May 21, 2022

Digital Marketing Education

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Nike puts global media account under review


The brand is believed to be talking to all major holding companies, which means Interpublic Group of Cos.’ Mediabrands could also be a participant. However, Nike won’t be looking to find just a single media partner according to a person close to the situation.

Nike, Weiden+Kennedy, Mindshare, Mediabrands, and Assembly weren’t immediately available for comment. The review is believed to be handled by R3 although the consultancy wasn’t immediately available for comment.

See Ad Age’s 2021 Marketers of the Year here.

The review covers about $1 billion worth of global spending, according to a person familiar with the matter.  The bulk of Nike’s marketing spending goes into non-media endeavors such as sponsorships and events. Nike reported worldwide spending of $3.1 billion on advertising and promotion, also known as “demand creation expense,” in the fiscal year ended May 2021, according to the Ad Age Datacenter. Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complementary products, TV, digital and print advertising and media costs, brand events and retail brand presentation.

The review was a long time coming given that Nike’s business is shifting from being brand-driven to performance-driven, according to a person close to the situation. It could result in big wins for the incumbent shops that only handle brand media as they look to get pieces of Nike’s performance media business given the brand has around a dozen performance media agencies in its roster, according to a person familiar with the process.

Of late, Nike has been following its consumers into the metaverse. Last month, the retailer filed for virtual goods trademarks for its namesake and Jordan brands. More recently, it created its own “Nikeland” world in the popular game Roblox. Today, Nike announced the acquisition of RTFKT, a fast-rising NFT company. In a statement, Nike President and CEO John Donahoe said the deal “accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming, and culture.”

Yet it’s brick-and-mortar retail that is helping the sportswear giant continue to grow. In its most recent quarter, Nike reported a revenue rise of 12% to $11.6 billion, including a 24% rise in physical retail, for its Nike brand. Overall, revenue rose 16% to $12.2 billion for the quarter. Like many retailers, the brand has been plagued with supply chain issues, which could impact the crucial holiday selling season. Nike will report second-quarter earnings on Monday, Dec. 20.

Earlier this year, the brand lost a top marketer when Alex Lopez, a Nike veteran who had most recently been global VP of brand marketing and global men’s creative director at the Beaverton, Oregon-based sportswear giant, joined McCann Worldgroup as president and global chief creative officer.

Contributing: Judann Pollack and Adrianne Pasquarelli

 



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