Nike and the Business Case for Getting Political

Author: Dana Lueck-Mammen | UC Berkeley School of Law | J.D. Candidate 2019 | Posted: February 5, 2019 | Download PDF

On September 5, 2018, Nike released an advertisement that, although not overtly political, immediately led to hordes of #BoycottNike tweets and videos of Nike gear bonfires. But the advertisement was no mistake—in this age of social media, where one tweet can suddenly snowball into a movement with millions of followers, Nike was wisely taking a side on an issue before its customers forced it to. And, despite the anger of some, Nike’s efforts paid off: when the stock market closed on September 13, Nike’s shares had reached an all-time high of $83.47.

What makes the ad so controversial? Not many people dispute the inspirational impact of any of the 16 athletes who appear throughout the ad in a series of video clips. The sole source of ire (as well as most of the praise) is the ad’s star narrator, former San Francisco 49ers quarterback Colin Kaepernick. Kaepernick, who is now an unemployed free agent, is well-known in America for protesting police brutality by refusing to stand during the national anthem, a stance which has earned him both strong praise and sharp criticism. By grouping Kaepernick with the other athletes—and making him the main focus—Nike implicitly endorsed his stance. That endorsement becomes unmistakable when Kaepernick tells viewers to “believe in something, even if that means sacrificing everything” while walking down a street in everyday clothes (rather than running down a football field in a jersey).

Given how much criticism Kaepernick has garnered, it may seem strange to say that Nike made a wise business decision. After all, even liberal Justice Ginsburg initially expressed her disapproval (an action for which she later apologized), and a large swathe of athletes believe that Kaepernick’s protests are what led to his current state of unemployment. But, when looking at the people whose approval most matters to Nike, the rationale becomes clearer. As sports-industry analyst Matt Powell succinctly tweeted, “[o]ld angry white guys are not a core demographic for Nike.” Indeed, Business Insider explains that approximately 67% of Nike’s customers are under the age of 35, and the customer base as a whole is ethnically diverse. Young minorities are generally presumed to be more liberal, and as Sprout Social found, self-identifying liberals are most likely to want the brands they support to take political stands. Thus, although Nike had to have known it would lose a few customers, it was making a very well-informed bet that it would gain many more.

Nike also stood to strengthen its customer base via a more indirect route: by galvanizing the athletes who it depends on to promote its products. Several fellow NFL players joined Kaepernick in kneeling during the anthem, and even among those who didn’t, there was nevertheless a strong outpouring of public support for what he was doing. Kaepernick earned even more praise from athletes outside of the NFL, including NBA superstar Lebron James, one of Nike’s most important sponsors and a co-star in the ad. By supporting Kaepernick, Nike sent the message to its current sponsors, as well as to its potential future sponsors, that it would stand beside them. Unsurprisingly, this message has been very well received.