Nike

Nike advertising & marketing profile

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Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. Almost out of the blue, the company established itself during the 1980s and 1990s as one of the world's most familiar brands; as ubiquitous as a Coke bottle or Big Mac. The Nike "swoosh" logo came to symbolize not just sports culture, but street culture, as the appeal of the star players who endorsed the brand was carried onto city streets. The approach of the new century set Nike new problems. Trainers went (briefly) out of fashion, economic slowdown and labour problems hit Asian performance. But the group has bounced back strongly, retaining its iron grip on the global sporting footwear sector and on US sports-related apparel in particular. Sports culture remains an intrinsic part of modern daily life, and Nike has strengthened its hold on the market as a whole through endorsement partnerships with many of the world's most prominent sports men and women as well as a string of memorable and effective marketing campaigns. A key development has been its erosion of arch-rival Adidas's grip on the global soccer market.

Selected Nike advertising

Advertising

Nike's main agency is Wieden & Kennedy, which works for the company in most global markets. Media is handled mostly by Mindshare. Click here for agency account assignments for Nike from Adbrands.net. Nike declared what it calls "demand creation expense", comprising advertising, promotion and endorsement payments, of $3.75bn in the year to May 2019. In the US, Kantar (in advertising Age) reported measured expenditure of $80m for 2016, out of an estimated total of $1.5bn.

Competitors

Nike's main competitors are Adidas (also owner of Reebok) and Puma. Others include Under Armour, Li Ning, Asics, Fila, K-Swiss and New Balance. See Clothing & Fashion Accessories Sector index for other companies and brands.

Contact

Nike Inc
One Bowerman Drive
Beaverton, OR 97005-6453
United States
Tel: 1 503 671 6453

Recent stories from Adbrands Update:

Adbrands Daily Update 23rd Oct 2019: Nike's CEO Mark Parker announced plans to relinquish that role at the end of the year. He will move to executive chairman, and be succeeded as CEO by John Donahoe, the former CEO of eBay and current chairman of Paypal, who is already a board director at Nike. His appointment suggests an even more aggressive push by Nike into direct-to-consumer retail. A 40-year veteran of Nike, who joined the company straight out of college, Parker has overseen a dramatic expansion of the business since he took on the top job in 2006. Sales have more than doubled, and Nike's share price is currently trading around record levels.

Adbrands Daily Update 28th Jun 2019: Nike posted strong performance for its 4Q and the full year to May, underpinned by solid growth in both the USA and China. There was no impact so far, said the company, from the trade war between those two countries. Another key contributor was direct to consumer sales via the Nike website and app, which rose 35% year-on-year. Full year topline rose 7% to a new high of $39.1bn, including $37.2bn from the Nike brand. Converse was flat at $1.9bn. Sales from China jumped 21% to $6.2bn, but North America remains the company's bedrock, up 7% to $15.9bn. Footwear accounts for around a third of Nike brand revenues, and apparel for most of the rest. Almost all the brand's sport segments reported growth, with soccer the notable exception, down 6% organic. Group net income more than doubled year-on-year, after last year's one-off tax hit, topping $4.0bn.

Adbrands Daily Update 20th Jun 2019: Only three days in, and Nike collected its fourth grand Prix of the 2019 Cannes Lions with a clever Media campaign in Brazil, coordinated by AKQA and Wieden & Kennedy. AKQA got local graffiti artists to spraypaint an exclusive custom-designed pair of Nike Air Max trainers onto their work in different areas of Sao Paulo. Nike then told customers they could order the limited edition shoes via their app, but only from the location of the graffiti. A GPS signal from their smartphones confirmed their positions and opened a special ordering page in the app.

Adbrands Daily Update 19th Jun 2019: Another day, another Grand Prix for W&K and Nike's "Dream Crazy", this time in the first ever Entertainment for Sport category. This time the prize was awarded to the full TV ad, narrated by Colin Kaepernick and featuring a host of other maverick sports men and women. Nike also collected a third Grand Prix in Industry Craft for "Just Do It HQ at the Church", a campaign from McCann's Momentum network which transformed an old church in Chicago into a sports and cultural centre for kids.

Adbrands Daily Update 18th Jun 2019: Wieden & Kennedy's "Dream Crazy" campaign for Nike received the first of what will doubtless be several big awards at the Cannes Lions festival, taking home the Grand Prix in the Outdoor category. That's despite the fact that the main thrust of the campaign began on Twitter and was then amplified by a TV and viral commercial. Yet the core image of Colin Kaepernick, the NFL player shunned by the League after he initiated the practice of not standing for the national anthem to protest against police brutality, was featured on billboards in the US. The Cannes judges were lavish in their praise for the campaign. The poster was a "thunderclap", said one. "It made a statement to the world," said VMLY&R ANZ CCO Paul Nagy. "That one image, they'll be teaching ten years from now, not just in marketing books, but in history books. "In my opinion, it's the greatest Nike ad of all time."

More about Nike from Adbrands Weekly Update

Brands & Activities

Nike remains the clear leader in the global sportswear market, and has if anything strengthened its position in recent years, especially in the global football (soccer) market, where it had traditionally lagged behind rival Adidas. With general approval of the sportswear market in general and Nike in particular at an all-time high there seems little evidence of any likely future downgrade in performance. The only significant clouds on the horizon could be rising costs of manufacturing or raw materials, and any extraordinary surge in performance by merging competitors.

