Finding ROI in Digital
As anyone who works in advertising right now knows, the traditional agency model is going through a huge shift. Where clients once looked towards digital agencies for their specific expertise, we now realizing the importance of having strong integrated agencies; able to navigate everything from TV to a brand's social media presence. Agencies are looking at how they can incorporate these channels in the initial conversation with an overarching idea being at the centerpiece. Ironically, we are likely to go back to the model of the past where one agency handles most of the client's business. But for now, we are contending with more traditional agencies laying people off, social media agencies growing and digital agencies becoming more like large traditional agencies in their hay day, minus the huge production budgets.Recently, there has been a huge debate as to how engaged Facebook users are with brands. Social media agencies, who can thank Facebook for their very existence, are now asking, "how can we get clients to think about social media beyond Facebook?" Many of these social media agencies are hiring more digital strategists and people from traditional backgrounds, realizing they need to diversify their offerings. Everyone is trying to figure out how to navigate the day to day implementation of social media. Do agencies completely cut down long standing barriers and work hand in hand with clients' PR agencies? Do they guide brands initially and then recommend hiring an house community manager? And where does mobile fit into all of this? Do mobile app developers drive the strategy or are they just digital production houses?
And more importantly, agencies are increasingly being asked to prove their ROI on digital. Today, I saw an interesting online campaign done by Wranger Europe. The video featured an Instagram-like film of a couple in a romantic setting. I didn't even quite understand what the website was asking me to do - click an arrow to continue the film? There was a drag feature that froze the film and as far as I'm concerned, its only purpose was to look really cool. And you know what, it did. At that moment while playing on the site, I thought to myself, "Hmmm, Wrangler jeans." In fact, I don't know if I've ever thought about Wrangler jeans. But because Wrangler used digital in an innovative, pioneering way and referenced Instagram, I thought Wrangler was cool and will look for them the next time I go shopping.
So I ask - when was the last time a client measured the efficacy of a television campaign beyond eye balls and brand sentiment? When was the last time an agency measured a radio campaign beyond listeners? So as we increasingly expect digital to create a stronger connection with consumers, and have even higher expectations for measurability and ROI, I ask, why should digital be any different? By developing innovative, digital campaigns, clients are relaying to consumers that they are innovative and forward thinking, thus becoming more appealing in a consumer's eye. In fact, it's no coincidence that leaders in their category including Nike, American Express, Coca-Cola and even Virgin America are all known digital innovators. Sounds like some pretty strong ROI to me.
Brands: A Lesson in Western Religion
As I contemplate my next move in the advertising world, I’ve started to delve into the science and philosophies behind positioning a brand. With each client I've worked for, I've wondered, will these ads even matter if at its core, the company does not share these beliefs? A few months ago, I attended PSFK’s conference in NYC and was inspired by their collection of speakers ranging from those passing on philosophical insights to practical advice. Vikram Gandhi’s talk on “Directing “Kumaré From Illusion Comes Truth,” stood out as an eye opening look into why brands have become such an important part of our lives. And well known for being an expert on branding, Debbie Millman’s book Brand Thinking and Other Noble Pursuits compares brands to religions in the first few pages.As an art history minor who spent a semester in Florence, I realize how the history of advertising can neatly be aligned with the history of Christianity. I focus on Christianity only because I am more familiar with its history and symbolism thanks to my art history classes while abroad.
In the beginning of Christianity, Jesus and his story were depicted through symbols. A circle, or halo was used to indicate Jesus along with other elements to indicate important people in his story. Mosaics in North Eastern Italy (Ravenna, Rimini), were featured in churches where people gathered to gain wisdom, a sense of community and direction from these images, each other and spiritual leaders. Compare this to the experience of regularly buying from a store in the 1800s. Would buying from one particular dressmaker or tailor make you seem more educated or put you in the upper class? While you felt that wearing their clothing gave you a particular sense of confidence, the key contact with the "brand" was limited to the physical location it was sold in just as the main connection with Jesus was made in a church.
Eventually, as Christianity grew in Italy, so did the experience of worshipping Jesus. Catholic Churches became more gilded, and church-goers were surrounded by painted imagery that told the story of Jesus. Through rituals and community, Christians were reassured that they were a part of something special and somehow connected to something bigger than themselves. The spread of the word of God inspired countless artwork around its stories but the ownership of the "brand of Christianity" was strictly controlled by the Catholic church.
In parallel, as brands developed in the late 1800s, so did the experiences around them. Their story was told through the
in store experience and through newspaper ads. Brands helped people identify who they were and gave them a sense of belonging. Do you drive a Ford or a Mercedes? Do you smoke Camels or Marlboros? The brand images were tightly controlled by the companies that ran them. Brands developed manifestos and content; Soap Operas, The Michelin Guide, etc. but it was not a two way conversation between the brand and the consumer.
