Saturday, September 8, 2018
I’ve been absolutely riveted by Nike’s decision to make Colin Kaepernick the face of its new ad campaign. (I assume most readers are aware of the basics but here’s an article to catch you up if you need it.) It’s a daring move, not just because of the controversy over Kaepernick himself, but also because of Nike’s relationship with the NFL: Nike is the official supplier of uniforms and sideline gear (a deal that was just extended through 2028), and presumably, in that capacity, Nike wants to keep the NFL popular and football fans happy.
So, there’s so much to chew over here.
We start with the ongoing tension between the fact that it is good marketing for companies to look like they care about various social causes – whatever those causes may be – and their fiduciary duty not to actually care about those things. (Assuming you buy into a shareholder primacy model, etc etc).
My favorite example for my students is, well, this FT Alphaville blog post in reaction to Jamie Dimon’s ostentatious announcement that he was giving his employees a raise. And then there’s Tax Exempt Lobbying, a new paper by Marianne Bertrand, Matilde Bombardini, Raymond J. Fisman, and Francesco Trebbi, finding that companies strategically direct charitable giving so as to please politicians that have control over their fates.
So on the one hand, it may be good business to promote Kaepernick, but Nike has to absolutely pretend that’s not really its motivation.
(More under the jump)
How successful has Nike been? I’ve got some links:
[M]y sneakers, ultimately, cannot be woke. They’re just fabric.
They’re fabric, moreover, that was stitched together by a subcontracted laborer in the developing world who probably was paid as little as humanely possible and whose income represents but a small fraction of what Nike will charge for each pair — or what endorsees such as Kaepernick will reap for touting them. Corporations have little interest in foregrounding her plight (and it’s usually a “her”), but that’s what circa-“No Logo” “woke branding” used to mean: thinking about the marginalized who make our stuff rather than the posturing it affords those privileged enough to own it.
It’s significant that an institution as powerful as Nike has thrown its weight behind Kaepernick and his crusade against racial injustice, which began when he started kneeling during the national anthem—a move that has put him at odds with the NFL, and which has almost certainly kept football teams from employing him. But Nike has often been on the wrong side of social-justice movements, and in the past used its considerable power and influence to crush any protest movement that undermined the company’s bottom line.
Throughout the 1980s and ’90s, underage workers toiled in Indonesian factories producing Nike shoes; at factories in China, workers claimed they were coerced into putting in excessive overtime in order to meet Nike’s demanding production schedule; and in Vietnamese factories, workers faced dangerous conditions later documented by independent auditors from Ernst & Young. In the summer of 1997, when Nguyen Thi Thu Phuong died while making a pair of Nike shoes at a factory in Vietnam, the company’s response was to boldly claim: “We don’t make shoes.”
...I learned that during the spring of 2000, Knight sought to crush a growing campus-protest movement against sweatshop labor by quashing lucrative equipment and apparel deals with the University of Oregon and the University of Michigan. Behind closed doors, the billionaire resorted to more personal means of retribution, including withholding donations from a nonprofit organization run by the University of Oregon president, Dave Frohnmayer. When Nike did at last make concessions to labor unions at some of the factories making its shoes, it was only because of sustained efforts from labor and human-rights organizations, such as the Worker Rights Consortium.
Which brings us to the next question, namely, are Nike’s motives pure, which is to say, in business parlance, appropriately impure? There’s always the worry that corporate CEOs will mistake what’s good for themselves for what’s good for the firm – which is one of the reasons why corporate political spending is such a hot-button topic.
Stephen Bainbridge harbors some concern in that regard:
[B]oth left- and right-wing populists historically have viewed corporate directors and managers as elites opposed to the best interests of the people. Today, however, right of center populists find themselves increasingly at odds with an emergent class of social justice warrior CEOs, whose views on a variety of critical issues are increasingly closer to those of blue state elites than those of red state populists.
