All Business is Politics: Nike’s Huge Return on Colin Kaepernick

On September 3, 2018, Colin Kaepernick posted on his personal Twitter account an image featuring a close-up photo of his face with the words, “Believe in something, even if it means sacrificing everything. Just do it.”[1] The photo was a Nike advertisement that the company’s Twitter account subsequently retweeted to kick off the thirtieth anniversary of the Just Do It campaign.[2] Nike had decided to make Colin Kaepernick, a former quarterback of the San Francisco 49ers, the face of their advertising campaign in both print and video.[3]

 

Nike’s decision sparked backlash from former consumers, who burned or destroyed their Nike gear in protest and organized a plan to boycott the company.[4] The visceral response from some consumers stemmed from Kaepernick’s decision in 2016 to kneel during the national anthem at National Football League (NFL) games to protest police brutality and the significant number of police killings of unarmed black and brown men.[5] While some fans heavily criticized Colin Kaepernick’s kneeling as being unpatriotic and anti-police, others have embraced him as a champion of promoting racial equity and drawing attention to a major issue being overlooked in another setting, the football field.[6]

 

What is puzzling to me is: Why would Nike be willing to embrace a polarizing figure that would align the brand with a liberal ideology?

 

The choice to embrace Kaepernick reflects Nike management’s decision to connect with key consumers. Steven Bainbridge describes how corporate executives have embraced a form of corporate populism that appeals more directly to liberal views, and as a result, isolates the conservative vein of populism.[7] Mark Parker, the Chief Executive Officer and Chairman of the Board of Directors at Nike, displayed his willingness to embrace these customers in a recent shareholder meeting by saying, “We are a sports company, first and foremost, but we believe that this communication, this campaign, is inspirational to many people.”[8] Parker’s decision to align the organization with Kaepernick’s stance on police brutality might reflect his own personal views,[9] but the ad was also a profit-maximizing tool to connect with Nike’s key consumer base. While Nike could be at a loss for excluding its conservative consumers, the organization has much more to gain from embracing liberal customers.

 

Nike’s message in the advertisement successfully connected with younger consumers yielding a positive response. In using social issues in advertisements, corporations attempt to pick issues they know will resonate with their target demographic.[10] According to a CNN poll, a younger demographic (age 18 to 34) approved of the advertisement at 44%, while 32% disapproved. [11] In addition, older individuals (age 35 to 44) approved at 52% and 37% disapproved.[12] Nike was able to attract a younger and more socially conscious age group. Through embracing a polarizing figure like Colin Kaepernick, Nike can generate a stronger relationship with consumers. The advertisement’s message resonated so strongly with Nike’s key customers that the company experienced an increase in product sales.

 

A metric that scholars use to analyze the stakeholder response to a corporate message is a consumer’s willingness to pay more for products from companies that are consistent with their own values.[13]  In the days following the advertisement’s release, online sales increased by 27% compared with previous years’ numbers.[14] In addition, Nike released a long sleeve T-Shirt with Kaepernick’s name on the back, the Nike logo on the sides, and the phrase from the advertisement that states, “Believe in something, even if it means sacrificing everything.”[15] The shirt retailing at fifty dollars sold out in seven hours on Nike’s online store.[16] Although it is difficult to determine how many shirts were initially in stock, consumers actively purchased Nike products that were heavily tied to the advertisement and political message. In this situation, the proceeds did not extend to a charity, but directly into Nike’s shareholders’ pockets. Consumers expressed their support of Nike’s decision not only through purchasing more of its products, but also signaling to the company that they agree with Nike’s position to embrace Kaepernick and his political message.

 

Publicizing the advertisement on Twitter—a social media platform that President Trump frequently uses[17]—not only generated a response from the President, but it also helped to amplify the message and reach more consumers.[18]

 

Over the past five years, chief executives have taken public positions on social media to display their support for social change, such as Chief Executive Officer of Salesforce Marc Benioff’ declaring opposition to the “religious freedom” bills on Twitter.[19] Especially during the Trump era, pressure is intensifying for corporate officers to take public positions on social issues. The Nike ad is no different.

 

Prior to the advertisement’s release, President Trump stated on Twitter (in reference to NFL players who kneel during the national anthem) that the NFL should adopt a new set of rules: “First time kneeling, out of the game. Second time kneeling, out for season/no pay!” [20] Nike’s advertisement praises the right to protest, which sits in direct conflict with President Trump’s position. Publishing the ad through Twitter allowed for a direct response from the President, who responded the next day by saying, “Nike is getting absolutely killed with anger and boycotts. I wonder if they had any idea it would be this way?”[21] The President inadvertently positively affected Nike’s reach by redirecting his millions of followers to engage in further discussion about the advertisement. A few days later, the President wrote on Twitter, “What was Nike thinking?”[22] Again, the President refocused the conversation on the subject that, which elicited more publicity for Nike’s brand.[23]

 

The ad from Kaepernick’s account sparked so much discussion that it provided Nike with free publicity. The tweet garnered $163 million of free advertising over the three days following the initial Tweet.[24] Despite $40.9 million resulting in negative free publicity in the form of criticism or boycotts, Nike still received $65.58 million in positive publicity and $48.84 million in neutral exposure.[25] The numbers signify strong consumer support of the message.

