Ever since its launch 45 years ago, Nike has been one of the world's most enterprising companies. By continually re-inventing its products and redefining advertising genres, Nike has firmly embedded itself in the consumer consciousness, but it's now facing one of its biggest challenges.
Back in 1964, Nike co-founders Phil Knight and Bill Bowerman were struggling to get their company off the ground. Disappointed after making just $8,000 (£5,000) selling track shoes out of the boot of their car, the running enthusiasts paid a university student $35 (£24) to design a logo that would make their sneakers more recognisable.
Now, just four decades later, Nike generates annual revenues in excess of $18.6 billion (£12.6bn) and its trademark 'swoosh' has become one of the most iconic brand symbols of all time.
Nike's UK marketing director Simon Pestridge claims the world's largest sports company owes its success to its unshakable brand vision. "Absolutely everything we do is motivated by the fact that we're here to enable athletes to be even better," he says. "We know who we are. We know what we want to achieve and we go for it 100 per cent of the time."
Pestridge, who has worked at Nike since leaving university 14 years ago, lives and breathes the company's brand values, and it's easy to see why. Somehow, despite employing 30,000 people in 52 countries worldwide, Nike manages to avoid coming across as the huge corporate money-making machine it clearly is. Even accusations of child labour haven't managed to damage its image.
This is largely due to an unfaltering desire to innovate and take risks in the name of creating better products. But it's also down to some pretty smart advertising that has kept the brand values instilled by Nike's founders at the fore.
Nike's approach to marketing has always defied convention. It's been this way since day one. In 1982, after handing Wieden & Kennedy its advertising account, Nike's co-founder introduced himself to the agency with the words "I'm Phil Knight and I hate advertising." Ever since, Nike has strived to push the boundaries of marketing, re-inventing print ads in the 1970s before moving on to TV in the 1980s and 1990s. Now its priorities have changed and it's turning its attention to digital in an effort to get closer to consumers.
"We don't do advertising any more. We just do cool stuff," says Pestridge. "It sounds a bit wanky, but that's just the way it is. Advertising is all about achieving awareness, and we no longer need awareness. We need to become part of people's lives and digital allows us to do that."
Nike's digital swing shift is not motivated by a superficial desire to be innovative or even cost-effective, but by a fundamental need to engage consumers rather than bombard them with ads. "I don't have any bias towards digital," claims Pestridge. "I have a bias towards the consumer. Right now consumers are spending their time online, so that's where we need to be. Will they be in two years' time? Who knows!"
For Nike, this cultural migration inevitably means a move away from the glitzy TV ads that have given it resonance for decades. The company has always relied on big ideas like 'There is no finish line' and 'Just do it' to bring its brand to life in the everyday lives of consumers. While Pestridge insists there will always be a place for TV advertising, he acknowledges that the days of 'interruptive marketing' are over. "Now it's all about deciding what you want to say and how you're going to say it," he explains. "There are going to be times when a TV ad is the right way to go, but that's the exception rather than the rule."
These days, countless brands are rolling out this type of brand rhetoric, but Nike is putting its money where its mouth is. Figures from Nielsen show that in the UK the company has reduced its TV spend by nearly 80 per cent during the past four years, while its digital budget has increased by 200 per cent during the same period.
Nike also now briefs all its roster agencies - AKQA, Wieden & Kennedy and Mindshare - together to ensure it is getting access to the best creative talent. Pestridge insists that Nike takes a media-neutral approach to marketing, selecting the most appropriate channel for each campaign. "I don't care about individual platforms and how much we spend on them," he says. "All I care about is good ideas." While this may be true, the nature of Nike's young, tech-savvy target audience means that digital is often in the driving seat.
Nike has already built up a respectable body of digital work to sit alongside classic TV ads such as 'Bo Knows' and 'Instant Karma'. Perhaps the most recognisable of these is its Ronaldinho 'Touch of Gold' viral, which has been seen by more than 30 million viewers on YouTube since it launched in 2005. Nike also broke the mould a year later by partnering with Apple to launch Nike+, a piece of technological wizardry that allows runners to chart their progress via a chip in their shoe, which feeds data to their iPod. Budding athletes can then go online to access their training stats and challenge people in more than 20 other countries to a race.
"We're only just scratching the surface of what's possible with Nike+," insists Pestridge. "There are many more iterations of the technology still to come." The most imminent of these is Gym+, a spin-off utility allowing fitness fanatics working out on a treadmill, a bike or a step machine to log the miles they travel and the calories they burn.
As groundbreaking as Nike's previous digital endeavours have been, they are just the tip of the iceberg for a company so fundamentally motivated by a desire to innovate. In fact, Nike is currently working to re-invent the online advertising model to allow consumers to embrace its brand, rather than slavishly forcing it on them.
