Nike recently posted a significant reduction in earnings: its share price plummeted 20% as $21bn was wiped off its value.
In the latest Marketing Week, Mark Ritson outlines what he believes are the four fundamental errors Nike made that caused such a decline.
These provide valuable insights (listed below) directly applicable to sports rights holders aiming to cultivate a larger, more engaged audience to increase consumption of their media product and/or participation in their sport.
We at Redtorch have added suggestions on how best to apply them.
Put product innovation at the heart of audience growth
Ritson points out that Nike’s monetary losses were partly due to a lack of product innovation. For sports organisations, this emphasizes the importance of constantly evolving and improving the fan experience.
Whether it’s enhancing activities onsite, developing interactive digital content or creating unique merchandise, innovation is crucial to capture and retain audience interest.
Application: offer new, engaging formats, experiences or products to attract diverse demographics by:
- using augmented reality (AR) to enrich the live experience
- offering behind-the-scenes content to make your sport more appealing/accessible, driving consumption and participation
- content personalization such as providing personalised video highlights, customised news feeds about their favourite teams or athletes
Balance short-term activation with long-term brand-building
Ritson’s critique of Nike’s emphasises a common marketing pitfall – the reliance on short-term performance at the expense of brand-building.
It’s easy in sports marketing to focus on driving immediate sales (sponsorship, tickets, merchandise etc.), but the success of short-term activations is reliant on brand strength and this needs a longer-term approach that builds emotional connections with an audience.
Application: invest in storytelling that extends outside of an event by:
- using emotional creative that helps audiences understand why they should care, e.g. athlete journeys, community impacts, relatable nostalgic moments
- building deep emotional connections with fans to ensure they remain engaged
- delivering sustainable increases in participation/consumption over time
- growing the impact of short-term sales activations
The importance of omnichannel distribution
As Ritson noted, Nike’s over-reliance on direct-to-consumer (DTC) channels proved costly. Despite a recent surge in investment in owned-and-operated stations, this should form only part of a distribution strategy rather than being relied upon (as Nike found out the hard way).
Sports rights holders must be present across multiple touchpoints to effectively engage their audience.
Application: ensure your sport is accessible across various platforms – from traditional broadcast/social media to in-person events/grassroots programmes in addition to owned-and-operated channels (if relevant/possible) to:
- reach different segments of your potential audience, making it easier for them to consume content/participate in activities
- capture first-party data to build audience insights
The need to adapt rather than overreact to market shifts
Ritson’s observation of how Nike misjudged the long-term impact of COVID-19 serves as a cautionary tale. While it’s important to adapt to circumstances, sports organisations should avoid overreacting to shifts in market trends.
It was wrong to assume, for example, that virtual events or remote engagement would permanently replace in-person experiences.
Application: maintain strategic flexibility by:
- combining digital engagement with in-person events as conditions evolve
- continuing to build digital communities while simultaneously preparing for a return to large-scale events that reignite passion/participation
By learning from Nike’s mistakes, sports rights holders can create a more balanced, innovative and adaptable audience-building approach. This will ensure a deeper connection to – and stronger relationship with – your sport/league/team.
A blend of short-term activation and long-term brand building, omnichannel accessibility and thoughtful adaptation will drive the sustained growth of sports audiences in what is an ever-evolving market landscape.
Chris Argyle-Robinson
Digital savvy. Always inquisitive. Sport loving and father of two young and very energetic girls.
My most memorable sporting moment is …
Spectating: Zenit St Petersburg v Liverpool with fellow director / friend Alex Ross.
Participating: Marathon in 3hr 40mins.
I am happiest when …
With family on the beach or in the mountains.
The sports person that best represents me is …
Geraint Thomas.
The three things at the top of my bucket list are …
1. Heli skiing with family and friends
2. Visit South Georgia and the South Sandwich Islands
3. Climb Everest / Surf Chicama
A quote I try to live my life by is …
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”