Retail

The Kaepernick Controversy And Nike’s High-Risk Strategy

With 12 words, one photo and a tweet, Nike has managed to capture the news cycle this week – and much of the market’s interest.

“Believe in something, even if it costs you everything … Just Do It,” were the dozen words, and the picture was of former San Francisco 49ers quarterback Colin Kaepernick. He was also the owner of the Twitter account that released a tweet announcing that he, along with athletes Lebron James and Serena Williams, would be the spokespeople for Nike’s 30-year anniversary “Just Do It” campaign.

Kaepernick’s relationship with Nike is not new, as he has been a client since 2011. But this week, his new multi-year contract gives him a coveted spot as a headliner on one of Nike’s “Just Do It” ad campaigns, as well as a branded line of Kaepernick shoes and apparel.

It was an announcement that clearly took the world by surprise, since Kaepernick is in some sense an unlikely choice.

Kaepernick has not thrown a single pass in the NFL in two seasons and is currently involved in an active lawsuit with the NFL, as he alleges that he was blacklisted as a free agent for his choice to kneel during the national anthem. His choice to do so was in protest of police violence during the 2016 season.

That protest, the subsequent lawsuit and the wave of kneeling protests that since emerged has made Colin Kaepernick a very controversial and public figure over the last two years.

And so the reaction across the web to the surprising announcement is perhaps very unsurprising. The internet more or less exploded when Kaepernick’s tweet hit the wires. The timing was designed to make it so: less than a week before the regular football season was set to begin – a season that Kaepernick would, again, observe and not play.

Some people cheered loudly and lauded Nike for embracing Kaepernick, the controversy surrounding the former NFL quarterback and the social position he represents. Others jeered loudly and complained, wondering why a storied brand of athletic shoes would insert itself into such a polarized debate, dragging football along for the ride.

Some said little about the ad campaign, but burned their shoes in protest. Some said little about the ad campaign, but said a whole lot about the kinds of people who burn products they already paid for as a form of protest.

But whether one came to praise or bury the decision, Nike undeniably owned the news cycle for 24 hours.

And it was not an inherently easy news cycle to win, considering that a controversial Supreme Court Justice was being confirmed on Capitol Hill at the same time. Judging by the balance of social media posts and media coverage, it seems safe to assume that on Tuesday, the world was a bit more interested in Colin Kaepernick and Nike than in Brett Kavanaugh and the Supreme Court.

So was leaning into the controversy the way to go for Nike? Even in the era of instant feedback on the internet, it is probably a little early to say – and in this case, there are many ways to assess success or failure. Nike’s stock fell 4 percent on the news, but it enjoyed hundreds of millions in free media coverage.

And embracing a controversial ad campaign is something of a mixed bag for brands that try it. Sometimes it’s a big win, while other times it’s a big miss.

But Nike has made a big – and rather public – bet on what it knew would be a controversial pick. By some accounts, the short-term consequences look a bit stiff, but experts are starting to converge around the idea that Nike is doing more than launching an advertising campaign – it’s investing in its next generation of customers and in remaining relevant.

The Tricky Business of Controversy 

Using advertising to stir controversy or comment on social issues can be a mixed bag for brands. When it hits, it can be a very powerful tool. But the odds of missing are high – and the costs of missing can be great.

The RED campaign to fight AIDS in Africa in 2006 is an excellent case in point. Launched by rock star and activist Bono and announced in Davos at the World Economic forum, the plan was to give brands an opportunity to offer products under a brand called “Red,” the proceeds from which would be funneled toward fighting HIV/AIDS in Africa.

It was a noble cause that enlisted some very high-profile brand support: Apple, American Express, Armani, Gap and Motorola (a big name in mobile phones two years before the launch of the iPhone) were all participants under the RED brand label.

RED was everywhere, and brands spent a fortune making it visible. Gap alone is estimated to have spent $7.8 million of its $58 million 2017 advertising budget on promoting RED. Across all brands, estimates put the total amount spent on the RED campaign at around $100 million.

