published Sep 4, 2018, 4:16:12 PM, by Eben Novy-Williams
(Bloomberg) —
The controversy surrounding Nike Inc.’s new Colin Kaepernick ad can’t be a surprise to the sportswear company. And in spite of the backlash, it’s probably pretty good for the brand.

In less than 24 hours since Kaepernick first revealed the spot on Twitter, Nike received more than $43 million worth of media exposure, the vast majority of it neutral to positive, according to Apex Marketing Group. That far outweighs the risk of alienating some customers, said Bob Dorfman, a sports marketing executive at Baker Street Advertising.

What’s more, he said, the move sends a strong signal to their current roster of athletes and positions Nike as a savvy risk-taker. “It’s not a move that any company can make, but for Nike it’s definitely smart business,” Dorfman said.

A Nike spokeswoman didn’t respond to a request for comment. The company’s shares closed down 3.2 percent Tuesday, the biggest one-day drop since April. Shares in Nike’s top competitor, Adidas, also fell.

The campaign is just the first step in Nike’s new partnership with Kaepernick, an extension of a deal he’s had with the company since he entered the NFL in 2011. The ad features his face along with the slogan, “Believe in something. Even if it means sacrificing everything.” Kaepernick hasn’t been on a roster since 2016, after he started kneeling for the national anthem to protest racism and police brutality in the U.S.

The image immediately drew the ire of those who view Kaepernick — and others who joined him in protest — as selfish millionaires who disrespect America. Some posted videos of themselves burning Nike shoes and apparel or cutting the swoosh logo off their clothing.

Others praised the ad, including former CIA Director John Brennan, Iran’s former president Mahmoud Ahmadinejad, and fellow Nike endorser Serena Williams. One sports gambling site published betting lines for Nike’s stock price at the end of the month.

President Donald Trump, one of the most outspoken opponents of the players’ protests, told the Daily Caller on Tuesday that the ads send “a terrible message.”

“Nike is, at the same time, one of the world’s best product companies and one of the world’s best marketing companies,” said Simeon Siegel, a senior retail analyst at Nomura Instinet. “This has been their strength. They understand impressions, they understand brand image, perhaps as good, if not better, than anyone.”

Nike’s Legacy

The company also knows its customers. Two-thirds are younger than 35, and it’s an ethnically diverse consumer base, according to NPD Group.

“Nike cares most about the category influencers and tastemakers — nearly all of whom will embrace their decision,” said Howe Burch, the former head of U.S. marketing for Reebok. “They know they will lose some customers short-term but not the kind of customers that really drive their business.”

Supporting disruptive athletes has long been a part of Nike’s marketing, dating to the early 1970s and runner Steve Prefontaine, the company’s first athlete endorser. Last month, when the organizers of the French Open banned an outfit worn by long-time Nike athlete Serena Williams, the company tweeted “You can take the superhero out of her costume, but you can never take away her superpowers.”

As part of the new campaign, the company plans to release a Kaepernick-inspired shoe and t-shirt and will donate money to the quarterback’s “Know Your Rights” educational campaign, according to the New York Times.

NFL Reaction

Nike’s renewed partnership with Kaepernick might create some tension between the company and the NFL. Nike has also been the official uniform and sideline apparel supplier for the NFL since 2012, a partnership recently extended through 2028.

The quarterback is currently suing the league, accusing its owners of colluding to keep him out of the league. Last week an arbitrator said Kaepernick had enough evidence to take the suit to trial.

“It’s a little surprising that they would take this position as the official supplier to the NFL,” Burch said. “But they’ve never been uncomfortable being contrary.”

The NFL on Tuesday said it is committed to “dialogue, understanding and unity.”

“The social justice issues that Colin and other professional athletes have raised deserve our attention and action,” the league said in a statement.

To contact the reporter on this story: Eben Novy-Williams in New York at enovywilliam@bloomberg.net To contact the editors responsible for this story: Janet Paskin at jpaskin@bloomberg.net ;Anne Riley Moffat at ariley17@bloomberg.net Jonathan Roeder
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