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Ted Mininni Ted Mininni   Bio
12.11.08

Is Some of Nike’s Current Success Due to Its 'Running' Social Network?

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So how could Nike take its 48% share of all the running shoe business in the U.S. in 2006 and grow that business? The company’s marketers may have found the answer in its Nikeplus social marketing site.

Analysts debate whether or not the site is directly responsible for Nike’s current 61% share of the running shoe market: “Nike+ attracts only serious runners, a drop in the bucket compared with its total customer base.” Still, there’s no doubt that social marketing has had an impact at Nike. Question is, how much?

In the recent Business Week article: “This Social Network is Up and Running,” it’s clear that Nike may have established a blueprint for other consumer products to emulate. Reason: it has adopted a very different strategy.

Many companies have tried to build virtual communities centered around their brands—that according to comScore statistics. But for Nike, “It was never about how can we convert some percentage of users (to buy Nike shoes)”, according to Stefan Olander, global director of consumer connections. It was about creating a social network for dedicated runners. . .

According to the Business Week article:
• The use of social networks has grown 38% in the past year, per comScore.
• A recent McKinsey survey found that many companies are struggling with Web 2.0 technology.
• McKinsey also cited that only 21% of nearly 2000 executives surveyed were satisfied with available software to launch blogs or create social media.

Back to Nike. Its site www.nikeplus.com was conceived to bring runners together, and to sell them its $29 Sport Kit sensor. As a result of community interest among runners, Nike has sold 1.3 million Nike + iPod Sport Kits, and a half million SportBands at $59 a pop. Total sales: $56 million in 2008. A drop in the sales bucket for Nike, but an important community for them, nonetheless.

It appears that runners’ enthusiasm extends into purchasing Nike shoes, as well. How much, though? There are vastly different opinions among analysts about that. More importantly, do marketers within Nike itself know what kind of ROI the site is giving the company? I’d love to find that out and the article doesn’t give Nike’s own take on this.

The skinny: when used with an iPod touch or nano, the Sport Kit sensor tracks runners’ speeds, mileage and calories burned. When runners upload their data to the site, it becomes “a virtual gathering place”. To date, runners have logged 93 million miles on the nikeplus.com site. In August alone, 800,000 runners logged onto the site and signed up to run simultaneously in a 10K Nike sponsored race in 25 cities around the world.

Buoyed by the success of this site, Nike is now testing a social network site aimed at the basketball-playing community—as a means to promoting its basketball shoes. I’m betting they’ll be successful in building a community of dedicated hoopsters if they use the same strategy with this new site. Bottom line: when the right strategy is in place, it can be a brand builder.


Questions:
• Could it be that companies that disparage social media haven’t developed the right strategy to maximize its potential as a marketing tool?
• How do you view social media’s role in brand building? Sales building?
• Should companies view social media sites as a potentially powerful tool among other marketing tools at their disposal?

I’d love to hear from you.



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Comments

I can't entirely agree with "Nike+ attracts only serious runners...", I have been a member of that site for just about a year now. I am in no way a serious runner, just some one who was looking for a good way to train for a short (one-time) race and get some encouragement.

I would definitely call the site very interactive, as well as 'cool'. I wouldn't immediately think to call the site 'social' though.

To be honest, I hadn't logged in in a few months. I guess it has grown a bit. However, I always felt that the social aspects felt very disconnected. This is mainly due to how everything was so based on rigid forms and processes (not to mention all Flash based!). I never felt very much like I was communicating with other members.

Aside from a few teams, most were never very well populated, and the events they pushed were few and never anywhere except the most major of metropolises.

So maybe it was partially due to me not getting into the community. But I'll say that I never felt like I could connect with another human w/ personality and feeling. It was just too detached.

Now, forgiving these issues, it is a great interactive site with the capability for social interactive and the possibility of being enhanced to a great social site.

I do think this was a great brand building experience and a way to build a strong relationship with customers. Until now I could have cared less about nike, specifically because I'm not a sports nut. But now I do have positive opinion of them and an emotional connection.

Kudos to nike+, but let's see it be more social in the future.

Posted by: Adam Covati | 12.11.08

Your question 'Could it be that companies that disparage social media haven’t developed the right strategy to maximize its potential as a marketing tool?' is a good one, but maybe the problem is that these companies just haven't 'got' what social media is about: people sharing and creating, individuals having choice and having control. It's not just another vehicle in which to peddle marketing messages.

You can be sure Nike did not say to themselves 'how can we maximize the potential of social media as a marketing tool?'

Nike's strategy has always been to embed itself in the lives and hearts of people who are serious about their sports. Moving into social media is just a logical step for them, because wherever sports people are congregating, be it offline or online, Nike will be there also.

Social media requires different thinking from brands - I would suggest that the successful ones, before jumping in, will be asking themselves not 'what are we getting out of this?' but rather 'what is everyone getting out of this?'