But a year later, it surfaced that all of that advertising spend had netted about $18 million dollars for fighting HIV/AIDS in Africa. In fairness, $18 million is not a small sum of money, and was probably used to buy a lot of AIDS medication for those in need. However, it is also fair to observe that the $100 million spent on marketing the program would have likely bought a lot more AIDS medication for those in need, and it perhaps would have been more efficient to spend less money on marketing and more on distributing medication.

It was an observation made often.

And the RED brand had another problem: It just didn’t sell that many products. Some consumers bought the red T-shirts and mobile phones, but on the whole, the concept didn’t set consumers on fire. They weren’t offended, of course – they just weren’t that interested. Or perhaps it was just a timing quirk: As the economy began to really unwind in the backend of the year, consumers got a lot less interested in shopping in general. Whatever the cause, by the end of 2007, the much buzzed-about RED campaign had faded from public sight.

And while RED’s media flogging was tough at the time, it wasn’t in the glare of an always-on news cycle. In 2007, the iPhone was a newborn baby, Twitter was in its infancy, Facebook was five years from an IPO and Snapchat’s CEO and founder was still in high school. It was a slower news cycle, and one where it was possible for a brand to launch a buzzy marketing campaign and then have to wait a year to see how well or how poorly the market had accepted it. And it also meant that a public miss was less public, simply because the stage was a lot smaller.

For an example of a miss in the age of social media, there is Nationwide’s infamous Super Bowl commercial of 2015.

What is officially titled the “boy commercial” became nearly universally known as the “dead kid commercial.” The ad features a young man talking about all the things he’ll never get to do, like get cooties from a girl or sail around the world with his dog. It looks like it might be a particularly wholesome detergent ad, when it takes a hard left turn to reveal the reason the boy will never get the chance to do these things is because he died in an accident.

It sounds dark because it is – you can watch the ad in full above – but the point was to convey that Nationwide, the company that made the ad, was committed to the most important thing: protecting consumers’ kids.

That was not quite the point the nation took from the ad. Outrage immediately broke out on social media:

“Nationwide: Think of us as the Dead Kid Company”

 “Hope you guys are having a great day. Did you know your kid is probably gonna die soon? Enjoy your nachos & funeral planning!” – Nationwide”

  “…Most horrible Super Bowl ad ever”

The  universal consensus among all of media was not much kinder, as the spot was mostly reviewed as “the absolute nadir of all Super Bowl advertising.”

Nationwide knew the ad would be controversial and start a conversation – they released a statement hours after the ad aired that said as much. It did not seem, however, that the company anticipated that the conversation would be a mostly uninterrupted stream of hostile criticism. Within months of the backlash beginning, the firm’s chief marketing officer who oversaw production of the Super Bowl ad had resigned his post. The company’s stock price took a bit of a hit, though mostly leveled out within a month of the ad airing.

But it seems Nationwide decided it wanted to be out of the business of creating a national conversation, quickly learning that introducing a touchy subject in the wrong way didn’t so much make customers talk to them as scream at them.

In fact, Nationwide stayed away from Super Bowl commercials for a year after the 2015 debacle – despite the fact that they were one of the NFL’s main sponsors in 2016 and that Peyton Manning, their brand spokesman, was a starting quarterback in that year’s game.

But starting a conversation can also be a lucrative play, as the team at Dove can attest.

Almost 15 years ago, Dove launched their conversation-starting campaign for its Real Beauty line of advertising.

That line has turned out to be a long one. First launched in the year 2004 with a slate of “real”-looking models to advertise Dove products to real women everywhere, the ad campaign has remained an ongoing message and discussion for the last 14 years.

And in that time, the campaign has continually raised the level of its game, expanding from billboards to television ads to online videos. The 2006 video “Evolution” went viral before the term “going viral” meant much of anything to anyone. The 2013 spot “Real Beauty Sketches,” which shows women describing their appearances to a forensic sketch artist, became the most-watched video ad of all time for a while.

