Con­tro­versy a vic­tory for Nike’s ad­men

Will the com­pany’s de­ci­sion to strike an overtly po­lit­i­cal stance pay off in the long term, asks David Mill­ward

The Sunday Telegraph - Money & Business - - Business -

If there is no such thing as bad pub­lic­ity, then the mar­ket­ing team at Nike will be hop­ing for a gen­er­ous bonus for its ef­forts over the past few months. With al­most im­pec­ca­ble tim­ing, the com­pany man­aged to se­lect two of the most con­tro­ver­sial fig­ures in Amer­i­can sport – Colin Kaeper­nick and Ser­ena Wil­liams – to spear­head its lat­est ad­ver­tis­ing cam­paign.

At a stroke, Nike has re­stored its rep­u­ta­tion as a cool brand. As its goods flew off the shelves, the com­pany shifted the agenda away from the rather more awk­ward is­sue of its treat­ment of women that hit the head­lines ear­lier this year.

Ms Wil­liams’s melt­down at the US Open has kept Nike’s dis­tinc­tive swoosh in the pub­lic eye, along with the furore sur­round­ing its de­ci­sion to make Kaeper­nick its poster boy at the start of the new NFL sea­son.

Kaeper­nick was the orig­i­na­tor of the protest that saw some of the NFL’S lead­ing play­ers kneel dur­ing the na­tional an­them be­fore games in an at­tempt to draw at­ten­tion to the treat­ment of black Amer­i­cans in the US by some po­lice forces. It was a ges­ture that en­raged Don­ald Trump, who has re­peat­edly voiced his fury on Twit­ter, call­ing for the protest­ing play­ers to be sus­pended with­out pay. At one point, he even sug­gested that they should not be in the coun­try.

The pres­i­dent’s sup­port­ers demon­strated their dis­taste at the “un­pa­tri­otic” mil­lion­aires by burn­ing their Nike train­ers or cut­ting up their socks. The com­pany’s call cen­tre was in­un­dated with an­gry phone calls.

In Louisiana, Ken­ner mayor Ben Zahn pro­posed ban­ning the city’s sport­ing clubs from buy­ing Nike. In Mis­souri, The Col­lege of the Ozarks, a pri­vate Chris­tian col­lege, said its teams would no longer wear the com­pany’s kit.

But while the Trump base wants no part of Nike, other Amer­i­cans ap­pear to have voted with their wal­lets with sales surg­ing by 31pc over the La­bor Day week­end, ac­cord­ing to mar­ket an­a­lyst firm Edi­son Trends.

Not sur­pris­ingly its shares bounced back, re­gain­ing the $3.3bn (£2.5bn) lost in the wake of the airing of the ad. One Twit­ter user prob­a­bly hit the nail on the head, tweet­ing: “Nike was think­ing: ‘More peo­ple loathe Don­ald J Trump than Kap.’ And they’ve made the cor­rect choice.”

The Nike cam­paign oozed street cred. Kaeper­nick was hailed as “one of the most in­spi­ra­tional ath­letes of this gen­er­a­tion”.

It was a pitch that res­onated with younger con­sumers and es­pe­cially those in Amer­ica’s cities. Colin Kaeper­nick is the lat­est black sport­ing celebrity to front a Nike cam­paign, fol­low­ing in the foot­steps of Michael Jordan and Tiger Woods. “There is a rep­u­ta­tional risk,” says Stephen Greyser, pro­fes­sor of mar­ket­ing and com­mu­ni­ca­tions at Har­vard Busi­ness School.

“Many peo­ple see Kaeper­nick as a neg­a­tive fac­tor. Peo­ple who en­joy the NFL are go­ing to ask why Nike is do­ing this. The idea that they should stand by Kaeper­nick is not so bizarre; they have a rep­u­ta­tion for stand­ing by their en­dorsees such as Tiger Woods. Show­ing that they stand up for what they be­lieve in will be seen as a state­ment from Nike, rather than Kaeper­nick.”

John Quelch, dean of the Mi­ami Busi­ness School, sees the deal as a shrewd piece of mar­ket­ing.

“Mar­ket-share lead­ers al­ways run the risk of grad­u­ally be­com­ing all things to all peo­ple. When this hap­pens, the fun, the edgi­ness drains out of the brand,” he says. “View the Kaeper­nick ads as a shot of brand adrenalin that’s reaf­firm­ing Nike’s sup­port for un­der­dogs and de­liv­er­ing tremen­dous free pub­lic­ity just as kids are buy­ing back-to-school sneak­ers.

“You may sup­port or re­ject Kaeper­nick’s peace­ful protest, but there are plenty of good busi­ness rea­sons for Nike to fea­ture him in its ad­ver­tis­ing.”

Quelch’s view is widely shared by mar­ket­ing ex­perts.

Pa­trick Rishe, di­rec­tor of the sports busi­ness pro­gramme at Wash­ing­ton Uni­ver­sity in St Louis, be­lieves it was shrewd mar­ket­ing by the Ore­gonbased com­pany.

“I am very much on the side of those who think that the re­ward out­weighs the risk,” he says. “I don’t think they are wor­ried about los­ing a few cus­tomers.

“Nike knows its de­mo­graphic. If its de­mo­graphic was over 50 and con­ser­va­tive, it would never have got into a re­la­tion­ship with Kaeper­nick.

“Its de­mo­graphic is mid­dle-in­come or high­er­in­come and col­legee­d­u­cated.

