Nike's most recent campaign in the US has divided opinion, but according to Tony Pace, Marketing Accountability Standards Board (MASB) President, analysed and praised the brand's continuous position at the side of the athlete. WARC's US Editor, Geoffrey Precourt reports.
Even at a large assembly – the crowd of 650-plus delegates at the Association of National Advertisers’ (ANA) 2018 Data and Analytics Conference – Tony Pace gets a special nod.
His exhaustive knowledge of marketing, his 25 years in the agency business (ten years at Y&R, followed by 15 years at McCann), his experience as a brand manager (nine years at Subway), and his generosity to the industry (two years as ANA chairman) demand attention when he steps up to the podium.
At the ANA gathering in Orlando, Pace was talking about the power of sponsorships in his role as president/CEO of the Marketing Accountability Standards Board (MASB). The organization has partnered with the ANA on a project to provide greater insight and guidance into sponsorship measurement.
And, specifically, he used the occasion to check in on a marketing program that has been a hot button everywhere from the White House to Wall Street.
“Back in the day, Nike was the upstart brand. They were the challenger brand. They weren’t the big corporate behemoth,” he said. “Before Michael Jordan was there, the two best players in the NBA were Larry Bird and Magic Johnson. And they both wore Converse.
“And there was a great, famous commercial where Magic took a limo out to French Lick, Indiana, and played basketball on Larry’s court.”
At the time, Bird and Johnson were not only formidable competitors; they were the faces of the NBA. Nike? “They were the upstarts,” Pace recalled. “They had a rebel edge.”
And, as an outlier, the brand wasn’t afraid to push the boundaries of legacy marketing practice.
Case in point: At the 1996 Olympic Games in Atlanta, Pace told the ANA delegates, Nike wasn’t an official sponsor: “They were an ambusher. They bought the parking garage across from Centennial Olympic Park in Atlanta and they put on the best show around Centennial Olympic Park, even though they had nothing to do officially with the Olympics.”
That legacy of making up its own rules, the MASB head proposed, may explain the explosive two-minute Colin Kaepernick “Believe in Something” ad that launched in early September 2018...
… and the outdoor displays that reinforced that message.
“In my opinion,” Pace said “the reason they did that ad is they were celebrating not just 30 years of ‘Just Do It’, but they also were celebrating their company’s lifetime of being on the side of the athlete.
“When Bill Bowerman” – the co-founder of Nike – “poured rubber into his waffle iron to make a better athletic shoe for runners, he was doing it because he wanted runners to succeed.
“When Nike included Kaepernick in the ad, it wasn’t solely about the [national anthem protest]. They were getting back to their company roots as they were celebrating a very important milestone.
“They’ve kept with the campaign theme for 30 years, which is the rarest of achievements in the current space.”
When Pace addressed the ANA conference, Nike’s stock already had started to bounce back after a day-after-Kaepernick tumble. “The Wall Street guys know what they’re talking about. They had about 1.6 billion shares outstanding and the share price went down a little over three bucks. And, very quickly, people were talking about a $5-billion stake in terms of market value.”
Ten days later, Edison Trends, a digital-commerce research company, reported that Nike’s sales had blossomed by 31% – a significant increase over the previous year’s jump of 17% during the same period. And, at the time of writing, the good news for the brand continues: Even in spite of some random community protests, Nike’s price on the New York Stock Exchange is close to a 52-week high.
Back to Pace and the ANA Data/Analytics presentation: “My guess is there’s going be a lot of continuing conversation about this. The people that I talk to – who are very good in this space – think that Nike, frankly, doesn’t really care” about the reaction to the Kaepernick appearance. “They subscribe to the there’s-no-such-thing-as-bad-publicity philosophy. I, personally, don’t subscribe to that theory, but they do.”
If the intent of the ad was to reinforce Nike’s self-referential, three-decade reputation as an outlaw brand – at a time when, in fact, it has long been perceived as mainstream fashionable among sneaker geeks – the splash of publicity worked.
But, as a bottom-line piece of brand strategy for the #89 on the Fortune 500, is it working?
It’s no surprise that Pace has an opinion: “One of the things that we don’t talk about enough, I think, in marketing is trying to put a value on everything. So, there was a lot of debate a couple of years ago when people were gaining ‘likes’ on Facebook. What is the value of a ‘like’? Or what is the value of a fan?”
Although many marketers and their agency partners dismissed such metrics as what Pace called “academic exercises,” the MASB head insisted, “I think it’s actually good to say, ‘Where does this fit in the value equation?’ and ‘How does that drive value?’”
Any definitive insight, he allowed, may be fleeting: “Unfortunately, some of the stuff that looks best within a modeling exercise is actually stuff that diminishes over time.
“If you talk to people who have a direct-marketing background, they know there used to be a ‘burning out the list’ phase. If I wanted to get the best return and my client was beating me up about it,” Pace would recommend a simple solution: Go out and get another list.
Why? “Because we know those people love you and it’s not going to cost much. And the numbers are going to look great.
“But, sooner or later, you’re not adding any more to the franchise and that becomes a real problem.” The solution: “Counter balance of long-term enterprise development versus maximizing short-term return.”
For Nike, the short-term return looks favorable. But what about the long-term development that results from linking a renegade football player with a brand that’s trying to rediscover its outlaw roots?
Pace told the ANA audience, “Conservatively, the value of the exposure they’ve gotten is $200 million. And I’ve seen numbers go up a lot higher than that.”
Another quick Pace observation on sponsorship: For decades, State Farm Insurance – a purveyor of great advertising – has insisted that it never would slap its brand name on the side of a stadium or arena.
But, in the course of a couple of weeks, the Arizona Cardinals’ “University of Phoenix” football homefield became the “State Farm Stadium” in a 19-year sponsorship program. And, for the next 20 years, the NBA’s Atlanta Hawks will play at what will be known as the State Farm Arena.
The MASB president/CEO has two theories: “Both Atlanta and Phoenix are regional headquarters for State Farm. And State Farm is ‘The Good Neighbor’ brand. If you’re going to be a good neighbor, shouldn’t you sponsor things that are very important to that market?”
More controversially, Pace reported, “I’ve heard from some people who are pretty knowledgeable about [the two naming-rights initiatives] that State Farm is worried about the continuing reduction in the size of television audiences.
“It’s harder and harder to get big reach. When you’re involved with venues like [Phoenix and Atlanta] that are going be hosting major sporting contests, your ability to get your name out there and to build off those events is much higher.”