To be sure, … brands like Nike have profit maximizing reasons for aligning themselves with woke coastal millennials, who are at the core of the supposedly most desirable marketing demographic. But there is also something else going on here, which I explore at length in my article:
“The values of the elites (the Oligarchs and Clerisy, as Kotkin calls them), on the one hand, and those of non-elites, on the other, have been diverging for several decades…. The disdain in which elites now hold non-elites was another critical emergent trend Lasch identified. As Christopher Lasch explained, 'the new elites, the professional classes in particular, regard the masses with mingled scorn and apprehension.' Many of Lasch’s new elites dismissed the masses’ values as “mindless patriotism, religious fundamentalism, racism, homophobia, and retrograde views of women.”
The bottom line is that the values, beliefs, and tastes of social justice warrior CEOs like Phil Knight have radically diverged from those of red state populists. In many cases, it simply would not occur to SJWs like Knight that there are folks who would take offense from the Kaepernick ad. And, if it did, Knight and his ilk simply won't care.
I actually find it difficult to believe that Knight was unaware this is a controversial move; it seems designed to be controversial. And however one defines social justice warrior, it seems an ... ill-fitting ... label for Phil Knight. Yet is there reason to think this is a poorly considered move from a business perspective?
Nike partnered with Kaepernick knowing both parties would have to weather backlash. Anti-Kaepernick sports fans called for a Nike boycott, and some even posted social media videos of themselves destroying Nike gear with scissors and flames. And as those posts accumulated views Nike’s stock price fell nearly three percent per share, lending credence to the idea that crossing socially conservative sports fans hurts business.
Except that Nike’s biggest rival, Adidas, saw its share price dip 2.4 percent Tuesday, while Puma lost nearly two percent. Neither of those companies signed a stridently pro-Black brand ambassador over the weekend, a clue something besides Kaepernick’s politics drove those share price declines.
That U.S. president Donald Trump tempered his public criticism of the deal highlights the business conflicts at play. Last year Trump called NFL players who, like Kaepernick, demonstrate during the pre-game anthem “sons of bitches,” and Tuesday said Nike signing Kaepernick sends “a terrible message.”
But Trump also said Nike rents retail space in a building he owns, and made a rare concession that opinions besides his own matter.
The company also stood by boxer Manny Pacquiao after repeated homophobic comments, and dumped him only in 2016, after their original contract lapsed, his marketability had cratered, and he spouted one last anti-gay rant.
And last summer Nike CEO Phil Knight made his largest political donation ever — $500,000 to boost Republican Knute Buehler’s run for Oregon governor.
So to speculate that all of Nike is all-in on Kaepernick’s pro-Black platform oversimplifies the issue, and ignores the limits of corporate support for grassroots social movements.
If the campaign is important, it’s not as an act of corporate conscience, but rather as a reflection of coming American demographics, which Nike is always so good at identifying and signifying.
What Nike always has been best at is staying ahead, and the risk of employing Kaepernick in a campaign is nothing compared with what it risks by falling behind. Here’s why:
Millennials, those Americans between the ages of 22 and 37, are projected to surpass baby boomers as the nation’s largest living adult generation in 2019, and fully 44 percent of them are of some race other than white. For post-millennials, that number rises to 48 percent, and for post-post-millennials (American children under age 10), it grows to more than 50 percent.
These Americans are “very different than earlier generations” in a variety of ways, according to demographer William Frey, author of “Diversity Explosion: How New Racial Demographics Are Remaking America.” They are more prone to interracial marrying, friendlier to immigration and often want their consumption to have a social component. If Nike is willing to offend its graying buyers in order to court these multiple generations with a racial justice campaign, “it’s a good bet that a lot of younger people will be attracted and go along with that,” Frey said.
Andrew McCaskill, senior vice president of global communications at Nielsen, puts these demographics in stark business terms. “If you don’t have a multicultural strategy, you don’t have a growth strategy,” he says.
