EDITOR’S NOTE: This article focuses on the analytical aspects of business-decision making, it does not focus on political or policy matters.
Former National Football League (NFL) quarterback Colin Kaepernick is easily one of the most talked about figures in all of sports. When apparel company Nike decided to sponsor Kaepernick through its most recent “Just Do It” marketing campaign, it likely had in mind two things when producing and releasing the advertisement; (1) social impact and (2) sales impact. However, those two impacts are not mutually exclusive.
Nike is a company that thrives, like any popularly-traded company, on its marketing efforts, brand connection and history. Nike is also no stranger to social impact. Nike has used storytelling to sell athletic shoes, sports apparel and influence since the 1970s. Think about Nike products and you immediately recall an athlete’s story to accompany the Nike brand. Michael Jordan. Tiger Woods. Serena Williams. Roger Federer. Andre Agassi. Pete Sampras. And even actor Mel Gibson in the movie “What Women Want.” “No games. Just sports.”
The more impact Nike makes, the more shoes it sells. Simple as that. The proof is in the pudding, as the saying goes. Nike’s online sales jumped 31% a mere three days after the release of the Nike-Kaepernick advertisement. As Oscar Wilde once said, “All publicity is good if it is intelligent.” To date, Nike’s stock is up and Nike has been given $163 million in media exposure. To determine Nike’s profits, consider the dollar cost to have Kaepernick as a spokesman/endorser and secondly, the loss of customers. The result is most certainly a Nike revenue-producing endeavor.
Relatedly, the problem with boycotts and strong brands that deliver consumer-trusted products is they very rarely work and may not have a significant effect on Nike’s bottom-line at all. Ask In-N-Out Burger if the recent call for a boycott of their burgers and fries had them scared. Unlikely.
Moreover, 53% of Nike’s sales come from overseas, markets that have less connection and passion to the Kaepernick story and controversy. As far as competitors go, Under Armour has a much stronger domestic market at 85% of their sales occurring stateside. The argument could be made that a less internationally-diverse company in terms of sales would have taken on more risk in releasing an advertisement that it knew would be welcomed by some, and rejected by others.
For Nike, it was a controversial-business decision worth making if it believes and can show that its buyers are younger, Democrat or left-leaning politically. This is because a recent poll shows that the aforementioned demographic of the American population would likely support the Nike-Kaepernick advertisement.
On the other hand, did Nike alienate an entire group of people by producing and running the Kaepernick advertisement? Nike’s advertisement with Colin Kaepernick is likely to alienate 20-50% of the American population, specifically those who are Republican or right-leaning politically, who buy sports apparel. The most successful brands are those that appeal to the masses, but maybe what gave Nike confidence was the NFL’s promise and eventual support of the advertisement. Although, the NFL has been losing viewers for several years.
In the end, by releasing a controversial advertisement, Nike added to its bottom-line, but may have entered the brand and apparel business into a new era of consumer purchasing. Namely, consumer purchasing driven by political leanings. Whether or not this was a good decision long-term, time will tell.