In general, Nike either has produced numerous individual ads or a group of spots and print executions for basketball, golf or leisure apparel to run in limited, targeted rotations.
The new approach comes as Nike consolidated its account at longtime agency Wieden & Kennedy, Portland, Ore., dropping Goodby, Silverstein & Partners, San Francisco, and ending a two-year, emotionally charged rivalry between two of the nation's most creative agencies.
In an analysts meeting earlier this year, Nike officials said ad spending in fiscal year 2000 would hit $350 million. For the first six months of '99, Nike spent $126 million.
The shifts correspond to Nike's attempt to cut costs for the company overall, according to analysts.
Nike's core athletic footwear business continues to face a depressed marketplace, as well as challenges stemming from a continuing drop in market share. According to NPD Group, from January through September, Nike's market share dropped to 31.4% from 34.9% a year ago. Through September, the overall athletic footwear market has slipped 1%, or $133 million, to $9.9 billion. Actual unit sales of footwear are down 5%.
After a poor fiscal 1999 that ended in May, Nike rebounded somewhat with net income up 22% or $200.2 million in the quarter ended Aug. 31, compared with $163.8 million for the same period a year ago. Revenues remained the same, at $2.5 billion. Nike also had a tough fiscal year in 1998.
In the running category, Nike's U.S. retail dollar sales increased 3% last year, and Brand Jordan improved 23%. But other areas are falling.
"It's tough to grow at 20% to 30% in a market where you have 60% to 70% share," said Michael Shea, VP-senior research director at D.A. Davidson & Co., a stock broker. "You are looking at more of a 5% to 10% revenue grower" in contrast to past results.
In 1997, Nike, feeling Wieden's work had slipped and looking jealously at the agency's campaigns for another client, ESPN, shifted a portion of spending to Goodby.
"If it put the fear of God into Wieden, so much the better," said one executive familiar with the marketer.
At first, Goodby won retail advertising for Niketown stores as well as apparel. It also picked up assignments for the Olympics and the high-end Alpha Project products, at one time thought to be key to restoring Nike's health as a brand but soon moved to a less prominent role. Spending fluctuated from 20% to a high of 40% of Nike's budget, but stood at about $20 million when Goodby lost the account, executives at the shop said.
Wieden, meanwhile, after a few missteps early on with new tagline "I can," kept the lion's share of the Nike work, and particularly its core basketball, football and other sports businesses.
In recent months, Goodby's star had dimmed as Geoffrey Frost, the global ad director who hired the agency, left Nike and was replaced by Rob DeFlorio, ad director for Nike U.S. At the same time, the company tired of trying to manage the work-and the egos-of the two shops, an executive familiar with the situation said.
By April, Goodby, frustrated by the lack of approval of work-and what it considered an unwieldy and difficult client-submitted its resignation. Although Nike refused to accept the resignation at the time, and made some management changes as a result, the agency was tainted by the impression of disloyalty to the team, said Jeff Goodby, agency co-chairman and creative director.
Still, the decision to part came as something of a surprise to executives at both shops.
When contacted by Advertising Age on Nov. 19, Mr. Goodby said the account was solid. "We've got nothing but reassuring signals," he said.
A Nov. 22 meeting with Nike's Mr. DeFlorio started with a usual discussion of a number of ongoing projects. Then, Mr. Goodby recalled, Mr. DeFlorio said something like "Here's the big bombshell."
Meanwhile, in Portland, Wieden President Dan Wieden, about to take a nap after a long trip from Bangkok, received Mr. DeFlorio's call. "It was the strangest thing-I'm almost starting to believe in [things like] horoscopes," he said.
Dave Luhr, Wieden chief operating officer, called the decision "a huge emotional win for us. Nike is the soul of this agency. It feels good to have it all back."
Goodby Partner and General Manager Harold Sogard, on the other hand, said, "It was obnoxious to lose to Wieden."
The move was also cheered by Chuck McBride, now executive creative director at TBWA/Chiat/Day on Levi Strauss & Co., and formerly the Wieden creative director who headed the agency's most recent Nike successes.
"If you catch the ball, pass it and put it into the hoop, you'll win the game," he said. "Nike is the best client on the planet."
At Wieden, Mr. McBride's former creative partner, Hal Curtis, has been joined by Bob Moore as creative director on Nike.
Today's Wieden & Kennedy is markedly different from the agency Nike tweaked by hiring Goodby in 1997. At that time, Wieden boasted a handful of large clients, Microsoft Corp., Coca-Cola Co. and Miller Brewing Co. among them. Since then, it has lost Microsoft and Miller Genuine Draft.
The agency, however, dusted off its new-business machine and since has picked up $150 million in new billings, including the $100 million Alta Vista account and dot-coms homegrocer.com, stamps.com and eVineyards.
As Wieden gets ready at the end of the year to move into new headquarters, Mr. Wieden is particularly pleased with the shape of the agency. "There's a synergy between those pieces of business," Mr. Wieden said of the dot-coms.
Still, Mr. Wieden should not rest too comfortably. Nike recently brought in Chief Marketing Officer Ellen Turner, formerly chief marketing officer at Kinko's, who in her last two marketing jobs hired TBWA/Chiat/Day to handle ads.
For Goodby, the switch allows the agency to pursue other apparel and sports marketers, maybe even TBWA/Chiat/Day's Levi's account. Nike refused to allow Goodby to participate in a 1997 pitch for Levi's won by its Omnicom group sibling.