 

The support was so extensive amongst consumers that other public figures spoke out in support.[26] For example, Jenifer Lewis, an actress from the television show Black-ish, made the unorthodox decision to wear Nike to the Emmy Awards[27]. Lewis told reporters, “I am wearing Nike to applaud them for supporting Colin Kaepernick and his protest against racial injustice and police brutality.”[28] Ms. Lewis so openly embraced the company based on its commitment to promote Kaepernick’s message, that she was willing to forgo the chic dress for sportswear. The power of Nike’s message not only signifies how salient the impact on a consumer, such as Lewis, is, but also how the ad could reach a larger audience within the film industry.

 

Scholars analyzing brand loyalty evaluate “an enduring relationship that manifests itself as repeat purchase and a resistance to purchase form other companies.”[29] While it may be difficult to project the long-term affect that Nike’s ad will have on consumer behavior, it is notable how much media coverage on the advertisement itself alluded to Nike’s past commitment to social action. For example, Adweek ran a story describing how the recent political stance was “nothing new for the brand.”[30] Nike had included social messaging in their advertisements featuring Ric Munoz, a marathon runner with HIV, and the fortieth anniversary of Title IX, the federal statute ensuring equal access to athletics for women.[31] Also, Vox, a left leaning publication, touched on Nike’s decision in the 1990s to launch an advertisement campaign directed at female empowerment in sports through the phrase, “If You Let Me Play.”[32]

 

The recent media coverage supports consumer loyalty through reinforcing Nike’s image as a socially conscious corporation. As Daniel Korschun and N. Craig Smith highlight in a recent article in the Harvard Business Journal, companies that remain consistent with their values and their stances on political issues are successful because consumers prefer predictability. [33] Even though Nike has already accrued social capital in the past, they are still willing to engage with consumers over issues that most companies might never want to address. Therefore, previous action in the social issue sphere lowers skepticism of the corporation and allows its consumers to continue to buy into the Kaepernick narrative, solidifying their brand loyalty.

 

In the past, Nike leadership has periodically signaled their willingness to feature polarizing athletes in their advertisements. In a 1992 interview for the Harvard Business Review, Phil Knight, the founder of Nike, said, “To create a lasting, emotional tie with consumers, we use the athletes repeatedly throughout their careers and present them as whole people.”[34] The terrain of taking on polarizing figures is not a new business strategy of Nike’s, but rather a long, concerted effort to connect with consumers and maintain their loyalty.

 

Through publicly embracing Kaepernick, Nike also strengthened its relationship with the professional athletes the company sponsors as independent contractors. During the 2018 US Open, Serena Williams, a prominent tennis player and a Nike-sponsored athlete, told reporters, "Having a huge company back him, could be a controversial reason for this company but they're not afraid and I feel like that was a really powerful statement to a lot of, a lot of other companies."[35] In her words, Williams acknowledges her own support for the company and its willingness to take a strong position on police brutality. As one of the highest paid female professional athletes,[36] Williams can be the face of any athletic company, but Nike’s values are consistent with hers which maintains their business relationship. Another prominent athlete to vocalize support is professional basketball player, Lebron James.[37] As the highest paid player in the National Basketball Association,[38] James has the capacity—like Serena Williams—to sign with any major athletic distributor, but rather he maintains his commitment to Nike. For example, James wore the Kaepernick T-Shirt at a recent Lakers basketball game to show support[39] and previously said, “[he] stands with Nike.”[40] The advertisement works to reinforce business relations between Nike and prominent private contractors that benefit the brand financially by helping sell their product.

 

In response to the advertisement’s release, multiple government officials retaliated through public denunciation of Nike, and threatened to end existing business relationships with the company.[41] For example, the North Smithfield Town Council in Rhode Island voted to end purchase agreements with Nike in local government agencies.[42] In addition, the Mayor of Kenner, Louisiana, Ben Zahn, issued a memo following the advertisement that states, “Under no circumstances will any Nike product or any product with the Nike logo be purchased for use or delivery at any City of Kenner Recreation Facility.”[43]

 

Despite effectively insulating the company from legal liability and producing a profitable outcome, Nike charted a new path for corporate action in politics that begs the question: Is it desirable for companies to take stances on political issues?

