Memo: The Nike Report, Part II

Screen Shot 2020-06-06 at 1.26.55 PM

American economics is, often, the true driver of lasting change. In this context, Nike has served as one of numerous leading indicators at the intersection of sports and social change for nearly 40 years, from Steve Prefontaine’s rebellious nature (pictured), to Compton’s own Serena Williams, to Lebron James’ philanthropy and social activism. In an earlier 2PM report on the apparel and shoe brand, I explained Nike’s deeper intentions for the then-controversial agreement with former NFL quarterback Colin Kaepernick:

You’re going to read numerous reports on the disingenuous nature of Nike’s co-opting of activism. And through the lens of journalism, their assessments are mostly correct. But through the lens of LTV / CAC ratio (lifetime value / customer acquisition cost), there is a different perspective to consider.

Socio-political arguments flooded the news in response to the deal, but few assessed the economic justification for it. That is, until last week. In a recent essay, NYU professor Scott Galloway explains:

Nike embraced Colin Kaepernick and took a calculated risk that paid off. The math? People of color have a higher representation in Nike’s customer base than the population at large. Most of Nike’s consumers are under the age of 35, live outside the US, and are willing to spend $200 on Vapormax Flyknit shoes. This is Latin for progressives. This was a genius, shareholder-driven move. [1]

Galloway’s thoughts of Nike’s intent was short-sighted, in my opinion. At the time, an important segment of Nike’s target demographic was comfortable with the deal. But Nike was betting on something far greater than the consensus that existed when the deal was first announced.

Nike is renown for casting light on the American consumer and how we think. In 1990, twenty-seven year-old Michael Jordan quipped, “Republicans buy sneakers too.” Nike stood by those comments. Objectively speaking, that was probably the smartest take that he could have had at that stage of his career. At 57, the same man pledged $100 million to social justice causes on behalf of same brand.

There is an even bigger story developing. When 2PM published the analysis of Nike’s Colin Kaepernick decision, 2PM lost more subscribers in one day than in the trailing twelve months. In that report, I justifed Nike’s marketing rationale:

Nike wants to own iconography. For a company that wants to own history, they own very little of it today. If you’re a history enthusiast, you can watch clips of Jesse Owens in 1936 Berlin exhibiting heroics in first-generation Adidas track spikes, hand delivered by Adi Dassler. Or you can watch Muhammad Ali swinging at other boxers with Everlast on display. Now, Under Armour owns his rights in a protective attempt to prevent Nike from using their marketing wizardry to build their cache. And in a similar attempt, Adidas owns the rights to Jackie Robinson. [2]

Last week, the NFL’s own social media team subverted the league’s commissioner to release a now-viral video featuring several players including the league’s face, Kansas City’s Patrick Mahomes. In it, they were all but demanding attention for the same issues that contributed to the league’s discontent with some of its most visible players. The athletes on video hinted at the importance of Kaepernick’s potential reinstatement into the league.  It’s been four years since the former Super Bowl quarterback played an NFL game. Within 72 hours, Commissioner Goodell released his own response, one that has been positively received. Just two months ago, this sequence of events would have been unheard of. It was Hemingway who once wrote: It happens “gradually and then suddenly.”

In one way, Galloway was correct. Nike’s math contributed to their decision to bet on a divisive American figure. But even Nike’s math was wrong. No one in Beaverton, Oregon could have predicted 2020, this interesting age. The week of that advertisement’s 2018 release, the U.S. president tweeted his distaste with the decision:

What was Nike thinking?”

Within two years, a marketing decision that garnered criticism from all circles of media has begun to pay off. Nike was thinking less about the consumers who already approved of the Kaepernick endorsement deal. They were thinking about the new consumers, the ones that are just now beginning to understand the messages that contributed to his early retirement. That foresight is how Nike makes its money. Not by being safe and calculated but by being right before anyone else. Nike wanted a re-do of sorts. In Inspirational Brands, I explained the story of Adidas and Jesse Owens.

As a culture, we’ve always relied upon the symbolism of achievements, the words of orators, the photographs of journalists, the penmanship of authors, and the impressions of brands that we trust. Another globally relevant event happened in 1936, the year that Coudert’s colleague wrote the letter with the now-famous quote. A young man from Ohio showed up to race in Berlin. With world record speed and a prototype of a shoe designed by a young German cobbler, he defied myths of supremacy en route to four Olympic gold medals. [3]

I concluded that essay with a prompt: What great symbolism will come of our own interesting age? Michael Jordan, Nike’s most famous athlete, avoided the moments that defined cultural or political history beyond the court. He was opinion-less, he rarely defied convention. With Kaepernick, it is Nike’s effort to own a new genre of iconography. It’s unlikely that an NFL team will sign the quarterback. Regardless, the athlete’s original message is no longer unpopular; social attitudes have shifted. Imagine the story that Nike will share if he does find his way back to the huddle. For Nike, that’s the story that they’re hoping to tell.

By Web Smith |Editor: Hilary Milnes | About 2PM

Part One: The Nike Report (2018)

Member Brief: The Great Equalizer

XUNWuhgg

Seated in terminal four at Los Angeles International Airport in early June 2020, it became clear. Retail has bifurcated, and the American consumer is polarizing with it.

यह सदस्य संक्षिप्त विवरण विशेष रूप से के लिए डिज़ाइन किया गया है कार्यकारी सदस्यसदस्यता को आसान बनाने के लिए, आप नीचे क्लिक कर सकते हैं और सैकड़ों रिपोर्टों, हमारी डीटीसी पावर सूची और अन्य उपकरणों तक पहुंच प्राप्त कर सकते हैं जो आपको उच्च स्तरीय निर्णय लेने में मदद करेंगे।

यहाँ शामिल होएं

Memo: On Inspirational Brands

aHWqJdLM

Frederic R. Coudert at 1939’s Proceedings of the Academy of Political Science told a short story that spawned one of the 20th century’s most repeated quotes. As he narrated the story of his correspondence with a colleague, he relayed the following from a letter addressed to him:

May you live in an interesting age. […] No age has been more fraught with insecurity than our own present time.

