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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.
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 $3.58bn in the year to May 2018. In the US, Kantar (in Advertising Age) reported measured expenditure of $80m for 2016, out of an estimated total of $1.5bn.
Nike's main competitors are Adidas (also owner of Reebok) and Puma. Other include VF Corp, Under Armour, Li Ning, Asics, Fila, K-Swiss and New Balance. See Clothing & Fashion Accessories Sector index for other companies and brands.
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Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 16th Aug 2018: Ads of the Week "Awaken the Phantom". Wieden & Kennedy Amsterdam is throwing literally everything *including* the kitchen sink at the screen for this extraordinary new campaign for Nike Football. Not just a big name movie director (Matthew Vaughn); not just all of its hottest endorsement partners (Neymar, Coutinho, Mal Pugh, De Bruyne etc etc); but also a hundred different scene set-ups and more special digital effects than your average Marvel movie. (Or at least that's what it feels like). And all for what is, after all, just a new football boot. Adidas may have more street cred in football (arguably), but Nike, this ad sets out to remind us, is still the guvnor when it comes to spectacle. You can't help but be impressed.
Adbrands Weekly Update 19th Jul 2018: Ads of the Week "Believe As One". Dry your tears, England. In this new campaign for Nike, Wieden & Kennedy London reminds us that the semi-final in Russia in 2018 was not the end but a new beginning. Ironically, it comes as Nike themselves scored every type of victory over arch-rival Adidas. France and Croatia both went onto the pitch in Nike apparel, as did England, with only Belgium among the final four sporting the Adidas logo.
Adbrands Weekly Update 5th July 2018: Tennis supremo Roger Federer has ended his 20-year partnership with Nike to sign a mammoth new contract with Japanese fashion label Uniqlo. The deal is worth $30m per year for at least a decade. As an added bonus, Uniqlo will allow Federer the unprecedented option of accepting secondary branding from other sponsors on his shirt. Since Uniqlo doesn't make tennis shoes, Federer is also sticking with Nike footwear, for the time being at least.
Adbrands Weekly Update 5th July 2018: Nike reported another year of record sales, with revenues up 6% to a new high of $36.4bn. However that growth was less than the group had been aiming for. In 2015 it set itself a topline target of $50bn by fiscal 2020, a target that now looks impossible. The Nike brand alone accounted for $34.5bn last year, up 5%, but that growth was offset by an 8% slump by Converse (or 11% ex currencies) to $1.89bn. The new tax regime took a big one-off bite out of bottom line, which plunged by 54% to $1.93bn. However even before tax, earnings slipped back by 11% year on year as costs and expresses rose at a higher rate than revenues. Even so, investors remain bullish on the company, pushing up shares to an all-time high at the start of the week.
Adbrands Weekly Update 24th Jun 2018: Cannes Lions 2018: And so Cannes Lions 2018 draws to a close. Another popular winner - widely predicted in advance of the festival, and also a past Ad of the Week here - was Wieden & Kennedy London's 'Nothing Beats A Londoner' film for Nike, which collected the Grand Prix in the new Social & Influencer category.
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 $34.5bn in the year to May 2018, up 5%.
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 $30.3bn, running accounted for 17%, training for 10%, the Jordan brand for 9%, football (soccer) for 7%, and Nike basketball for almost 5%. General sportswear is still the brand's biggest category, at 33% of wholesale sales. Men's footwear and apparel accounted for 56% 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). Individual players include England striker Wayne Rooney and Brazil's Ronaldinho. French soccer star Thierry Henry (now retired) controversially quit Nike in 2006 to sign with rival Reebok. 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 2017 totalled $1.3bn for 2018 alone, and total future commitments of $9.85bn.
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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