Nike is the world's #1 manufacturer and marketer of athletic footwear and apparel. The group operates a broad collection of separate divisions, and produces footwear and sportswear for just about every conceivable sport within its main range. Combined sales for the Nike brand were $37.2bn in the year to May 2019, up 7%.

The business is now structured as now key segments of running, Nike basketball, Jordan (including basketball), football (soccer), men's training (including American football and baseball), women's training, action sports, general sportswear and golf. It is the clear market leader in running, training and basketball (the latter mostly under the Jordan brand), all of which reflect its powerbase in the US, where it now has around 60% share of the branded athletic footwear market, up from just 36% in 2005. The group reports an annual breakdown by category of wholesale sales (not including its own sales direct to consumer). Out of total wholesale sales for the Nike brand of almost $32.6bn, running accounted for 14%, training and the Jordan brand for 10% apiece, football (soccer) for 6%, and Nike basketball for 5%. General sportswear is still the brand's biggest category, at 38% of wholesale sales. Men's footwear and apparel accounted for 54% of sales, women's for 23%; most of the rest is categorised as "young athletes".

Traditionally Nike was less all-conquering in less American-focused sports, but has caught up very quickly indeed with its traditional European rival. In soccer, for example, Nike had traditionally held 2nd place to Adidas, but the Air Zoom Total 90 soccer boot launched in 2003 was extremely successful in Europe's main football markets, giving Nike the edge over its rival in soccer footwear for the first time. It continues to hold onto the leading position in football footwear in Europe, although Adidas has the edge in overall apparel and equipment. Soccer alone contributed revenues of around $1.7bn to Nike in fiscal 2010, compared to just $40m in 1994. In 2008, Nike agreed a stunning deal to replace Adidas as official sponsor of the French national team from 2011 to 2018, offering a total fee of around €320m. (The shine came off that deal somewhat because of France's disastrous performance in the 2010 World Cup).

In 2007, Nike attempted unsuccessfully to wrest the contract to sponsor the kit for German national football team from Adidas (it will try again in 2017), and subsequently announced a $291m takeover of UK-based sportswear manufacturer Umbro, best known as the official manufacturer of the England football team's kit. Umbro retained standalone status within the group as an affiliate brand, generating sales of $262m in 2012. However the group put that business up for sale during the year, and a deal was eventually agreed with Iconix Brand Group, who acquired the business for $225m. Nike retains the England football team contract (now until 2030). Football remains one of the brand's key segments, although it was also the only one to record a decline at constant exchange rates between 2014 and 2015, falling by 2% from highs encouraged by the build-up to the 2014 World Cup.

German firm PR Marketing estimated that Nike had an overall 36% share of the total football market in 2012, just behind Adidas at 38%. Globally Nike has around 33% share of the athletic footwear market. In the US it is more like 48%.

In running and training, Nike has strengthened its position with a range of innovative add-ons, most notably, Nike+, a partnership with Apple to integrate its iPod technology with footwear and apparel. As a result, Nike+ running shoes are able to transmit performance data wirelessly to the Nano, including distance run, pace and calories burned. The accompanying apparel has a special pocket to house the iPod. Along similar lines, the group introduced the Nike+ Fuelband in 2012, a digital bracelet that tracks daily activity and calories burned.

Key to the marketing of its main brand is the group's huge portfolio of endorsement agreements with leading sportsmen and women. Combined payments are well in excess of $1bn per year. The most celebrated such arrangements have been the original precedent-setting deal with Michael Jordan in 1985 (then worth a little more than $4m), and a later gamble on golfer Tiger Woods which turned into an ongoing $105m endorsement contract, currently still the reigning record for a solo sportsman. In 2005, Nike dipped deep into its wallet again to sign up teenage golfing phenomenon Michelle Wie to a contract estimated to be worth at least $5m a year. In the US, Nike was able in 2010 to poach the prestigious contract to become official uniform supplier to the NFL from Reebok from 2012.

In soccer, the group has a deal with the Brazilian national football squad worth $695m over 10 years to 2018. It also supplies the French, US and Chinese teams. Other football endorsements in Europe include kit sponsorship deals with Barcelona, Paris St Germain, Internazionale and 24 other top European clubs, though it lost Manchester United to Adidas in 2015, and Juventus from 2016. Tottenham Hotspur joined the portfolio in 2017 (from Under Armour). It lost Manchester City in 2019 to Puma. At the beginning of 2013, the group signed what was then thought to be its richest deal to-date, securing a 10-year partnership with golfer Rory McIlroy for a rumoured $250m. That deal proved something of a disappointment as McIlroy's performance slumped dramatically during the course of the first year, though it has since improved significantly. The group now pays out at least $1bn a year to its various endorsement partners, and even without new deals or renewals, Nike's outstanding financial commitments under existing endorsement contracts at the end of May 2019 totalled $1.4bn for 2020 alone, and total future commitments of $10.2bn.

Nike's vast range of clothing and footwear is manufactured by independent suppliers in more than 450 factories around the world (mostly in Asia), and sold in nearly 160 countries. Most Nike-branded merchandise is designed and developed by Nike, but several lines including swimwear, sports bras and maternity exercise clothing, children's clothing and timepieces are licensed to other manufacturers. There are also several specialist lines including the Jordan Jumpman 23 sportswear brand; Nike All Conditions Gear (ACG), producing footwear and apparel "infused with the flavor and attitude of the outdoor athlete"; and Nike Team Sports, which manufactures custom-designed uniforms for amateur and college sports teams. Nike NSW is a newer line of premium sportswear introduced in 2010.

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See also:

Adidas

Puma

Reebok

Under Armour

New Balance