To say “may you live in an interesting age” would not be a cheerful adieu. In fact, some would say it is a curse. 1936, the year that Coudert’s colleague wrote the letter, was one of tremendous global turmoil. America’s Great Depression lingered and unemployment hovered at 16.9%. Germany was vying for global, military dominance. And they were succeeding. Their breaking the Treaty of Versailles defied the world’s wishes. A Victorian masterpiece, the Crystal Palace was destroyed in a tragic fire. Mussolini and Japan formed an alliance that defined a coming war. And King Edward abdicated, shocking the nation that he helped govern. For the world, 1936 was an “interesting age.”

The most interesting times inspire the greatest creativity. World War I and the Spanish Flu pandemic inspired creators like Ernest Hemingway to publish their first works. Hemingway followed with The Sun Also Rises, a pioneering, modernist novel shortly after. The Civil Rights movement inspired some of the greatest musical acts of the past century. Sam Cooke, Nina Simone, Bob Dylan, and Gil Scott-Heron’s music filled the radio waves. Each were inspired by their interesting times. And the Great Recession of 2008 inspired creators of another kind. Companies like Venmo, Uber, Pinterest, and Instagram navigated the interesting times of a formative decade.

The same year that inspired some of this era’s top entrepreneurs, I was finishing college. Our bills were going unpaid, no matter how hard we worked. Medical debt haunted us. Our infant, born six weeks premature and just 4.7 pounds, was still ill. Working a 40 hour “part-time” job and managing 23 semester credits was a back-breaking proposition. The duress was unenviable. Like many other Americans at the time, what was left of my mental health was faltering. And none of this was helped by a global recession that ensured that most college graduates would be jobless. This was the spring of 2008.

One night – during a tireless job hunt – an advertisement took over the 20-inch television across the living room of our one bedroom apartment. I remember walking over from a caffeine-laced session of hail mary attempts at finding a place to work. It was the second advertisement of Jordan Brand’s Be Legendary campaign. As I walked to the LCD screen, Michael Jordan’s voice concluded with a quote that I wouldn’t forget:

Look me in the eyes. I have something more important than courage, I have patience. I will become what I know I am.

On the screen, Be Legendary flashed across and the fabled Jordan logo faded soon after. In that moment, I had three converging thoughts, two of which I will share. They were the first glimmers of optimism that I’d had in weeks: (1) we were in for a painful few years of very little pay and many sleepless nights (2) it will all work out. It provided perspective that I was unlikely to find elsewhere, at least in that moment.

There is marketing that moves people through a funnel and there is marketing that simply moves people. This Jordan brand advertisement didn’t feature a single image of the shoe that Nike was marketing. That wasn’t the advertisement’s purpose. The ad was more than the clever copywriting by a team of Nike marketers; it was something more than aspirational marketing. In that moment, Nike executives understood what many in brand marketing do not. In periods of great duress, brands can play a role in elevating discourse, building consensus, or simply uplifting the people  The imagery, the words, and the score of the ad provided a tether that, 12 years later, can be recalled with clarity. I cannot watch the advertisement without being taken back to the one-bedroom apartment that we could barely afford.

This is merely an anecdote, a story of many. Some may relate and some may not. But history suggests that we do.

Why Brands Matter

In Imagined Communities, I explored the role of brands, community, sociology, and influence.

In a recent report by The Atlantic‘s Derek Thompson on [religion], he lays out several of the catalysts responsible for the shift away from religion in America. Ironically, he cites politics, an evolving culture, and a sequence of current events as culprits. But in it, he seems to have omitted a factor. Thompson left out modern consumerism. […] America has not become non-religious. Rather, America spent the last several decades forging new communities. These types of communities don’t show up in Thompson’s polls. America believes in brands. [1]

If and when there is no unifying voice in American leadership, we’ve always looked to other American institutions to fill that void. Sports, the arts, politics, and celebrity have rotated in and out of the responsibility. And so have the brands that have functioned as pillars to many of our communities.

Over the last few months, America has endured an intensifying political divide, a pandemic that crippled our economy, and an awakening on matters of social equity and justice. I’d argue that the marketers that pursue aspirational branding will give way to a new crop of those who use the platforms to inspire, to build consensus, or to provide normalcy. And many of the attempts will fall flat. They will be perceived as disingenuous or opportunistic. For the brands who possess the authenticity and moral high ground, I suspect that their messages will be more relevant than in years past. We are living in another interesting age and history suggests that great creativity will come of it.

As a culture, we’ve always relied upon the symbolism of achievements, the words of orators, the photographs of journalists, the penmanship of authors, and the impressions of brands that we trust. Another globally relevant event happened in 1936, the year that Coudert’s colleague wrote the letter with the now-famous quote. A young man from Ohio showed up to race in Berlin. With world record speed and a prototype of a shoe designed by a young German cobbler, he defied myths of supremacy en route to four Olympic gold medals.

That young man was named Jesse Owens and the cobbler’s shoes became a brand called Adidas. So, 1936 was an interesting age. Of the numerous tragedies and the countless moments of global turmoil, there was the symbolism of an American sharecropper’s son silencing a murderous tyrant. There were statues built of that son, buildings named after him. Our children know his name. They also wear that cobbler’s shoes. What great symbolism will come of our own interesting age?

By Web Smith | Edited by Hilary Milnes |  About 2PM