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 $3.34bn in the year to May 2017. 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. 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.

Contact

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

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 10th May 2018: Nike's internal investigation into allegations of harassment and discrimination led to the removal of five further managers this week, bringing the total number of departures to 11. The latest resignations include several leading marketers, including the head of marketing for performance apparel; a director of sports marketing and a senior creative director. The shake-up began in March after a small group of female employees started an informal survey of their colleagues on the issues of sexual harassment and discrimination, resulting in multiple allegations of inappropriate behaviour, the marginalisation of female staff and a pervasive "boys' club" mentality presided over by brand president Trevor Edwards, then the company's #2 manager.

Adbrands Weekly Update 29th Mar 2018: Nike shrugged off any further fallout from the abrupt departure last week of two senior executives in connection with inappropriate workplace behaviour. Many observers credited the company for grasping the nettle so firmly, exposing its own missteps publicly before it could become the subject of a whistleblower-led media assault. The departures immediately preceded publication of 3Q results to Feb, that were, on an underlying basis, quite strong. Trump's new tax laws contributed to a $921m net loss for the period. However adjusted earnings excluding tax were well above analysts' expectations, while revenues rose 7%, also better than expected. North American performance was still weak, but CEO Mark Parker highlighted a clear turnaround towards the end of the quarter, while sales in other global regions were up strongly, achieving double-digit percentage growth. The group also ramped up its so-called Consumer Direct Offense strategy - focused on building direct connections with its customers - with the acquisition of leading US data analytics company Zodiac.

Adbrands Weekly Update 22nd Mar 2018: Nike's brand president Trevor Edwards resigned abruptly from his position, although he will be retained as an advisor to group CEO Mark Parker until August. That announcement came in the same week - indeed in the same email - that Parker told staff that "we've become aware of reports of behaviour occurring within our organization that do not reflect our core values of inclusivity, respect, and empowerment". He said the company would overhaul its leadership team and its workplace culture and would conduct a full review of existing HR resources, including the introduction of a new whistleblower procedure. A day later, the dismissal of VP & GM global categories Jayme Martin, a Nike staffer for more than 20 years, was also reported. According to the Wall Street Journal there were complaints against Martin but no direct allegations towards Edwards. However, a source within Nike told the WSJ, "Messrs Martin and Edwards protected male subordinates who engaged in behaviour that was demeaning to female colleagues. Their lieutenants bullied people who weren't in their group, this person said, such as women and individuals from foreign countries." Parker told staff that he is himself committed to remain as chairman, president & CEO of Nike until "beyond 2020", longer than had been expected. Elliot Hill was promoted to take over some of Edwards' duties as president of consumer & marketplace.

Adbrands Weekly Update 15th Feb 2018: Ads of the Week: "Nothing Beats A Londoner". Maybe it's because we're a Londoner, but we love Wieden & Kennedy London's epic and hyper-localised extended spot celebrating Nike's partnership with a certain capital city. It has a looseness and a raggedly playful style that has long been missing from most of Nike's highly polished mainstream marketing, which is mostly produced out of W+K in Portland or Amsterdam. (See the handsome but very restrained new spot "Air", also out this week, and so very different in style. It's over on our Facebook page). And it does a fine job of encapsulating the spirit of the city, with witty cameos from a variety of celebrities big and small, from God-like England manager Gareth Southgate and marvellous Mo to club stars like Skepta, Giggs and J Hus. Inevitably, there has been a backlash from other cities. Forget "What's wrong with Peckham?"; more like "How About Manchester?". Time for Adidas to return the ball. 

Adbrands Weekly Update 25th Jan 2018: Nike named Dirk-Jan "DJ" van Hameran as global chief marketing officer. He takes over from Greg Hoffman, who shifts sideways to a new role as VP, global brand creative & marketing innovation.

More 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 $32.2bn in the year to May 2017, up 6%.

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 $28.7bn, running accounted for 18%, the Jordan brand for 11%, men's training for 9%, football (soccer) for 7%, Nike basketball for almost 5% and women's training for 4%. General sportswear is still the brand's biggest category, at 30% of wholesale sales. Men's footwear and apparel accounted for 56% of sales, women's for 23%. Some categories are doing significantly better with others, with the best growth, even at currency-neutral rates, coming from US-centric lines like running and Jordan. Sales of soccer, action sports and golf have fallen sharply since 2015.

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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See also:

Adidas

Puma

Reebok

Under Armour

New Balance