As a rule of thumb, most marketers spend 20 per cent of their budget on creating content and 80 per cent on buying enough media to convince consumers to view it. Nike, however, does things the other way around, choosing to invest the bulk of its spend in creating compelling online content that spreads across the web virally. "Some of our best campaigns have been the cheapest to create because they've caught the imagination of users and then taken off like wildfire," claims Pestridge.
Nike has already proved the success of this model, with its Cesc Fabregas initiative engaging millions of consumers online and on TV. The brand invested 95 per cent of its campaign budget in the creation of a website encouraging internet users to upload video clips, to be included in a live TV show presented by the Arsenal midfielder. Nike shunned online ads in favour of populating the site with widgets and exclusive sports-related content in order to motivate football fans to get their friends to tune into the programme. "We want to inspire consumers to seek out our content," says Pestridge. "This is the model we will be following from now on."
As part of this strategy, Nike also recently tapped into the power of blogs with a campaign to promote its new Mercurial football boot, billed as 'the fastest boot on Earth'. To raise awareness of the launch, Nike created a series of videos showing the UK's top footballers competing to be the quickest on and off the ball. Rather than investing ads to promote the clips, Nike seeded the videos across a selection of influential blogs ahead of taking the Nike Mercurial Speed Test to football clubs and schools across the UK. The campaign drove 432,000 unique visitors to the Nike hub on Sky.com and resulted in a 260 per cent increase in blog conversations relating to Nike-sponsored athletes.
Trial and error
With the recession forcing brands to become increasingly risk-averse, it's refreshing that so much of what Nike does relies on trial and error. Employees in every area of the business, from product design to marketing, are encouraged to experiment with ideas in the pursuit of excellence. This may seem surprising, but back in 1970 Nike co-founder Bill Bowerman set an important precedent. Convinced that Nike's track shoes could be even better, Bowerman decided to experiment by pouring a liquid rubber compound into his wife's waffle iron; the result was a sole that forever changed the design of running shoes.
"We're pushed to take risks in everything we do as long as we're enabling the athlete to be better," claims Pestridge. "Sure, we'll get some things wrong but you've just got to go for it."
Nike clearly relishes the fact that now, thanks to the internet, it can engage consumers in an almost limitless number of ways. The potential to move beyond interruptive advertising and put consumers in charge of the Nike brand has never been greater. "Nobody knows what innovations are around the corner," insists Pestridge. "Who could've predicted Facebook or MySpace would have enjoyed such huge success? That's the beauty of digital."
True to form, Nike is perfectly at home venturing into uncharted territory. Its complete belief that it understands its consumer better than anyone means that campaign testing and focus groups are out the window. Obviously, like any other brand, Nike constantly evaluates the success of its digital activity so it can learn what works and what doesn't, but anything else just gets in the way.
"You don't get anything from sitting behind a two-way mirror listening to focus groups.
"You learn from living and breathing your brand," asserts Pestridge. "When anyone in my team comes up with an idea, I tell them go and run it past a kid on a football pitch. If they don't get laughed at and if they avoid coming across as the kid's un-cool dad, then they're probably on the right track."
Coming from anyone else such gusto would seem absurd, but Pestridge is qualified to talk in these terms having spent his early career at Nike as an Ekin (Nike spelled backwards). Ekins are official company storytellers employed to evangelise about the Nike brand and its sports technology. Before being unleashed on the world, Ekins are required to undergo an almost military-like training regime comprising a nine-day rookie camp at Nike's headquarters in Oregon and a full day's running at the Hayward field track where Bill Bowerman worked as a track coach. Almost unbelievably, as a further sign of their devotion to the brand, each Ekin is then invited to have the Nike 'swoosh' tattooed on their ankle ahead of their 'graduation'.
It's an inevitability that most companies the size of Nike will eventually lose touch with the core values instilled by their founders. It has arguably already happened to Google in a much shorter space of time. However, Nike's philosophy of 'innovation and inspiration' is still present in absolutely everything it does. "Innovation comes in the form of our constantly evolving products," says Pestridge. "Inspiration comes from the way in which we enable consumers to experience these products."
The latest chapter in the Nike story has seen the sports giant merge the two pillars of its business: product design and consumer experience. The new NikeiD studio at NikeTown London represents the brand's most significant attempt yet to put the consumer in control.
Visitors to the NikeiD studio can customise a whole range of Nike products, including training shoes, football boots and sports kits. Consumers are invited to experience the products in-store, selecting colours and choosing materials, before going online to personalise their chosen items with the help of a NikeiD specialist. As part of the same strategy, Nike is also relaunching its global e-commerce store in an effort to provide internet users with a similar experience through interactive online videos and social networking.