And Kaepernick is just one small piece of what is apparently a much larger millennials strategy: Last year, CEO Mark Parker announced a new 12-city drive, as the company tries to become once again an entity that “obsesses the needs of the evolving consumer.” Among the target cities are Mexico City, Shanghai, Beijing, Seoul and Milan, and the company projects 80 percent of its projected growth will come from metropolitan areas. Why? Because that’s where diverse, high-earning, younger people live.
According to Nielsen’s McCaskill, significant percentages of millennials and post-millennials say they expect the brands they buy to support social causes. Fifty-seven percent of Hispanics agree they are more likely to buy brands that support something they care about. The old assumption and traditional wisdom that companies must avoid activist stances is over.
This isn't "woke capital." Companies are maximizing profits as they always did, but they're responding to incentives that have shifted to encourage political participation by brands.
After the Delta-NRA flap, I wrote this:
"Socially liberal segments of the public punch above their weight as potential customers (and, in some cases, as potential employees) for these companies. Think about who companies most want to advertise to: people who have a lot of disposable income and aren't too old. This advertiser preference is why television ratings are reported in terms of adults 25 to 54 (or sometimes even 18 to 49) and it's why networks like Bravo tout their unusually upscale viewer base to prospective advertisers. Appealing to senior citizens is a good way to win an election, but it's not a good way to sell most consumer products and services."
Unfortunately for conservatives, markets for consumer products are not democracies. As American politics gets more polarized by age and less polarized by income, most brands' target customer will tend to move left relative to the country's political median,
Younger Americans are also more ethnically diverse than older Americans, so a company trying to sell to young people is naturally selling into a much more diverse "electorate" than a political party running a national election in which the average congressional district is significantly whiter than the country as a whole.
So, think about the demographic of who's most upset about Kaepernick's protest movement, and then think about how much an athletic-apparel company needs to concern itself with the opinions of senior citizens, and then think about why Nike thinks this ad campaign will improve its sales.
The decision will undoubtedly have ramifications for the N.F.L., which is caught in the middle of the debate — the league is a major partner of Nike’s but is also being sued by Mr. Kaepernick, who has accused the league’s 32 teams of colluding not to give him a contract because of his on-field demonstrations.
However, it could pay off among Nike’s base of young customers and fans, according to analysts, and signals that political stances could be seen as winning issues by some brands. Nearly two-thirds of individuals who wear Nike in the United States are under 35 years old, and are much more racially diverse than the baby boomer population, said Matt Powell, a sports industry analyst at the NPD Group….
In the end, there might be two simple explanations for Nike’s move: money and attention. Mr. Kaepernick’s jersey was among top 50 in sales during the second quarter of 2017, even though he was not on an N.F.L. roster.
If you ever wondered what it would take to get the woke Social Justice Warrior crowd to loudly support a multinational corporation with nearly $35 billion in revenue in 2017; that pays its assembly line workers about 2.5 percent of production costs; that faces accusations that its factories bar independent inspections of working conditions; whose workers frequently faint from heat and exhaustion, and suffer wage theft, forced overtime, restrictions on their use of toilets, exposure to toxic solvents, and padlocked exit doors . . . well, apparently Colin Kaepernick is all that it takes….
You almost have to admire the audacity of Nike; for decades they’ve cemented their position as The Man by marketing an image of fighting The Man.
They are the kind of big, powerful corporation with a long history of documented exploitation of overseas labor that is usually the villain in leftist narratives. Staunch progressives who proudly wear the Nike swoosh are like impassioned environmentalists wearing Exxon Valdez t-shirts.
And now, for the cost of a few million — remember Nike had nearly $10 billion in revenue last quarter — the company bought the loyalty of the woke Social Justice Warrior crowd.
In a divided world, Nike has learned, in a way the NFL just can’t figure out, that staying out of politics isn’t a way to keep your business humming: It’s how you lose.
In this environment, Nike’s move is so simple it’s sort of embarrassing no one else came up with it first. You can argue that unless the country officially slides entirely into fascism — which is always possible! — there is basically no downside. Look at how they’ve covered their bases. They are such a fundamental part of professional and amateur sports that most organizations and customers couldn’t live without them if they wanted to.
