Marketer A-List Nike is Ad Age's Marketer of the Year for 2018

By Adrianne Pasquarelli and E.J. Schultz.

Colin Kaepernick ad is textbook example of how a marketer can change a conversation

"Believe in something, even if it means sacrificing everything." With that nine-word tweet, sent on a quiet Sunday afternoon in September, Nike and Colin Kaepernick kicked off a campaign that would go on to win fans, create enemies and refuel a conversation about the role brands should—or should not—play in tackling societal issues.

Depending on who you asked, Nike was either a crusader for social justice or an unpatriotic agitator making a hero out of the man who started the movement of NFL players kneeling during the national anthem as a means to bring attention to racial inequities. Kaepernick was not the only athlete in the campaign celebrating the 30th anniversary of the "Just Do It" slogan, but he narrated one spot, which quickly became a lightening rod. Spike Lee praised Nike for being "on the right side of history." Republican Sen. Ted Cruz bashed the brand for being "on the wrong side of the American people."

Either way, Nike ended up right where it needs to be: in the middle of a debate that drew attention, admiration and—most importantly—sales from the urban millennials it needs to keep the swoosh strong. Along the way, the company proved it pays to take a stand, and it put to shame mealy-mouthed brands that claim to plug into culture but fall short with marketing that fails to portray a point of view on anything at all.

Nike's Kaepernick ad stands as a textbook example of how a marketer can change the conversation, a strategy that industry experts say will be emulated by many brands in 2019. "Virtually every CMO is going to look at [the campaign and say] 'How can we capture that magic?'" says Keith Johnson, VP and research director for the CMO research practice at Forrester.

For these reasons, Nike—which also made revenue leaps this year by bolstering its direct-to-consumer sales pipeline—is Ad Age's 2018 Marketer of the Year.

"Nike has regained its footing and is solidly marching back to top form," wrote Camilo Lyon, a retail analyst at Canaccord Genuity, in a recent research report. Nike had been losing steam to Under Armour, Adidas and some startups, but Lyon predicted that forthcoming product innovations will spark "the next multi-year run for Nike."

The company is already sprinting. Revenue soared to $9.9 billion in the quarter ending Aug. 31, up 10 percent from the same period a year earlier. Net income in the quarter jumped 15 percent over last year to $1.1 billion. Much of the gains are from Nike's online division; in the quarter, digital sales jumped 36 percent year-over-year.

Wooing millennials

The ad featuring Kaepernick, called "Dream Crazy," was unveiled on TV Sept. 5 during the NFL's season opener. The spot by Wieden & Kennedy also included other sports stars like LeBron James and Serena Williams, as well as lesser-known athletes like 10-year-old Isaiah Bird, a wrestler who was born without legs.

"We have a long history of supporting those whose voices are not always heard. For the 30th
anniversary for 'Just Do It', we wanted to energize its meaning and introduce 'Just Do It' to a new generation of athletes," said KeJuan Wilkins, Nike's VP of North America communications, in a statement to Ad Age.

The attention could not have come at a better time for Nike. For months, the 54-year-old brand had been plagued by inner turmoil after reports surfaced in the spring of a toxic workplace culture where many female employees alleged sex discrimination, including unequal pay and harassment. Nike parted ways with more than a dozen executives following the reports.

No marketing campaign can make that right, but the Kaepernick campaign, says Forrester's Johnson, "turned away attention from their own internal challenges." It also helped restore luster to a brand that built its reputation in part by standing by its star stable of athletes, in good times and bad.

"We look to iconic brands to remain relevant by capturing the cultural moment and taking a stand. Nike did it brilliantly," says Carol Phillips, president of Brand Amplitude, a brand strategy firm. "It demonstrated support for its athletes as people, not just performers, on and off the field of play."

Kaepernick, formerly a quarterback with the San Francisco 49ers, has been on Nike's endorsement roster since 2011 but has not played football since 2016, the year he started kneeling during the anthem. By deploying him in an ad, Nike risked angering the NFL, which has been trying to delicately navigate the kneeling issue that has split its fan base. Nike is an NFL sponsor, supplying on-field apparel.

Yet the campaign helped Nike gain a stronger foothold with millennial shoppers, a group that had been slipping away in recent years due to increased competition from the likes of Adidas, Under Armour and even startups like Allbirds (see p. 29).

Younger age groups embraced the Kaepernick push, unlike their older relatives. Analysis from Morning Consult showed baby boomers and Gen Xers losing interest in Kaepernick's two-minute-long spot the second he appeared on screen, while the ad kept the attention of millennials and Gen Zers.

The ad's divisiveness is a strength, according to Gary Getto, president at ABX, which tracks the effectiveness of marketing. ABX found that a 60-second version of the Kaepernick ad scored only an 88 with a general audience, significantly below the average score of 100. However, the bulk of the drop was from older consumers, while millennials and African-American and Hispanic men scored the ad much higher than the industry average, according to ABX.

Says Getto: "I give Nike the highest marks. They knew what they were doing and knew that that ad was going to appeal to their primary customer base."

Soaring stock price

Nike's internal problems have not vanished. It still faces a federal lawsuit filed in August by former employees alleging gender and pay discrimination. More recently, a former Nike footwear developer filed a complaint with Oregon's Bureau of Labor and Industries alleging a hostile work environment, according to a report in Footwear News. Nike told the publication that it is "committed to creating a culture of empowerment and respect where everyone can succeed and contribute to our success."

But when measured by its stock price, Nike is healthy. Its share price hit a 52-week high near $86 less than two weeks after viewers first saw Kaepernick in the ad. Shares of Nike have grown 18 percent year-to-date and currently trade near $75. In the three-day period after Kaepernick first tweeted his involvement with Nike's "Just Do It" push, online sales of Nike jumped 31 percent, compared with a 17 percent increase over the year-earlier period, according to Edison Trends.

"We've seen record engagement with the brand as part of the campaign," said Nike CEO Mark Parker on a Sept. 25 earnings call.

Bridging digital and brick and mortar

Nike's 2018 retail gains include improving its brick-and-mortar offerings in an effort to be more of a direct supplier to customers. That makes the company less reliant on middlemen such as struggling department stores. These efforts are also helping the brand collect more data about consumers and adjust marketing accordingly. Last month in Manhattan, Nike unveiled a new futuristic store on Fifth Avenue, the "House of Innovation 000," which boasts 68,000 square feet over six levels. The store replaces a Niketown flagship a few blocks away.

The new location has something for everyone: Busy shoppers can use a self-checkout option without ever having to interact with employees, while shoppers eager for in-depth sportswear analysis can schedule a fitting and consultation in the Nike expert studio. A similar concept store in Los Angeles has a conversion rate of turning in-store shoppers into digital NikePlus members that is six times higher than the rest of the brand's fleet, Parker has said.

But for Nike, 2018 will likely always be remembered as the year of Kaepernick, which got the broader marketing industry talking. Chief marketing officers not affiliated with Nike heaped praise on the ad. That includes Kristin Lemkau, of JPMorgan Chase, who simply tweeted "Respect to Nike."