Eventually, the Catholic church became the most powerful force in Europe and started abusing its power by charging believers to have their sins forgiven. Like a company that lies to their customers because they know they can get away with it, their brand image eventually suffered. The intersection of Martin Luther's theses' against the Catholic church and invention of the printing press created a huge shift in people's relationships with Christianity. The new group of Protestants were taught that they had a direct relationship with Jesus and could read the Bible for guidance.
Fast forward to the onset of social media in our current century. Like the invention of the printing press in the early 15th Century, social media has enabled an even faster spread of information. Companies who have chosen to take advantage of customers have been exposed and no longer exist. Like Protestants, I can have a direct relationship with the brands I admire through social media. I have a shared set of beliefs with other users of my brands and the brand acts as a virtual church or community where I can connect with people who share my interests. I can go into a Nike store and put on a pair of shoes that I think will make me run faster. Or I can go for a run, motivated by Nike+ in the hopes that I'll run faster and further. Just as I can go to church and take communion or choose to cultivate my own relationship with God at home worshiping various icons and performing certain rituals.
During Easter Services this year, my Pastor, Pastor Derr, known in the religious community for promoting the universality of all religions, said that religions are connected by a universal, human truth. He cautioned against religions that discriminate or against those who skew parts of the Bible for their own personal agenda. He reminded us that we all have the power to learn from our religious leader's teachings and find support through our faith. Clearly this thinking doesn't have to apply to Jesus but rather, to any religion.
So where does this leave brands? Consumers are increasingly expecting the brands they buy to entertain and more importantly, inspire them. I want to know that a brand isn't just out there just to get my money, but exists to make a positive contribution to society, just like I know that my offering to the church will go towards helping the needy. Only then when a brand has entertained or inspired me and given back to society, will I purchase their products in the hopes that the brand will live on to "do good."
I gave money to my church at the service not because I had to, but because I wanted to support the institution and people who had inspired me, who had connected me to others, and who I know will continue to give me spiritual guidance and fulfilling experiences. Because as strong and as resilient as I am, I still need a supportive community and the occasional inspirational push. I don't know if that moment of support will come from a brand or a religious institution but I do know that the person giving it to me will receive my loyalty as a customer.
How Nike Is Embracing Digital & Social Media - Re-Blogged from Fortune
Nike's new marketing mojo
February 13, 2012: 5:00 AM ET
How the legendary brand blew up its single-slogan approach and drafted a new playbook for the digital era.
By Scott Cendrowski, writer-reporter
FORTUNE -- Few outsiders have visited the third floor of the Jerry Rice Building at Nike's headquarters. Even most Nike employees know little about just what the staffers working here, on the north side of the company's 192-acre campus in Beaverton, Ore., actually do. A sign on the main entrance reads RESTRICTED AREA: WE HEAR YOU KNOCKING, WE CAN'T LET YOU IN, and it's only partly in jest. Inside, clusters of five or six employees huddle in side conference rooms where equations cover whiteboard walls. There are engineers and scientists with pedigrees from MIT and Apple. Leaks are tightly controlled; a public relations man jumps in front of a visitor who gazes at the computer screens for a little too long.
Once upon a time, the hush-hush plans and special-access security clearance would have been about some cutting-edge sneaker technology: the discovery of a new kind of foam-blown polyurethane, say, or some other breakthrough in cushioning science. But the employees in this lab aren't making shoes or clothes. They're quietly engineering a revolution in marketing.
This hive is the home of Nike Digital Sport, a new division the company launched in 2010. On one level, it aims to develop devices and technologies that allow users to track their personal statistics in any sport in which they participate. Its best-known product is the Nike+ running sensor, the blockbuster performance-tracking tool developed with Apple (AAPL). Some 5 million runners now log on to Nike (NKE) to check their performance. Last month Digital Sport released its first major follow-up product, a wristband that tracks energy output called the FuelBand.
But Digital Sport is not just about creating must-have sports gadgets. Getting so close to its consumers' data holds exceptional promise for one of the world's greatest marketers: It means it can follow them, build an online community for them, and forge a tighter relationship with them than ever before. It's part of a bigger, broader effort to shift the bulk of Nike's marketing efforts into the digital realm -- and it marks the biggest change in Beaverton since the creation of just do it, or even since a graphic design student at Portland State University put pen to paper and created the Swoosh.
