What startups can learn from Nike's marketing debacle
And why startups should ignore marketing basics at their own peril
Last week, former Senior Brand Director of Nike, Massimo Giunco, a company veteran of more than 2 decades, wrote a long-ish piece on LinkedIn about how Nike’s senior marketing custodians led the Swoosh down a slope of value and brand destruction.
I had bookmarked it to read myself, but throughout the week, it was shared to me by several people who read this newsletter. And when I read it, I understood why.
A lot of what Giunco talks about in terms of decision making and metrics mentality is what I have covered repeatedly in this newsletter.
In fact, it may well be the very point of the 4 years I have spent writing about startup marketing in the first place: There are certain basics of marketing and brand building, there is a grammar, there is a logic. If you ignore them in pursuit of gimmicks and trends, you are setting yourself up to fail.
The mistakes
I’m paraphrasing, but the following is the core of what happened:
Nike eliminated categories in the business, moving brand, product, development, and sales into a single org structure. When something like this happens, a bunch of core competencies get lost. A brand manager does not know how distributors work, for example. This is a classic recipe for disaster. At Nike, this also resulted in hundreds of jobs being cut, probably the objective of this streamlining in the first place.
They moved from wholesale shoe-selling to the DTC model, taking out in one strike relationships that had been constructed over a long period of time. They dissolved agreements and downsized field sales teams. One outcome of this was that the feedback loop between consumers and the company was broken, resulting in them not knowing what to produce for the sports customer. You can see the result of this in reviews: Product quality has suffered.
This move also upended the leadership that Nike had in the wholesale/retail marketplace. Nike owned the in-person shopping market, basically, and they let go of this position in pursuit of their win-anywhere strategy.
The move to online selling on Nike.com meant that that Nike had to start competing on price, with discounts and bargains that cut into what had been a high-cost, premium brand. This affected the margins and put pressure on the numbers immediately.
But how did this happen? How could leadership let hard-won experience and product superiority be run into the ground this way?
Focusing on digital over brand marketing
Giunco places the blame squarely on leadership’s focus-shift to digital marketing from brand marketing.
This is instantly alarming, because Nike’s legendary brand-building is what inspired many of us to get into marketing in the first place.
But unbelievably, that’s what they did: Nike invested in programmatic and performance marketing over brand marketing, and more tellingly, elevated brand design over brand communication.
Put simply, all that Nike copy you loved? Not important anymore. They downsized local marketing and creative teams (everything will be sold digitally, remember), and tried to build membership programs to keep the sales happening.
The result of all this has been Nike’s terrible performance over the last few quarters, and the gaps it has opened up for competitors to come in and challenge the Beaverton giant.
This is fascinating as a business and marketing case study, but more important and recognisable to readers of this newsletter because I have repeated these same points for such a long time now.
Learnings for startups: The basics don’t change
Digital marketing can only capture demand effectively. It can never create demand. For that you need brand marketing. And you have to be okay with not measuring it perfectly. If you do only things that can be measured, get ready for obsolescence. You will never attract new customers.
Please, please remember this: Just the fact that you measure everything you do doesn’t mean you are doing good marketing. Measurement is not marketing.
As Giunco puts it: “Nike invested a material amount of dollars (billions) into something that was less effective but easier to be measured vs something that was more effective but less easy to be measured.
In conclusion: an impressive waste of money.”
In the devastating reorg and elimination of Nike’s marketing, copy, and sales talent, the leadership violated a basic tenet of management: Don’t break something that is working well. If it is working, there’s a reason, even if you don’t see it. The best thing to do is leave it alone.
Becoming like everybody (in this case DTC) is a huge marketing mistake. Your differentiation is the core of your marketing and brand (and distribution). Why would you change that and want to become like everyone else?
Nike is a brand I’ve loved, like many marketers have, and which has a lot of talent and money and brand power at its disposal. I’m sure they’ll figure this out and get back on track.
But if you are a startup and make these same mistakes, you will have to fight a much tougher battle. The whole reason I have repeated this on my newsletter so many times is also why I’m writing about this again today: The basics don’t change.
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As I say above, I write a lot about these very topics. :)