Digital drives change at Nike

14 February 2012

NEW YORK: Nike, the sportswear giant, is adapting its approach to advertising, agency relationships and product innovation to reflect the demands of the digital world in each of these spheres.

The company has cut TV and print adspend levels by 40% in the last three years according to industry estimates. However, its overall marketing budget climbed to a record $2.4bn in 2011, as other channels attracted expenditure.

"Connecting used to be, 'Here's some product, and here's some advertising. We hope you like it,'" Mark Parker, Nike's chief executive, told Fortune. "Connecting today is a dialogue."

One major driver behind this process has been that the firm's core customers – typically 17 year olds spending 20% more on running shoes than adults – have shifted their attention to new media.

An intensifying rivalry with adidas, the rise of challengers like Under Armour and Lululemon and the growth of teen-focused players including Vans and Quiksilver also meant moving fast was essential.

"My fear was that we would be this big blood bank of a company that was dabbling across all these areas and wasn't seen as cool, as interesting, as relevant, as innovative," said Parker.

Wieden+Kennedy, the agency, has been working with Nike for three decades, and retains a central role in its marketing activity, such as with the highly successful "Write the Future" campaign.

While Wieden+Kennedy handled all of Nike's $350m in estimated billings in 2000, it now operates alongside shops from R/GA and AKQA to Mindshare, as Nike's move into digital prompted a reappraisal.

"Collaboration is the new thing," Dan Sheniak, global communications planning director for Nike at Wieden+Kennedy, said.

Additional proof of the firm's new focus comes from its Nike Digital Sport unit, launched in 2010. It created the Nike+ sensor in partnership with Apple, which has 5m users and lets runners monitor their performance via the web.

The follow-up, FuelBand, also recently hit the market, further enabling the company to enhance its online communities, boost loyalty and collect in-depth customer data.

As Nike's stock has offered returns of 120% in the last five years, compared with just 2.5% for the S&P 500 as a whole, such strategies seem to be working. "They have their finger on the pulse of what their customer is looking for," David Carter, executive director of USC's Sports Business Institute, said.

Data sourced from Fortune; additional content by Warc staff