And perhaps most vitally, they’re betting on the future rather than the past. While it’s possible that in 40 years our 20-something grandchildren will be out there vilifying Colin Kaepernick as a traitor to America and putting up statues of Senator Jack Posobiec, it sure doesn’t seem likely.
Put it this way: When you look at the people in charge of the NFL — a gaggle of old rich white men who, Mark Leibovich convincingly argues in his terrific new book Big Game, have a senators-right-before-the-fall-of-Rome vibe to them — why in the world would they be the people you would bet on?... But as far as Nike is concerned, the NFL is just another client … and one with about a third the size of Nike.
That size gives them enormous power in any fight. The reason the NFL has wobbled in the face of Trump’s constant Kaepernick tweets is because they, like (supposedly) Jordan before them, have tried to close their eyes, plug their ears, and keep yelling “Protect the Shield! Football can be all things to all people!” until the noise goes away. Nike knows better.
Certainly, there’s a sense these days that in a polarized era, companies need to be polarized to stay relevant:
A year and a half into the Trump presidency, entertainment companies are grappling with a fan base that is splintering into political factions as never before. Whether in regard to explicitly political entertainment or the rapidly multiplying number of entertainers who talk about politics, Americans appear to be increasingly figuring ideology into their Hollywood choices….
“Part of the issue now is that the bigger the base, the more you have to worry about offending it,” said a television marketing expert, who spoke on the condition of anonymity because of the sensitivity of the subject. “The climate actually puts the fragmented in a better position to make political statements.”
For his part, Fallon has tried to adjust. In June, he sought to walk back a 2016 Trump appearance that critics said normalized the then-candidate. It went over poorly — liberals didn’t buy it, and the president tweeted that the late-night host was “whimpering.”
But that’s speculation. What do we have so far in terms of data?
Nike just lost about $3.75 billion in market cap after announcing free agent NFL quarterback Colin Kaepernick as the new face of its “Just Do It” ad campaign. It’s the 30th anniversary of the iconic TV and print spots.
On Wednesday, Mr. Trump said on Twitter, “Just like the NFL, whose ratings have gone WAY DOWN, Nike is getting absolutely killed with anger and boycotts. I wonder if they had any idea that it would be this way?”
Since Monday, people have taken to social media to say they were going to shun Nike, while others have pledged to buy the company’s products. Nike’s stock dropped 3.16 percent on Tuesday, its fourth-largest daily decline this year. It has risen since and is up 28 percent in 2018.
After an initial dip immediately after the news broke, Nike’s online sales actually grew 31% from the Sunday of Labor Day weekend through Tuesday, as compared with a 17% gain recorded for the same period of 2017, according to San Francisco–based Edison Trends….
Nike’s stock has also held up after its initial slump….
Nike’s most engaged audience persona is “Made it and Know it,” said 4C Chief Marketing Officer Aaron Goldman, one of 70 categories of consumers that 4C has identified by analyzing social-media engagement on a range of platforms. People in that bracket are generally successful in their careers and personal lives, are typically single with robust social lives, and like to spend money on entertainment and travel, as well as online streaming services.
“Racial equality is a top concern for this audience, along with causes like clean-water access and gun control,” Goldman said.
[W]hile many investors were shedding the stock, traders on Robinhood were doing the exact opposite, the no-fee brokerage told Business Insider.
"Investors on Robinhood are buying Nike stock 300% more than they are selling, compared to 12% last week," Sahill Poddar, the app's data scientist, said Tuesday. "Investors in Oregon, where Nike is headquartered, are buying the stock 850% more than they are selling."
Robinhood users tend to skew much younger than traditional brokerages…
- Nike’s Favorability Drops by Double Digits: Before the announcement, Nike had a net +69 favorable impression among consumers, it has now declined 34 points to +35 favorable.