(Disclosure: I am a former Nike marketer)

Posted by: Robin Houghton | 12.11.08

Ted,

I never thought of myself as a serious runner either, although there was a time when I ran 5 - 15 miles a day, five days a week. That said, in my experience runners are a "tribe" that love to interact with each other.

Nike is capitalizing on that social characteristic. Therefore, I'm not sure you can transfer the success of a sportswear social media site to other businesses, especially those that are B2B or B2C non-retail.

Posted by: Lewis Green | 12.11.08

Adam,

Thanks for taking the time to add many great insights to this post. The fact that you find Nike's site a bit cumbersome deters you from using it as the "social media" site it was set up to be. Hopefully, Nike will streamline its processes so that users will be more likely to interact with each other. Overall, though, your impressions of the site seem very positive. I also like your observation that one doesn't have to be a serious runner to get involved on the site. That might encourage DF readers to check it out. Your statements say it all: "Until now I could have cared less about nike, specifically because I'm not a sports nut. But now I do have positive opinion of them and an emotional connection."

Thanks, Adam, for weighing in.

Posted by: Ted Mininni | 12.11.08

Robin,

I'm not sure I agree with your statement (even though I respect the fact you were a former Nike marketer): "You can be sure Nike did not say to themselves 'how can we maximize the potential of social media as a marketing tool?'" As a very savvy company, I think Nike launched this site--and sees social media--as a potentially strong marketing tool.

I do love what you said here: "Moving into social media is just a logical step for them, because wherever sports people are congregating, be it offline or online, Nike will be there also." Spot on, Robin.

This is also worth reiterating: "Social media requires different thinking from brands - I would suggest that the successful ones, before jumping in, will be asking themselves not 'what are we getting out of this?' but rather 'what is everyone getting out of this?'" Very well put.

Thanks, Robin, for your sharing your insights with us. Much appreciated.


Posted by: Ted Mininni | 12.11.08

You're very right, Lewis: runners are a tribe. And there are many other tribes out there: the Apple tribe, of which I'm a member, for example; the Harley-Davidson tribe, the Hannah Montana tribe, etc. This kind of social media site won't work for every brand; I concur with that, as well. The point for B2B and non-retail, service-oriented companies is: what kind of model will work? If companies are interested in tapping into their customers who are congregating online to some extent--some more than others--what will engage them? That's the question.

Do any Daily Fix readers know of engaging B2B or service social media sites out there? I'd love to have you weigh in, if you do.

Thanks, Lewis, as always, for making some very cogent observations.

Posted by: Ted Mininni | 12.11.08

Ted,

I'm not a runner, but I did visit the Nike site. One thing that immediately caught my eye is the pitch on the bottom of the page for Nike's latest shoe. I wonder if a better approach would have been to hide that link deeper in the pages, or just a "learn more about Nike shoes" hyperlink. It smacks of "selling".

Blasphemy I know (since most marketers would probably argue that selling is one key goal of the site), but I suppose I would have preferred a more subtle approach.

Posted by: Paul | 12.11.08

Ted,

I think those of us who are B2B Marketing Consultants find social media useful and profitable. But not because our clients use social media but instead our blogs serve as better places than web sites for our clients to make buying decisions regarding our firms.

Posted by: Lewis Green | 12.11.08

I suspect many feel as you do, Paul, resisting social media sites that are blatantly used to sell merchandise. . .however, that is just what Nike has done with its sports kits here. It's subtle in a way--appealing to runners in a special manner--but it's there. If you were a runner, Paul, would you feel differently though? Especially if you could use the site to form relationships with other runners? That's the key question, I think.

Thanks for adding your thoughts to the post, Paul. I appreciate your input.

Posted by: Ted Mininni | 12.11.08

Yes, I'm aware that many consultants use blogs to communicate their value to prospective clients, Lewis. I'm wondering though: do you ever advise your clients, who may very well offer services vs products B2B or B2C, to launch blogs of their own? If so, what kinds of blogs have you suggested they develop?

Thanks for adding a great deal to this discussion, Lewis.

Posted by: Ted Mininni | 12.11.08

Ted,

My clients are mostly B2B and to date we have talked more about their presence in social networking than in social media. The reason: My clients, many of whom have no marketing or communications departments, would be forced to outsource to me with no end in sight or add a hire.

The first option works for the short-term but eventually a business should be hands on when it comes to social media. The second option is not a viable one for my clients in terms of either ROI or Value returned.

Posted by: Lewis Green | 12.11.08

Lewis,

Thanks for shedding light on this. This is important: social media isn't for everybody and it isn't the end all-be all. It can be effective as one marketing tool among many, but a balanced approach is key, isn't it? Also: many small businesses simply do not have the resources to make this work. Then there is the issue of the "value" proposition. SM isn't viable for every business. For those businesses, networking is the way to go. With all the hoopla around all of this, it's important to really think it all through. That's obviously what you've done and do for your clients. They're lucky to have you, Lewis.