But more than the media it put out, Dove also invested in its cause. When the campaign launched a decade-and-a-half ago, the marketing team worried that their campaign would be criticized as a shallow marketing ploy, and so the team behind the Dove Campaign for Real Beauty concluded that simply talking about these issues wasn’t enough.

“[We were thinking], we have to walk the talk,” Sharon MacLeod, vice president of Unilever North America Personal Care, told HuffPost. “We can’t just be getting people stirred up; awareness and conversation isn’t enough. We actually have to do something to change what’s happening.”

And so Dove created a fund in 2004 to partner with organizations like the Girl Scouts, Boys & Girls Clubs of America and Girls Inc. to organize activities including discussions about online bullying and the concept of beauty itself.

“A product-based affair was never going to [affect change],” noted Janet Kestin, former creative director of Ogilvy & Mather Toronto who worked on the “Evolution” video. “The goal is to alleviate pressure on the next generation.”

Alleviate pressure on a generation … and sell products, which the campaign has done. Dove saw its sales jump from $2.5 billion to $4 billion after the 2004 launch of its Real Beauty campaign, and its numbers have been climbing ever since.  Their public campaign to end airbrushing in their ads bounced sales another 12 percent year on year in 2016.

Dove started a conversation with its ad – but more importantly, it also became a trusted authority for its customers on beauty, and beauty products. That has translated into a conversation that has lasted over a decade, and a fanbase that is continuing to both grow and spend.

Will it do the same for Nike?

What’s Next 

Buzz-generating ads come in a wide variety of flavors. Dos Equis introduced us all to the most interesting man in the world, Lincoln took us all on a strange journey through the mind of Matthew McConaughey and Progressive Insurance introduced us to the world of Jimmy and Flo. These ads get people talking, hopefully laughing and actively meme-ing. “Stay thirsty” is practically daring the internet to come up with something funnier.

Those types of buzz, however, are safer insofar as if they miss, the audience might not think they are funny or might fail to engage with them, but they probably won’t be offended or feel their values are being questioned.

Starting a conversation around a potentially polarizing figure like Kaepernick raises the stakes, because it runs the risk of alienating fans of the brand, with no promise of recruiting new ones to take their place. As that stock drop demonstrated, investors are clearly worried that a move this bold will alienate more than it brings in.

But for the time being, it seems Nike is not looking to dial back on the controversy surrounding its new ad so much as they are interested in doubling down on it. Yesterday, the brand released their first new Just Do It ad, narrated by (and featuring) Colin Kaepernick and centered on the concept of following one’s dreams even if others think they are crazy.

That video made the rounds online in the back half of the week – and made its first TV network appearance during the NFL regular season opener.

Just Do It, indeed.

But as Thomas Ordahl, chief strategy officer at brand consulting firm Landor, noted, a little shot of controversy and conversation might just be the medicine Nike needs, as it has struggled in recent years to generate excitement around new products. Sales have been sliding in three out of the past four quarters – and though sales were up 4 percent during the most recent quarter, Nike’s rebound is still tenuous enough that the firm is looking to build momentum.

“The opposite of love isn’t hate. It’s indifference,” said Ordahl. “That’s kind of where they are. They’ve had cultural relevance, but that’s their biggest risk — not being relevant, fading into obscurity by being neutrally palatable.”

Brands that sit on the sidelines too much run the risk of simply fading out of the market, and a legacy brand like Nike wants to stay at the forefront. It’s a calculated risk: If the move totally misses, the news cycle is a fast-moving place, and they can let the ad and the concept behind it fade into obscurity. If it hits, it seems they are betting that the ensuing new business will not just be from those who buy Nikes, but those who ideologically associate themselves with their shoes. It’s an interesting approach to loyalty and branding, though perhaps one that is appropriate in the age of Instagram.

But ultimately, at this point, it is still too early to make any kind of call, because the key piece of missing information is sales. If Kaepernick gear moves – or if Nike successfully rides this wave of renewed attention to sell more gear in general and claim more market share – then whatever one thinks about the politics, the strategy was sound.

If not?

Might be time to have another conversation at Nike, about what they’ll do to win back their fan base.

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