Assessing the fallout -- good and bad -- from Nike's Kaepernick ad

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Credit: Sean Clancy via Twitter

If Nike's goal with its Colin Kaepernick ad was to get attention, mission accomplished. The sports retail giant has stolen the spotlight in the sports world and beyond with the ad, which is largely seen as Nike supporting National Football League players kneeling during the national anthem to protest racial inequalities.

It's a bold move in an age where marketers often talk a big game about becoming part of the cultural conversation, but often fall short by refusing to take much of a stand on anything. "Most brands try desperately to stay out of highly charged political issues. In this case Nike is almost inviting the controversy," says Tim Calkins, a marketing professor at Northwestern University's Kellogg School of Management.

But the business payback for Nike remains in question. The company's stock price fell by roughly 3 percent by early afternoon Tuesday, as critics who oppose protesting during the anthem threatened to boycott the brand. Images of people burning Nike gear filled social media. But Nike was winning plenty of support, too, especially in key urban demographics. On social media, "#JustBurnIt" competed with "#ImWithKap."

"Nike likely weighed the risks beforehand but, in our view, while it is noble to take a stand on something, it is also commercially imprudent to dash headlong into a very sensitive issue which polarizes opinion," said Neil Saunders, managing director of GlobalData Retail, which analyzes the retail industry, in a statement. "Although the company's stand may go down well on its native West Coast, it will be far less welcome in many other locations."

Yet others said the decision to tap Kaepernick in its campaign could help strengthen Nike, which has a history of standing behind controversial athletes. Nike stuck by Tiger Woods, for example, through his 2009 sex scandal as other endorsers backed away, including Gatorade, AT&T and Accenture.

Of course, the Kaepernick case is different. He's not accused of any wrongdoing; he just used his high-profile position as an NFL player to protest the anthem with a the goal of bringing attention to police brutality and social inequality. In doing so, he hit a nerve, with politicians and celebrities taking sides.

Critics, which include President Donald Trump, don't like the anthem being used that way. But Kaepernick has a decent approval rating with people who matter most to Nike: shoppers. YouGov, which tracks consumer perception of brands, found that 46% of current Nike customers have a positive opinion of Colin Kaepernick, compared to 34% of the general public.

"In my mind, this resonates with Nike's core customer," says Matt Powell, a sports analyst at market research firm NPD Group, noting that two-thirds of Nike's US athletic sales are to consumers under 35 years of age. "If we look at the studies that have been done on millennials and Gen Z, it's very clear that they want the brand that they buy to take visible stands on social issues."

Nike already has built-in brand love from millenials. Morning Consult found that 55 percent of millennials believe Nike has strong, positive values, according to polling done in July. Not surprisingly, the polling found that 71 percent of Trump voters said they would be less likely to buy from a company that supports anthem-kneeling.

But "the perception with African-Americans and those in urban culture is that Nike has in fact taken a stand to support the culture and they are in turn going to support the brand," says Ahmad Islam, CEO of Ten35, an agency that specializes in reaching multicultural, millennial and GenZ consumers.

Islam, who says he spent Sunday night studying the social media reaction, adds: "The people who view this as a strong stand are the same people who drive culture. If you think about it as a funnel, there are going to be some people falling out the bottom of the funnel, [but] there are also going to be a lot of people coming in the top."

Credit: Nike

The ad, by Wieden & Kennedy, carries the text, "Believe in something. Even if it means sacrificing everything," against a photo of Kaepernick staring straight ahead. That sacrifice is an apparent reference to the fact that Kaepernick has not been signed by a team since entering free agency in 2017. He has accused team owners of keeping him off the field because of his role in the protests. Last week an arbitrator ruled the case to proceed after the NFL tried to get it dismissed.

Nike is a major sponsor of the National Football League. It recently extended that agreement with a 10-year-deal making it the supplier of on-field apparel.

"The NFL, I am sure, doesn't like that this issue that has been so divisive is going to get more attention by one of the largest league sponsors," says Marc Ganis, president of SportsCorp, a sports-business consulting firm.

Jocelyn Moore, the NFL's executive VP of communications and public affairs, issued the following statement on Tuesday afternoon (more than 24 hours after the ad went live): "The National Football League believes in dialogue, understanding and unity. We embrace the role and responsibility of everyone involved with this game to promote meaningful, positive change in our communities. The social justice issues that Colin and other professional athletes have raised deserve our attention and action." Nike did not respond to an interview request to discuss the ad.

The ad is part of a broader campaign that commemorates the 30th anniversary of Nike's "Just Do It" tagline and includes other athletes, such as Serena Williams.

The campaign drew praise from marketing professionals, such as JP Morgan Chase CMO Kristin Lemkau, who tweeted her support.

The other side includes Texas Republican Sen. Ted Cruz, who responded on Twitter to former Iranian President Mahmoud Ahmadinejad, who tweeted his support of Nike.

The Kaepernick ad comes as Nike continues to deal with internal tumult that includes a slew of executive-level departures following reports of a workplace toxic to women. In August, four former female employees, including one who had worked as a director of marketing, sued the sportswear brand in a class-action lawsuit alleging sex discrimination such as unfair pay and harassment. Separately, Nike came under fire last month after a South African employee's husband used an ethnic slur in a video; the brand closed some South African stores as a result.

Yet analysts have said that the backlash has not trickled down to affect the purchase decisions of everyday consumers, as evidenced by Nike's most recent quarterly earnings report. The company reported a 13 percent increase fourth-quarter revenue to $9.8 billion. The company's fiscal year ended May 31.

Ganis suggested that Kapernick, by aligning with Nike, risks being tainted by the company's own internal problems, including what he described as its "mushrooming 'me-too' issues." But he adds, "all that having been said, I think everybody is going to come out just fine in the end."

"Kaepernick will make millions of dollars on this deal," he says. "Nike will gain street cred, even it it costs them some sales. And the NFL will continue to plod along on this challenging issue." And, he added, "It will probably give President Trump something else to tweet about."

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