Posted by: Ted Mininni | 12.11.08

I totally agree with Adam. Nike has a great foundation but has not leveraged the social aspect of it. The have had success with it because it is easy to use and provides value to the user. I think they could drive a lot more growth and financial success by enabling more social aspects and adding features such as shoe tracking, 3rd party race results, other work outs, information, etc. They are the leading brand in the sports and fitness world and they have the ability to satisfy an unmet need online. Personally I don't wear Nike shoes but they can still influence my clothing and accessory purchases.

Posted by: Garrett | 12.11.08

No mention of Nike's shameful racism and the recent multi-million dollar court settlement for discriminating against black employees at its Chicago store, including white managers liberally tossing around the word, "nigger?"

Success indeed. Don't support this company.

Posted by: LaTonja | 12.11.08

Garrett,

Both you and Adam have posted some viable insights and you have taken another step and made suggestions on how Nike might improve the social aspects of its site. Let's hope they're listening to the input from users and consumers in general.

Your statement is a testament to the strength and power of the Nike brand: "Personally I don't wear Nike shoes but they can still influence my clothing and accessory purchases."

Thanks for weighing in, Garrett. Good stuff.

Posted by: Ted Mininni | 12.11.08

LaTonja,

Yes, there were allegations and a suit filed in the Chicago area which was settled this past summer. DF readers can read about it in numerous places on the Internet, this article among them:
http://www.civilrightslawfirms.com/topics.cfm/african-american-racism.html

When allegations like these surface, consumers decide whether the actions of a few employees taint their entire perception of the company enough to refuse to purchase their products or not. The actions of employees always reflect back on the company, for good and for ill. When bad things happen, companies need to take control of the situation--in a meaningful and transparent manner--or be faced with a loss of customer trust and faith. This does inestimable damage to their brand. P&G CEO Alan Lafley once said that customers vote on brands every day--with their pocketbooks. He was absolutely right.

Thanks for sharing your perspective with us, LaTonja.

Posted by: Ted Mininni | 12.11.08

My colleague Perry Hewitt (CMO at crimsonhexagon.com) and I recently used Nike+ as an example of effective use of social media for a talk we gave to Pete Krainik's thecmoclub.com. I posted our analysis of Nike+ here:

http://www.octavianworld.org/octavianworld/2008/11/nike-yeat-another-good-structured-collaboration-example.html

A summary of the talk is here:

http://www.octavianworld.org/octavianworld/2008/11/cmo-club-talk-recap.html

Posted by: Cesar Brea | 12.11.08

Thanks, Cesar, for sharing our thoughts and those of your colleague on the Nike + site with us. Love it. Hopefully, these ideas will get some creative juices flowing out there...

Posted by: Ted Mininni | 12.12.08

As a runner, what Nike+ tells me is that Nike gets me. They know what running data is important to me, they know the types of people that I want to connect with, and they know that I want to run more than I want to be sold on Nike shoes. However, I wouldn't be surprised to find that this idea of 'Nike gets me' translates into shoe sales as well, because consumers think that if Nike understands their needs as a runner, then they must also understand what needs their feet have while running as well, and are able to design a shoe that caters to those needs.

Posted by: Cory O'Brien | 12.14.08

Hi Cory,

As a runner and as the target for the Nike+ site, your input is invaluable. 'Nike gets me' demonstrates that the company has hit the nail squarely on the head with the launch of this new site. It is tailored to the unique needs of its core audience, isn't it? You are so right: . . ."consumers think that if Nike understands their needs as a runner, then they must also understand what needs their feet have while running as well, and are able to design a shoe that caters to those needs."

A well-constructed social marketing site can and should bring heightened brand awareness and help build sales, directly and indirectly. Thanks for weighing in, Cory. I appreciate it.

Posted by: Ted Mininni | 12.15.08

The one thing that I find hard to stomach is that someone from Nike is all proud on video about their brilliant idea, when they actually ripped the idea off a team of German inventors who had pitched it to them a few years earlier: http://www.brandeins.de/home/inhalt_detail.asp?id=2399 (German source, sorry.)

Posted by: Martin Oetting | 12.18.08

I don't read German, Martin, but some Daily Fix readers may, so they can view this for themselves. As I've stated in past blog posts, the whole area of intellectual property ownership is a cause for concern among entrepreneurs, inventors and companies these days. Not knowing the background in this instance makes it hard to make a judgment call. Many companies these days solicit ideas from outside sources and sometimes entrepreneurs freely discuss and share their ideas without getting any kind of patent on them, so they basically get thrown into the public domain. Then, there are instances where companies have independently come up with very similar ideas, as well.

Thanks for weighing in, Martin. I appreciate your adding another important dimension to this conversation.

Posted by: Ted Mininni | 12.19.08

I do not know about all that but I do know Nike is "running" the university I used to attend. To learn about Nike-governance at the University of Oregon and how the media has enabled it you can watch the six videos I recently posted at Utube. To find them use the search at the Utube site with keywords:nike university of oregon.

Posted by: conspiracyzach | 12.31.08

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