- No Boost Among Key Demos: Among younger generations, Nike users, African Americans, and other key demographics, Nike’s favorability declined rather than improved.
- Purchasing Consideration Also Down: Before the announcement, 49 percent of Americans said they were absolutely certain or very likely to buy Nike products. That figure is down to 39 percent now.
Nike’s Reputation Takes A Hit Overall and Across Key Demographics
Before Kaepernick was revealed as the face of Nike’s campaign, only two percent of Americans reported hearing something negative about Nike. After the launch, that jumped to 33 percent. As the negative buzz set in, consumer sentiment followed, with favorability and purchasing consideration dropping.
Americans are split on how appropriate the ad campaign is, as 39 percent of consumers said it was appropriate to make him the face of their campaign, while 38 percent said inappropriate. Fifty percent of those who said they wear Nike at least once a month support the decision, compared with 30 percent who do not.
College of the Ozarks announced that it is choosing "country over company" and is dropping Nike over the sportswear company's use of the former NFL player to promote the 30th anniversary of its "Just Do It" ad campaign.
[A]ccording to a leading advertisement consulting service, Kaepernick’s first commercial registered as a big hit with consumers. The “Dream Crazy” ad scored high marks with a broad base of the consumer population, according to Ace Metrix, a company that provides real-time impact and analysis data surrounding major advertisements.
According to data released by Ace:
” ‘Dream Crazy’ saw strong resonance among [Generation] Z and Millennial audiences [on average, Ace Scores were 33% above norm],” the company said in a statement Thursday. “Older viewers, those among [Generation] X, positively regarded the ad as well, but to a lesser degree than those younger than them.”
Ace Metrix polled consumers on how Kaepernick’s signing would impact their plans to spend money with Nike. Thirteen percent of those surveyed said they were less likely to purchase from Nike after viewing Kaepernick’s first ad. That percentage was down to 10 percent among millennials and 6 amongst Generation Z. Conversely, a staggering 56 percent of those surveyed said they were more likely to purchase from Nike after seeing the commercial.
One of the most fascinating aspects of the whole thing, for me, is its live-by-the-sword-die-by-the-sword quality.
“It’s the position they’ve put themselves in,” said Oregon State professor Michael Oriard, a former NFL lineman and author of several books on the league’s place in society. “They’re not content to be entertainment — Disney/Pixar doesn’t profess to be saving the world. Even with ‘Coco,’ they’re going to play up the multicultural sensitivities, but they implicitly acknowledge they’re in business to make money. The NFL claims to be in the business to be a beacon of Americanness or something. They brought that on themselves. It backfires on them.”
In 2015, an oversight report by Sens. Jeff Flake and John McCain of Arizona revealed the NFL as one of several leagues that accepted Department of Defense funds to stage military tributes, a practice known as paid patriotism. (The league eventually gave back more than $700,000, drawing praise from Flake.)...
While raising money for noble causes, the NFL has intertwined its brand with the military, and that enhances the way many football fans feel about both.
“It reverberates naturally with the fan base,” Fleischer said. “If the NFL decided it was going to really promote veganism and vegetarianism, it probably wouldn’t go over very well with the fan base. Because it’s consumer-driven. It’s a reflection of who the fans are and what the fans’ interests are. When the NFL decides it wants to have partnerships and public displays with the military, it’s very well-received, because the fan base is so inclined. It’s a perfect match.”
The prominence of the NFL’s patriotism is what gave Kaepernick the platform to protest in the first place. Before 2009, players were not on the field for the national anthem for typical regular season games, a decision the league made to please broadcast partners.
The NFL has tried to appease every part of its fan base, which in 2018 for an entity as dominant as the NFL is impossible. The division roiling the country affects the NFL because the NFL is such a dominating feature of American life.
“If you invent yourself as a cultural institution, when the culture fractures, there you are,” Oriard said. “What are you going to do about it?”
