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Another Fallen Nike Star, Another Chance To Reconsider Marketing Strategy

The Oregonian, October 10, 2012

By Allan Brettma

Nike has long prided itself on its stable of high-profile, big-money endorsed athletes. But some of them, as was again made evident by the Lance Armstrong doping scandal that came to a head last week, make all-too-human mistakes. So in a shifting world where some experts are starting to doubt celebrities' power to heavily influence consumer buying anyway, Nike's 2.7 billion marketing dollars a year are being spent like never before on things other than endorsement contracts for famous athletes.

Call it the Tiger/Kobe/Vick/Lance/JoPa Effect.

When Nike got its start in 1964, known then as Blue Ribbon Sports, the company embraced an anti-establishment ethos. Promotional dollars were for athletes, not their governing organizations, a belief Nike's executives had cultivated during their own (at the time, fairly recent) days on the track or playing fields.


Examples abound of Nike spreading marketing dollars farther afield than athlete-endorsement contracts.

Nike forged a partnership with the National Football League to supply uniforms for its 32 teams. It outfits the majority of Division I college football and basketball programs. It's the official soccer ball sponsor for the English Premier League, four other major soccer leagues, 23 soccer federations and hundreds of teams worldwide.

Nike's advertising, produced with Portland's Wieden+Kennedy, has shined a spotlight on non-celebrities. The company's "Find Your Greatness" campaign during the 2012 Summer Olympics, for example, focused on the everyday athlete: the child nervously poised on the diving board, the overweight boy running down the road, the one-armed Little League pitcher making the throw to first base.

Nike, which declined to make an executive available for an interview for this story, has placed its marketing muscle behind other non-celebrity campaigns, such as the "We Run" road race series that linked runners worldwide through the company's websites and other digital platforms. One of the underlying attributes of its digital products, the company likes to say, is a users' ability to compare scores with anybody, including celebrity endorsers.

And nothing says hedging your bets, husbanding resources, socks-with-sandals thinking quite like this news release headline last week: "Nike to Supply Product to International Olympic Committee."

Brands have plenty of reasons to lean toward endorsement deals that don't involve always-fallible humans, said Bob Dorfman, who analyzes athlete endorsements at Baker Street Advertising in San Francisco.

"As athletes have been more and more microscopically watched and the scandals keep happening," Dorfman said, "you see marketing moving into teams, leagues, stadiums – you know, more of the generic categories that are scandal-proof."

Matt Powell, a respected footwear and apparel analyst with SportsOneSource, questions the effectiveness of the celebrity endorsement deals, irrespective of scandals.

"I do not think big money endorsement deals are worth it to brands any longer," Powell says.

Nike has stopped signing major deals since paying what is believed to be $90 million to the Miami Heat's LeBron James in a seven-year deal that was extended in 2010.

"If you look at LeBron's $90 million contract in terms of just shoe sales," Powell said, "Nike lost money on the deal.

"Brands do need athletes to play and excel in their shoes," he said, "but athletes don't move product like they used to."

There will never be another Michael Jordan, the Chicago Bulls Hall of Famer who is credited with reviving Nike's fortunes some 20 years ago and, through the influence of a devoted core of shoe devotees, who spun off his own footwear brand.

Adidas may have similar hopes for current Bulls guard Derrick Rose, who signed a 13-year endorsement deal worth at least $185 million. But, "no way Adidas can make that back on shoe sales," Powell says. And Li-Ning Co. Ltd. may realize a sales bounce in its native China through its endorsement deal with the Miami Heat's Dwyane Wade, but its U.S. shoe sales "won't matter at all," calling the endorsement "a major waste of money."

But brand expert Jim Andrews, senior vice president at IEG, a sponsorship consultant in Chicago, is more supportive of endorsements.

In addition to Nike, several former partners dumped Lance Armstrong last week or did not renew contracts, including Trek, Anheuser-Busch, 24-Hour Fitness, Radio Shack and Gyro.

"Whenever these kind of scandals come up," Andrews said, "There's a conversation around, 'should brands be involved with individuals – they're such a risk.'"

They are indeed a risk, he said, but a calculated risk "that I think is worth taking."

"There's still an interest created around whose shoes the leading basketball players are wearing," Andrews said.

Christopher Svezia, a stock analyst with Susquehanna Financial Group who follows Nike and other sports footwear and apparel brands, said it's possible the athlete endorsement does not resonate with consumers as much as in Jordan's playing days. But they're still valuable, he said.

The bicycle apparel brand Rapha, which has its North American offices in Portland, has built its marketing for years around "everyday" riders who aren't paid much more than what it takes to clothe, feed and transport them to photo shoots.

When the company launched eight years ago, it realized early on that with a limited marketing budget, amateur riders could help tell the brand's story through photos, videos and blogs.

"You don't think of it as modeling," says Portlander Cindy Lewellen, a Rapha model. "Literally, you go out and ride your bike all day and they're taking your photos."

Lewellen, a senior business affairs manager for Wieden+Kennedy, Nike's ad agency for the past 30 years, has ridden for Rapha in Siracus, Italy, and Palm Springs, Calif.

But even Rapha, known for pricey cycling apparel and accessories, may have to rethink its marketing approach.

Slate Olson, a former Nike executive who is general manager of Rapha North America, says the brand will never completely abandon its target for the dedicated, recreational bicycle rider. But it does have aspirations that could be called Nike-esque.

In August, the company announced it would be official clothing supplier for Team Sky.

That means Rapha will be outfitting the world's highest-ranked professional cycling team – a team that includes Bradley Wiggins, winner of the 2012 version of the race that made Lance Armstrong a household name, the Tour de France.