Nike's new digital hook: the Nike+ logo; the new Nike FuelBand; and the Nike+ SportWatch GPS
Just try to recall the last couple of Nike commercials you saw on television. Don't be surprised when you can't. Nike's spending on TV and print advertising in the U.S. has dropped by 40% in just three years, even as its total marketing budget has steadily climbed upward to hit a record $2.4 billion last year. "There's barely any media advertising these days for Nike," says Brian Collins, a brand consultant and longtime Madison Avenue creative executive.
Gone is the reliance on top-down campaigns celebrating a single hit -- whether a star like Tiger Woods, a signature shoe like the Air Force 1, or send-ups like Bo Jackson's 'Bo Knows' commercials from the late '80s that sold the entire brand in one fell Swoosh. In their place is a whole new repertoire of interactive elements that let Nike communicate directly with its consumers, whether it's a performance-tracking wristband, a 30-story billboard in Johannesburg that posts fan headlines from Twitter, or a major commercial shot by an Oscar-nominated director that makes its debut not on primetime television but on Facebook. Says Jon Bond, co-founder of Kirshenbaum Bond Senecal & Partners who now runs a social media agency: "Clearly they think they can get by without big television campaigns anymore."
The reason for the shift is simple: Nike is going where its customer is. And its core customer, a 17-year-old who spends 20% more on shoes than his adult counterparts, has given up television to skip across myriad online communities. Not only does Nike think it can do without the mega-TV campaigns of old, it says the digital world allows the brand to interact even more closely with its consumers -- maybe as closely as it did in its early days, when founder Phil Knight sold track shoes out of his car in the 1960s. That's a major change, Nike CEO Mark Parker explained toFortune during a recent interview in his tchotchke-filled office in Beaverton. "Connecting used to be, 'Here's some product, and here's some advertising. We hope you like it,' " he says. "Connecting today is a dialogue."
Of course, it's impossible these days to find a Fortune 500company without an app or a social media strategy. But Nike has been lapping other blue-chip marketers in this domain: It spent nearly $800 million on 'nontraditional' advertising in 2010, according to Advertising Age estimates, a greater percentage of its U.S. advertising budget than any other top 100 U.S. advertiser. (And Nike's latest filings indicate that that figure will grow in 2011.) It's hired scores of new engineers to make technology for online communities (Digital Sport has grown from 100 to 200 employees in the past six months and has moved into a larger space on the outskirts of campus). And the brand has overhauled its $100 million-plus campaigns around major events like the World Cup and Olympics to focus on online campaigns first. The result? Before, the biggest audience Nike had on any given day was when 200 million tuned in to the Super Bowl. Now, across all its sites and social media communities, it can hit that figure any day.
That's all the more impressive given that Nike shouldn't be good at this. After a decade of growth, its sales have reached $21 billion, making it the world's largest sports company, a full 30% bigger than closest rival Adidas. But biggest is rarely best in the brand game, where niche players routinely run circles around lumbering giants, especially in the new digital world. Hot upstarts like Under Armour (UA) and Lululemon (LULU) have established fast-growing, cultlike followings, while smaller players like Quiksilver (ZQK) and Vans are already going after next-generation tweens. Even Adidas's 2006 merger with Reebok has created a new formidable global foe.
None of this is lost on Parker. "My fear was that we would be this big blood bank of a company that was dabbling across all these areas and wasn't seen as cool, as interesting, as relevant, as innovative," he says. Not too long ago Parker sketched a big Swoosh being eaten by a dozen Pac-Men to demonstrate how easily competitors could overtake Nike.
Just market it: 7 of Nike's notable campaigns
Like almost every large company, Nike stumbled early in the digital world. In the late '90s it celebrated the start of NCAA March Madness on its home page in every country. Europeans had no idea what was going on. But it improved over the years. Around 2005 its then-revolutionary Nike iD online store, where customers could design their own shoes, became a surprise hit, reaching $100 million in sales within a few years.
In 2006 it started experimenting with social networking and online communities, partnering with Google (GOOG) for a World Cup-related social network called Joga. Then came Nike+. After Nike engineers started noticing everyone on the Oregon campus using iPods, teams at Nike and Apple met to hash out a simple idea: synchronize jogging data with an iPod. Steve Jobs loved the idea (Apple CEO Tim Cook serves on Nike's board, but Parker also had a good relationship with Jobs). Powered by a sensor inside running shoes, the service both monitors a runner's performance and provides digital coaching. A voice lets runners know how much farther they have to go; the PowerSong function generates a musical blast for extra motivation. At the end, it logs details of the workout onto Nikeplus.com, where users can store and analyze the data, get training tips, and share workouts with friends. Whereas Nike's digital campaigns communicate the brand image, the Nike+ platform creates an intimate conversation and a laboratory that lets the company study its customers' behaviors and patterns. The company won't offer financial details about Nike+, but analysts say the 55% growth in membership last year was important in driving sales in its running division up 30%, to $2.8 billion.