How do I feel about it? I guess, I'm somewhere along here:
This is a head-spinning set of circumstances. Nike has been for decades a target of protests by student activists, with organizations like United Students Against Sweatshops on the front lines, for notoriously poor labor practices. Earlier this year, the company was accused of fostering a sexist work environment with chronic harassment. The opening line of a New York Times exposé was “For too many women, life inside Nike had turned toxic.” Then there is Nike boss Phil Knight, who gave $500,000 in 2017 to Oregon Republican gubernatorial candidate Knute Buehler.
When it comes to marketing, for three decades—from Spike Lee’s famous Air Jordan ads and John McEnroe’s “Rebel With a Cause” campaign to its current campaigns featuring LeBron James and Serena Williams—Nike has used the image of rebellion to sell its gear, while stripping that rebellion of all its content.
In Nike’s antiseptic, hollow corporate-speak, Kaepernick is simply “moving the world forward.” There is no mention here of police violence or racism. And it would be stupid to expect it. This is Nike. Asking them to be a voice for social justice is like asking a dog to meow.
All of that being said, this is a case more complicated than just calling out Nike for commodifying dissent. Kaepernick has spent the last two years being showered with hatred and death threats, vilified on social media and from the presidential bully pulpit. In the last year, he has given away over a million dollars of his own money. He has been unable to earn a living during the prime years of his career. It is a great thing that he is actually going to earn an income and receive funding for his activist works….
It is satisfying that after two years in the political wilderness, he is getting an outpouring of support from those defending an ad with a message that reinforces the power of political sacrifice. Nike is the official sponsor of the NFL, so this ad campaign is a thumb in the eye of every owner who has colluded against him.
But global, multibillion-dollar corporations that run an archipelago of sweatshops don’t underwrite rebellions. They co-opt and quash them.
In 1987, Nike adman Dan Wieden mashed up quotes from two unlikely figures: “Let’s do it,” the last words of convicted killer Gary Gilmore before his execution, and “Just Say No,” the sunny slogan of first lady Nancy Reagan’s anti-drug campaign.
If its origins are unsettling, "Just Do It" was extremely successful for the unconventional ways in which it engaged consumers. Co-founder Knight recalled that after the launch of ads bearing the slogan, Nike received fan letters for the first time, recounting stories of how the slogan inspired them in arenas unrelated to sports.
A decade later, when the “Let Me Play” campaign memorably linked girls’ sports participation to survival of domestic violence and lower cancer rates, the effusive calls poured in from “daughters of Title IX,” the first generation that came of age with the athletic opportunities afforded by the landmark 1972 legislation.
But these advertising and advocacy achievements obscure the lived experience of women at the company, who were often marginalized. In the 1980s, the company acknowledged “missing the mark,” as many executives described it, on the aerobics boom that introduced millions of women to exercise (and put rival Reebok on the map with its 1982 Freestyle sneaker). But an alternative account suggests that executives didn’t just “miss” signals from the 22 million, overwhelmingly female, aerobics enthusiasts; they ignored the insights of women working at Nike....
Nike’s history reveals that two things can be true at once. For decades, Nike has advanced people marginalized by mainstream athletic culture — whether the sidelined Colin Kaepernick or oppressed women surreptitiously seeking sport or amputees aspiring to do a triathlon — through its branding, advocacy, product development and philanthropy. But it has done so publicly while also enabling an internal culture of discrimination and inequality, from sexual harassment at the Beaverton, Ore., corporate headquarters to sweatshop conditions in its factories that turn out products as varied as baseball cleats and breathable hijabs.
Nike’s latest newsmaking campaign requires critical consumers to surrender the simplistic takes that cast the company as either boldly advancing progressive politics with its branding or hypocritically proclaiming anti-racist solidarity while exploiting communities of color or amorally commodifying radical protest to more swiftly move merchandise.
It is all true.
So, I conclude with something I tweeted earlier this week:
they've gone from john schnatter to basically hrc's campaign slogan https://t.co/NESkzb1SAJ— Ann Lipton (@AnnMLipton) September 7, 2018