Nike's marketing strikes a chord without hurting business

Nike caused an uproar earlier this month with its ad featuring former NFL quarterback Colin Kaepernick that debuted just as the football season was about to begin. But the shoe maker's stock is up and sales have been steady.

The furor seems to have largely died down and the company reported an earnings beat on Tuesday.

While purpose-driven marketing can be a land mine for some companies, others like Nike have found it a useful way to appeal to their core demographic and differentiate themselves in an increasingly polarized political landscape.

"I don't think it was a big gamble. Historically, Nike has always done this so it was no shock," said Antonio S. Williams, who teaches sports marketing at Indiana University. "They're the king of emotional marketing so everything they do, they do it with emotion."

For the quarter ended Aug. 31, Nike's net income rose 15 percent to $1.09 billion, or 67 cents per share, from $950 million, or 57 cents per share in the prior-year quarter. Analysts expected 63 cents per share. Revenue rose 10 percent to $9.95 billion, edging past analyst expectations of $9.93 billion, according to FactSet.

The results don't have anything to do with the Kaepernick ad, which came out shortly after the quarter ended. Instead, the quarter benefited from the FIFA World Cup of soccer that showcased many players and teams wearing its clothing and shoes, as well as the "athleisure" trend that continues to be strong.

But Nike has long boosted its global brand with edgy visual ads. On Monday, it celebrated another controversial athlete, Tiger Woods, who Nike stuck by during a 2009 sex scandal. Its latest campaign, a two-image Instagram ad celebrating Woods's first PGA Tour win in five years, went viral. The first image shows his back, with the words, "He's done." But a swipe through to the second image shows the front of him giving a fist pump and the words "it again."

The Kaepernick campaign included a print ad that featured a close-up of his face and the words, "Believe in something. Even if it means sacrificing everything," as well as a TV ad that featured many Nike athletes and a voiceover by Kaepernick in celebration of the 30th anniversary of Nike's "Just Do It" tagline. Kaepernick was the first NFL athlete to take a knee during the national anthem to protest police brutality.

People online were divided over the ads. Some burned their Nike socks and threatened boycotts while others saluted the company's message. Overall, revenue hasn't been dampened and the boycotts seem to have fizzled out. This week, in fact, a Rhode Island town council that had approved a nonbinding resolution to boycott Nike products reversed course .

In a call with analysts, Nike CEO Mark Parker said the campaign has inspired "record engagement with the brand," and an uptick in traffic and engagement "socially and commercially," although he did not give specifics.

He said Nike marketing is always about addressing "how do we connect and engage in a way that is relevant and inspiring to the consumers we're here to serve."

Taking a political or social stand is anathema to most brands, who aim to appeal to the broadest amount of people possible in order to get them to part with their dollars. They don't always work out. For example, Etsy, the craft-centric e-commerce company, rose to prominence as a B Corp., a type of for-profit company that has been certified to meet social sustainability and environmental performance standards. But once Etsy went public, its board voted to give up its B Corp. status to maintain its corporate structure.

In another case, an 84 Lumber Super Bowl ad in 2017 that tried to tackle immigration came across as overly complicated and tone deaf. Similarly, a 2017 Airbnb Super Bowl ad that aimed to celebrate diversity ended up inadvertently echoing Airbnb's own problem with combating discrimination by some hosts.

But if it fits with the brand, a social stance can work. Outdoor clothing company Patagonia has had success taking a stand on environmental issues because that resonates with its main customers: buyers of high end outdoor clothing gear. And as opposition swelled against the Trump administration policy to separate migrant families, American Airlines and United Airlines, as well as other carriers, issued statements that said they did not want to use their flights to carry migrant children to temporary shelters.

As for Nike, "they hit it out of the park with the Kaepernick ad," said Bob Phibbs, CEO of New York-based consultancy the Retail Doctor. "This ad is completely in line with who Nike is and what they stand for. That authenticity resonated and will continue to resonate with their customers."