“These peo­ple who be­long to this group lean to­wards the side of supporting the prin­ci­ples of free­dom of ex­pres­sion.”

Mike Gal­li­nari, a re­search an­a­lyst at Min­tel, was not sur­prised by Nike choos­ing Kaeper­nick as its pub­lic face.

“Our re­search shows that more peo­ple are will­ing to sup­port a brand pro­mot­ing a stance they agree with than boy­cott a com­pany that doesn’t align with their be­liefs. This trend is am­pli­fied by peo­ple 35 and un­der. Nike is very into re­search an­a­lyt­ics. I don’t think this is some­thing they would have rushed into, given the po­ten­tial flash­point of en­dors­ing Kaeper­nick.”

But the hip pub­lic­ity cam­paign comes af­ter an awk­ward pe­riod for Nike dur­ing which com­plaints of a ma­cho work­place cul­ture put the com­pany at odds with the #Metoo move­ment.

Cyn­ics might sug­gest that the brouhaha over Kaeper­nick has helped Nike di­vert at­ten­tion away from some em­bar­rass­ing prob­lems with claims that a “frat-boy” cul­ture was rife and that women were un­der­paid.

In March, Mark Parker, the com­pany’s chief ex­ec­u­tive, is­sued a memo to the com­pany’s staff. He dis­closed that se­nior man­age­ment had be­come aware “of be­hav­iour oc­cur­ring within our or­gan­i­sa­tion that does not re­flect our core values of in­clu­siv­ity, re­spect, and em­pow­er­ment”.

An­nounc­ing a re­view of the com­pany’s HR prac­tices, he added: “We will in­crease and in­vest more heav­ily in our di­ver­sity and in­clu­sion teams and net­works, and ad­di­tion­ally will im­me­di­ately put in place an en­hanced process to en­cour­age our em­ploy­ees to speak up and make their voices heard.”

At the same time, he an­nounced that Trevor Ed­wards, the brand pres­i­dent and the man tipped as Parker’s “heir ap­par­ent”, would be re­tir­ing later in the year.

There were no di­rect com­plaints about Ed­wards, but he was the first of a num­ber of se­nior fig­ures to leave over the sum­mer as the com­pany launched a sweep­ing re­view. By May the num­ber of top ex­ec­u­tives to quit had reached 11.

To add to Nike’s prob­lems, four women who used to work for the com­pany have gone to court al­leg­ing that Nike broke state and fed­eral equal-pay laws and presided over an en­vi­ron­ment that al­lowed sex­ual ha­rass­ment. The women are not seek­ing a pay­out, just a court or­der com­pelling Nike to pay staff fairly and tackle the gen­der pay gap.

“The numbers don’t lie. On a global scale, cur­rently 77pc of Nike’s lead­er­ship team are men; 71pc of its vice-pres­i­dents are men, and 62pc of its di­rec­tors and se­nior di­rec­tors are men,” says Laura Salerno Owens, who is act­ing for the women who have brought the ac­tion.

“I’ve rep­re­sented more than

50 Nike em­ploy­ees and their ex­pe­ri­ences have been con­sis­tent with the plain­tiffs’. The more se­nior the job ti­tle, the smaller the per­cent­age of women.”

Nike’s re­sponse has been to de­fend its be­lief in di­ver­sity and in­clu­sion. “We are com­mit­ted to com­pet­i­tive pay and ben­e­fits for our em­ploy­ees. The vast ma­jor­ity of Nike em­ploy­ees live by our values of dig­nity and re­spect for oth­ers,” the com­pany says.

But clearly the risk of rep­u­ta­tional dam­age re­mains. “The big­gest is­sue for any com­pany in these cir­cum­stances is tak­ing ac­tion,” says Mon­ti­eth Illing­worth, chief ex­ec­u­tive of a strate­gic and cri­sis com­mu­ni­ca­tions com­pany in New York and Lon­don. “In many cases, com­pa­nies move at a glacial pace, which is the re­spon­si­bil­ity of the board of di­rec­tors and they are out of sync with what is be­com­ing a tidal wave of pub­lic aware­ness.

“Nike has been ad­ver­tis­ing for decades and they have al­ways tried to be edgy and hip, and you have to ap­plaud them for us­ing Kaeper­nick. He doesn’t have many friends out there in cor­po­rate Amer­ica.

“It makes them seem as if they are more aware of so­cial con­scious­ness than they re­ally are. But have they moved fast enough in chang­ing the ‘frat-boy’ cul­ture? If they haven’t, the com­pany loses cred­i­bil­ity.

“The brand has to be aligned with cor­po­rate cul­ture. If it isn’t, the cam­paign is vir­tu­ally mean­ing­less.”

‘Mar­ket­share lead­ers al­ways run the risk of grad­u­ally be­com­ing all things to all peo­ple’

‘The numbers don’t lie. On a global scale, 77pc of Nike’s lead­er­ship team are men’

Nike en­dorsee Ser­ena Wil­liams shouts at chair um­pire Car­los Ramos in the women’s fi­nal against Naomi Osaka at the US Open, trig­ger­ing a sex­ism de­bate in ten­nis over the treat­ment of fe­male play­ers

The sports­wear brand has re­stored its ‘cool’ rep­u­ta­tion among its key de­mo­graphic by run­ning an ad cam­paign with con­tro­ver­sial Amer­i­can foot­ball star Colin Kaeper­nick, right, who started the kneel­ing protest dur­ing the na­tional an­them be­fore NFL games

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