Nike bets on Olympic marketing spending to revive flagging sales
In addition to basketball and track, Nike shoes can also be found at events, wherever sneakers are worn. (Photo: Bloomberg)
By Kim Bhasin
Nike Inc. is investing more than ever in Olympic marketing with a global advertising campaign, hoping to revive sales and help the world’s largest sportswear company make a comeback.
Executives have asked their top stars for help ahead of the 2024 Summer Olympics in Paris, whose opening ceremony took place last week. Nike co-founder Phil Knight made a rare appeal to the “Nike Family” of athletes and coaches a week before the Games, encouraging them to “reignite the passion, desire and will to win.”
“We need you. The world needs you. Now more than ever,” Knight said in the letter, seen by Bloomberg News. He then referenced Nike’s Olympic marketing campaign. “It feels like winning has become a reputation for being a loser these days. It’s time to change that.”
It’s all hands on deck after Nike’s shares suffered their worst day ever in June, when management told investors it expected revenue to fall this fiscal year. The stock fell as much as 20 percent, wiping out about $28 billion in market value.
Chief Executive Officer John Donahoe is reallocating resources amid the turmoil. Nike is in the midst of a $2 billion cost-cutting plan that includes layoffs that affected 2 percent of its workforce, and management is redirecting some of those savings to marketing. Nike typically spends about $4 billion a year on “demand creation” — television commercials, athlete endorsements, digital ads, brand events and more.
“We are reinvesting nearly $1 billion in consumer-facing activities,” Donahoe told investors and analysts in June, pledging to accelerate product development and make advertising more eye-catching to reengage shoppers with the Swoosh.
Heidi O’Neill, president of Nike’s consumer, products and brands division, told Reuters in April that the brand’s Olympic marketing would be the company’s “largest media spend.”
“This will be the biggest investment and the biggest moment for Nike in years,” she told the news service, without giving an amount for the planned spending.
Management is rushing to release new items, such as the Pegasus Premium running shoe, as demand for older merchandise wanes, but most won’t be available until next year. Analysts say Nike’s advertising extravaganza doesn’t guarantee a comeback — not without new products to back it up.
“They’re already spending billions on marketing,” said Brian Yarbrough, an analyst at Edward Jones. “I really don’t know if all the money they’re spending on the Olympics is going to make everything better.”
Hype machine
The world’s biggest brands see the Olympic Games as an opportunity to reach a global audience through a range of sporting events, with sports brands such as Nike, Adidas AG and Puma SE able to showcase a range of products and compete head-to-head to see who is the best in events such as athletics, cycling and volleyball. It also provides an opportunity for specialist brands to gain international exposure, such as Speedo swimsuits and GK Elite leotards.
So Nike has been pouring money into Paris to drum up interest, and has been making its presence felt in the French capital for months now – and not just through the Swoosh billboards that have popped up all over the city.
In April, Nike kicked off its Olympic hype machine by enlisting marathon runner Eliud Kipchoge, sprinter Sha’Carri Richardson and dozens of other athletes to promote new Nike shoes and the brand’s presence in Paris. It was marked by a towering neon orange statue of LeBron James in front of the Palais Brongniart, the former home of the Paris Stock Exchange.
“Nike is a winning brand,” Serena Williams, who was also brought to the host city for a whirlwind week of photo shoots and dinners hosted by Nike, said in an interview. “And they work with winners.”
At the Centre Pompidou, a Parisian landmark that houses a modern art museum, Nike is hosting an art exhibit about the history of its Air Max sneakers. Employees have also set up a home for Team USA athletes, away from the hustle and bustle of the Olympic Village, with physical therapy, hair stylists, makeup artists and nail technicians.
Top sponsorship
Nike has the largest athlete sponsorship of any competitor, according to Citi Research, and a significant roster of athletes aiming for podiums in Paris. None is more prominent than James, who carried the American flag across the Seine during the opening ceremony.
The 39-year-old Los Angeles Lakers star has offered Nike a rare opportunity to capitalize on his Olympic presence. He hasn’t competed in an Olympics since London in 2012. His sneakers are among Nike’s core product lines, and he has appeared alongside some of Nike’s top names as part of a splashy campaign for the Games, a list that includes Giannis Antetokounmpo, Victor Wembanyama, Kylian Mbappe, Sabrina Ionescu, Sophia Smith and the late Kobe Bryant.
In addition to basketball and track, Nike shoes can be found at events wherever sneakers are worn. Japanese skateboarder Yuto Horigome won a gold medal on Monday with a smooth run in his own Nike shoe collaboration.
Still, many of Nike’s latest innovations won’t hit store shelves until 2025. Only a few were available in time for the Games, such as the Nike Air Sesh, a special breakdance shoe that will grace the feet of b-boys and b-girls at the new Olympic event at the Place de la Concorde.
“You have to have a product that the consumer wants,” said Yarbrough, the analyst. “Right now, that’s missing.”
First print: Aug 02, 2024 | 10:07 AM IST