Having spent the past 45 years re-inventing sportswear and redefining advertising to get its message across, Nike's next big idea looks set to be even more impressive. By focusing on digital, it hopes to break down the boundaries between brand and consumer, thereby making its advertising all but invisible. "The great thing about being an innovator," concludes Pestridge, "is that there are no boundaries."
This is a tall order even for Nike, but when it comes to digital its message is clear: just do it.
AGENCY TALK - HOW NIKE UK'S BRAND GURUS SEE ITS FUTURE
NEIL CHRISTIE - Managing director, Wieden & Kennedy
For Nike, the future is about using new channels to form closer connections with its consumers, and to facilitate ever more intimate and frequent interactions and conversations within their communities the world over.
People aren't looking for a different relationship with Nike, but a deeper one. They still want it to share stories of athletes that will inspire them, but they increasingly expect them to be delivered in more varied, interesting and interactive ways.
Nike needs to continue to innovate around the unique experiences that accompany these stories and enable its audience to get the most from their chosen sport. Whether these experiences are on- or offline is no longer a valid question - that distinction is now so blurred it's practically meaningless.
There's no denying new media and technologies have enabled greater complexity of consumer interactions. Ultimately, however, future success will still come from inspirational Nike ideas.
AJAZ AHMED - Co-founder, AKQA
Nike is moving beyond the ad campaign into something that's fresh, long-lasting and genre-defining.
People are bombarded with advertising and Nike wants to do something different that's memorable and has an impact. It's all about finding new ways and new media to share the passion that Nike has for sport with the world.
Nike is dedicated to innovation and the passion to create great products. The way that Nike tells the story of its products and athletes transcends sports and has a resonance that crosses language barriers and cultural boundaries.
Any good farmer will tell you that excellent soil bears excellent fruit. That's why much of Nike's success is rooted in strong philosophies that are reflected in every aspect of its culture, such as 'There is no finish line' - or the relentless pursuit of excellence. It's the same mentality a great athlete has.
Nike has produced an extraordinary body of work, but the momentum is strong, the team is busy and the most exciting work is ahead.
NICK ASHLEY - Client director, Mindshare
When you start working for Nike, one thing that instantly strikes you is its constant desire to try something new and be ahead of the competition. This is rooted in product innovation but transcends all of Nike's business.
Nike is constantly looking to target new consumers, understand influencers, use new channels and pioneer the use of existing channels.
It is experienced in bringing its big ideas to life online. It is now pioneering an approach to content distribution across its key product categories, particularly football.
Research has shown Nike content is a valuable asset in its own right - usually adored by consumers and always something that prompts a conversation.
Nike knows that early and exclusive communication with influential bloggers can help speed the distribution of content across the web. It now plans to make blogging central to all of its future football-related campaigns.
NIKE DIGITAL TIME
1996: Atlanta Olympics Nike makes its first foray online by launching a site to support its presence at the Games with details of the athletes and the Nike products they are wearing.
2001: Run London Nike launches Run London, blending experiential and digital marketing for the first time: 10,000-plus Londoners take part.
2003: Nike Bowerman The Bowerman website is unveiled to improve the running experience by providing information on the latest exercise techniques, as well as personalised training schedules.
2004: Nike Speed Launched to coincide with the 2004 Athens Olympics, NikeSpeed.com mixes artists' interpretations of speed with advanced multiplayer gaming.
2005: Ronaldinho 'Touch of Gold' Redefining viral, this film was seen by 30 million-plus YouTube viewers.
2006: Festival of Air The Air Max 360 is launched with Nike Festival of Air, a web portal challenging consumers to do physical challenges that are broadcast live at NikeTown.
2006: Nike+ Nike and Apple team up to offer the ultimate personal workout coach. A chip in your shoe talks to your iPod to give you real-time feedback during workouts.
2004: NikeiD The new NikeiD studio at NikeTown allows sports fans to customise Nike shoes and then star in the ads that made them famous. The ads are beamed to interactive kiosks.
2007: Nike Supersonic Run London is replaced with Supersonic, a live event built around social networking that combines running and live music.
2008: Nike Live Nike Live is a new programme format aimed at connecting fans with their heroes. In the UK, The Cesc Fabregas Show invites Arsenal fans to upload video clips for the show.
2008: Nike PhotoiD Nike PhotoiD encourages people to use their mobile phones to take pictures, which can then be uploaded to the NikeiD website and used as inspiration for custom-made trainers.
2008: Nike Playmaker Nike launches Playmaker so footballers can spend less time organising games and more time on the pitch.