, and out of home has changed as well. A significant pain point for Nike, and for a lot of brands, is effectively distributing, optimizing and managing content across a number of channels.

A helpful item to evaluate Nike’s presence in the social media space comes from last week’s article of “Where’s the ROI in Social Media (Part Two)” That article featured discussion of a thought leading piece on the topic from an MIT Sloan Management Review article. The MIT piece had a chart of relevant metrics of social media applications. Nike has some robust Follower and Likes numbers on Twitter and Facebook respectively. They have over a million Twitter Followers and over 12.6 million Facebook Likes. Nike has other sub feeds on both sites like Nike Basketball, Nike Tennis, Nike Women, etc. All have pretty decent quantity of Follower and Like numbers. There were two things I found interesting though when looking over Nike’s Facebook and Twitter presences. First off, as of the morning of April 15, no new content had been posted on the main Facebook and Twitter feeds of Nike since April 2. New content is the lifeblood of any social media presence. Also, I noticed that Nike’s People Talking About This (PTAT) was a little low. Nike has 12,632,400 Likes but only 69,869 PTAT. That is a PTAT of 0.5%, which is below the industry average PTAT of major brands of 1.4%. To be fair, certain subfeeds of Nike that I found on Facebook exceed the 1.4% PTAT.

Another item that is likely of concern for Nike is that the brand ranks 5th in loyalty amongst those ages 18-24, traditionally a key demographic in apparel. This alone is not cause for concern, but it does underscore some other themes from above. A significant percentage of 18-24 year olds have had economic difficulties (both in the US and globally), a factor that is troubling a lot of consumer brands these days. The brand loyalty stat is likely correlated to some degree with some of the low PTAT numbers on Facebook. There’s been some thought that under 25s are not drawn to Nike because of the perception that it is popular with older generations. While there have been cases of brands not resonating with certain generational cohorts over time, often times when a brand doesn’t connect with an age segment, the explanation as to why it happens encompasses numerous factors.

At this point, I wouldn’t perceive that Nike is in need of a full scale brand revitalization. Nike has $24 billion in annual sales to its name, and gross margins rose for the first time in 2 years during their fiscal 3rd quarter, which ended February 28. However, should Nike not overcome content management and digital marketing challenges that exist, greater brand revitalization efforts may be needed in the future to stem a tide of declining market share.