 

To start exploring this question, it’s worth hearing from Nike’s employees. A key component of successful political messaging is through worker motivation. In a recent Rolling Stones article that interviewed employees working in the Nike call center, one employee daunted with the rantings of disgruntled customers still felt he supported the overall message. The employee noted, “A lot of us have more respect for our company than we have in the past. We feel a big swell of pride that we stood up for something meaningful. But we’ve been getting harassed like crazy.”[44] Despite having to manage day-to-day criticisms from customers that feel passionately opposed to the messaging employed by Nike, employees are still extremely proud of where they work. Although this is difficult to quantify, the morale of employees should not be overlooked as it contributes greatly to a company’s ability to mobilize a movement.

 

On the other hand, multiple critics who support Kaepernick’s message still question the impact of the advertisement on the issue of police brutality. For example, some argue that the advertisement itself dilutes the message of racial inequality in the United States by not directly addressing the issue.[45]  The video and photo advertisements never mentions the word “race” or “police brutality,” and the video repeats the tagline from the image posted on the billboard, which states, “Stand up for what you believe in. Even if it means losing everything.” In the age of Trump’s presidency, liberals may feel their consciences eased by purchasing goods that are consistent with their values, but that does not necessarily mean these individuals are engaging in direct political action.[46]

 

Another line of criticism, levied by Delaware Supreme Court Justice Leo Strine and Jonathan Macey, is whether the law should restrain corporations from taking political positions because investors do not regularly support companies in the hopes of advancing a political goal.[47] Although some millennial investors purchased Nike stock as a result of the advertisement,[48] the problem still arises that previous investors did not invest based on political values.[49] For instance, the members of retired Englewood Cliffs Police Department tried to lobby New Jersey officials to pull the public pension fund that manages $77 billion from Nike as a result of the advertisement, but ultimately failed.[50]

 

Nike’s decision to employ Colin Kaepernick as the face of the brand strengthened existing relationships with key stakeholders such as employees, contractors, and consumers, and did not bear legal risk as Nike was insulted from shareholder liability by the business judgement rule. Nike’s position was also protected by the First Amendment, which allows it to file lawsuits against governments that have rescinded their contracts with Nike. The advertisement allowed Nike to benefit from the monetary, and non-monetary, benefits of taking a political stance, and reflects a willingness to shift marketing tactics. Other companies might wish to implement similar advertising strategies in the hopes of capitalizing on the success that Nike’s campaign has received, but it might be difficult to recreate considering Nike’s history and its stature within the market.


SOURCES

[1] Lauren Thomas, Jessica Golden, Here’s Nike’s full ad featuring Colin Kaepernick, Lebron James, Serena Williams and other athletes, CNBC (Sept. 5, 2018), https://www.cnbc.com/2018/09/05/heres-nikes-full-ad-featuring-colin-kaepernick-and-other-athletes.html.

[2] Dan Green, Trump tweets that Nike is ‘getting absolutely killed with anger and boycotts’ over tis Colin Kaepernick ad, Business Insider (Sept. 5, 2018), https://www.businessinsider.com/trump-tweet-nike-boycott-colin-kaepernick-ad-2018-9.

[3] Id.

[4] Id.

[5] Billy Witz, This Time, Colin Kaepernick Takes a Stand by Kneeling, NY Times (Sept. 1, 2016), https://www.nytimes.com/2016/09/02/sports/football/colin-kaepernick-kneels-national-anthem-protest.html.

[6] Lee Siegel, Why Kaepernick Takes the Knee, NY Times (Sept. 25, 2017), https://www.nytimes.com/2017/09/25/opinion/nfl-football-kaepernick-take-knee.html.

[7] Stephen M. Bainbridge, Corporate Purpose in a Populist Era, UCLA School of Law, Law & Economics Research Paper Series 1, 28-29 (2018).

[8] NIKE, Inc. Annual Shareholder Meeting Transcript September 20, 2018, https://s1.q4cdn.com/806093406/files/doc_downloads/2018/09/NIKE-Inc-2018-Annual-Shareholders-Meeting-Transcript-9-20-2018-FINAL.pdf (last visited Dec. 16, 2018).

[9] Mark Bain, Colin Kaepernick ad is what happens when capitalism and activism collide, Quartz, (Sept. 29, 2018), https://qz.com/1400583/modern-corporate-social-activism-looks-like-nikes-kaepernick-ad/.

[10] Minette E. Drumwright, Company Advertising with a Social Dimension: The Role of Noneconomic Criteria, 60 Journal of Marketing 71, 79-82 (Oct. 1996).