Two years ago a group including Stefan Olander, 44, a longtime marketing executive (and Matthew McConaughey look-alike) formally pitched Parker on the idea for Digital Sport, a cross-category division that would take the Nike+ idea -- chip-enabled customer loyalty -- into other sports. Up and running a month later, the Digital Sport division now works across all of Nike's major sports.
A massive digital billboard in Johannesburg asked fans to submit messages.
For all its success, though, a follow-up blockbuster to Nike+ has been elusive. The company has high hopes for the FuelBand, a $149 wristband that measures movement and calculates its user's exertion levels throughout the course of the day. Like Nike+, users sync to the Nike platform online to analyze their results. At the FuelBand's official unveiling in Manhattan -- a splashy event emceed by Jimmy Fallon -- Parker compared it to the launch of Nike Air or the first Air Jordan shoe.
While Digital Sport is crafting gizmos, Nike has also been revamping its giant advertising bursts around major events like the World Cup and Olympics. The highlight of its 2010 World Cup campaign, for instance, was a commercial produced by Nike ad agency Wieden + Kennedy and shot by Babel director Alejandro González Iñárritu. Called "Write the Future," the ad featured Nike soccer stars Wayne Rooney and Christano Ronaldo imagining the riches that come with winning the cup. But instead of making its debut on-air, the ad launched on Nike Football's Facebook page. Wieden and other agencies spent months cultivating a base of 1 million "fans" and teasing the ad's debut. When it aired, it whizzed around blogs and wall posts at warp speed, gathering 8 million views in a week to set a viral-video record.
For decades Nike's closest partner in reaching the masses was Wieden + Kennedy, the famously hip place whose 30-year collaboration with Nike is one of advertising's longest and most prolific. But Nike's digital shift has had reverberations here too. In 2000, Wieden handled all of Nike's estimated $350 million in U.S. billings. Now those campaigns are increasingly split between Wieden and a host of other agencies that specialize in social media and new technologies. In a closely followed dustup in 2007, Nike dropped Wieden from its running account reportedly because the agency was behind in digital efforts. Wieden has added more digital positions to its Nike "platoon." (Wieden reclaimed the running account just 13 months after losing it.) But it now splits billings with agencies like R/GA, AKQA, and Mindshare. "Collaboration is the new thing," says Dan Sheniak, Wieden's global communications planning director on Nike, maybe trying to look on the bright side.
Perhaps the biggest impact of Nike's shift falls to the people whose names adorn every building on its campus: superstar athletes. Consider the controversies that Tiger Woods, Michael Vick, Lance Armstrong, and LeBron James -- Nike endorsers all -- have sparked over the past five years. Industry insiders say the effect is difficult to measure in the short term. But as the marketing mix becomes less about hero worship and more about consumer-driven conversation, they say, Nike is insulating itself from an era of athlete endorsements gone wrong. "Everybody's realized there's not the same one-to-one relationship as in the past: When Jordan's hot, his shoes are hot," says a former Nike executive. "I don't know if hero worship is the same as it used to be."
To be sure, marquee athletes haven't disappeared: Kobe Bryant is arguably the biggest sports celebrity in China, Nike's second-largest market, and Michael Jordan's brand remains one of the company's most powerful franchises. But for the first time in its history, Nike isn't wholly reliant on a handful of superstars to move merchandise.
So is it working? Is Nike's massive digital push a true replacement for its marketing past? Its unconventional approaches have won accolades from insiders. "They have their finger on the pulse of what their customer is looking for," says David Carter, executive director of USC's Sports Business Institute. Institutional investors who pay close heed to Nike's subtlest moves have voted in favor of the changes: The company's stock has returned 120% over the past five years as the S&P 500 index (SPX) has returned just 2.5%.
That's not to say everything has been a slam dunk. Nike shut down its Joga network after the last World Cup game in 2006, confusing the million-plus members who'd signed up for it. Its Ballers Network, meanwhile -- launched in 2008 as an app that let basketball players organize street games -- recently had less than 300 users in the U.S.; a recent wall post was a teenager complaining he couldn't get it to work. And critics say products like the FuelBand and Nike+, while dazzling, are more about keeping Nike's retail prices high than innovating.
In public Nike executives will protest this characterization. But if running shoes continue flying off the shelves, they won't blink at the criticism. That's exactly the kind of shrewd marketing attitude that drove Nike's past success. After perfecting the art of big branding, it's moving on to a world in which its consumers want to be told less and just do more. Which, when you think about it that way, might not be such a big change after all.
This article is from the February 27, 2012 issue of Fortune.