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Quitting Cold Turkey… Nike’s Example… “Connecting today is a dialogue.”

February 20, 2012

Earlier in my career, while at Reebok in the ’90’s, I was continuously  in awe at Nike’s execution-superiority.  The company seemed to be able to see around corners and be where the puck was going as it arrived.

They’re still at it.  Several days ago I happened upon this piece in Fortune depicting Nike’s complete transformation from mainstream marketer to digital 2.0 marketer.   For an old competitor, the piece reads like an intense, multi-layered spy novel.  For the rest of you, perhaps there’s an opportunity to take a peak around the corner while fast forwarding to where the puck is headed…  some excerpts

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.

…This hive is the home of Nike Digital Sport, a new division the company launched in 2010.

…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.

…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.

…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.” 

…the marketing mix becomes less about hero worship and more about consumer-driven conversation…

…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 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.

Read more

This chart says it all…

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