[11] Nathaniel Myersohn, Young people Support Nike’s bet on Kaepernick, polls show, CNN Business (Sept. 13, 2018), https://money.cnn.com/2018/09/13/news/companies/nike-colin-kaepernick-just-do-it-national-anthem-nfl-football/index.html?iid=EL.

[12] Id.

[13] CB Bhattacharya ET AL., Leveraging Corporate Responsibility: The Stakeholder Route to Maximizing Business and Social Value 55 (2011).

[14] Eben Novy-Williams, Nike orders Rose in Four-Day Period After Kaepernick Ad Debut, Bloomberg News (Sept. 7, 2018), https://www.bloomberg.com/news/articles/2018-09-07/nike-orders-rose-in-four-day-period-after-kaepernick-ad-debut.

[15] Jack Baer, It took less than a day for Nike’s new Colin Kaepernick shirts to sell out, Yahoo Sports (Oct. 26, 2018), https://sports.yahoo.com/took-less-day-nikes-new-colin-kaepernick-shirts-sell-233628819.html.

[16] Id.

[17] Robert Draper, The Man Behind the President’s Tweets, NY Times Magazine,(April 16, 2018), https://www.nytimes.com/2018/04/16/magazine/dan-scavino-the-secretary-of-offense.html.

[18] Chloe Bryan, Trump’s Nike Tweet proves you should never ask a rhetorical question on Twitter, Mashable, (Sept. 7, 2018), https://mashable.com/article/donald-trump-what-was-nike-thinking-tweet-reactions/#nMtaxJWe.sqr.

[19] The Economist, In the Trump era, big business is becoming more political, (Nov. 30, 2017), https://www.economist.com/business/2017/11/30/in-the-trump-era-big-business-is-becoming-more-political.

[20] Nate Davis, President Trump tweets NFL players shouldn't be paid if they kneel for national anthem, USA Today (July 20, 2018, 6:45pm), https://www.usatoday.com/story/sports/nfl/2018/07/20/president-trump-players-shouldnt-paid-if-kneeling-anthem/810484002/.

[21] Dennis Green, Trump tweets that Nike is ‘getting absolutely killed with anger and boycotts’ over its Colin Kaepernick ad, Business Insider, (Sept. 5, 2018, 10:15am), https://www.businessinsider.com/trump-tweet-nike-boycott-colin-kaepernick-ad-2018-9.

[22] Chloe Bryan supra note 26.

[23] Id.

[24] Brandon Kochkodin, Buzz from Nike’s Kaepernick Campaign Now Worth More than $163 Million, Bloomberg News (Sept. 6, 2018), https://www.bloomberg.com/news/articles/2018-09-06/value-of-nike-s-exposure-from-kaepernick-ad-up-to-163-million.

[25] Id.

[26] Kenzie Bryant, Emmys Red Carpet: Jenifer Lewis Wears Head-to-Toe Nike to Support Colin Kaepernick, Vanity Fair (Sept. 17, 2018), https://www.vanityfair.com/style/2018/09/jenifer-lewis-black-ish-emmys-nike-colin-kaepernick.

[27] Id.

[28] Id.

[29] CB Bhattacharya, supra note 19, at 54.

[30] Diana Pearl, Why Nike’s 30th Anniversary Ad Featuring Colin Kaepernick Is a Worthwhile Risk, Adweek (Sept. 4, 2018) https://www.adweek.com/brand-marketing/why-nikes-30th-anniversary-ad-featuring-colin-kaepernick-is-a-worthwhile-risk-for-the-brand/.

[31] Id.

[32] Alex Abad-Santos, Nike’s Colin Kaepernick ad sparked a boycott—and earned $6 billion for Nike, Vox (Sept. 24, 2018), https://www.vox.com/2018/9/24/17895704/nike-colin-kaepernick-boycott-6-billion.

[33] Daniel Korschun, N. Craig Smith, Companies Can’t Avoid Politics – and Shouldn’t Try To, Harvard Business. Journal (2018), https://hbr.org/2018/03/companies-cant-avoid-politics-and-shouldnt-try-to.

[34] Geraldine E. Willigan, High-Performing Marketing: An Interview with Nike’s Phil Knight, Harvard Business Journal (1992), https://hbr.org/1992/07/high-performance-marketing-an-interview-with-nikes-phil-knight.

[35] Adam Reed, Serena Williams backs Nike’s ‘powerful statement’ in using Colin Kaepernick for advertising campaign, CNBC (Sept. 5, 2018), https://www.cnbc.com/2018/09/05/serena-williams-on-nike-colin-kaepernick-advertising-campaign.html.

[36] Kurt Badenhausen, The Highest-Paid Female Athletes of 2018, Forbes (Aug. 21, 2018, 10:13am) https://www.forbes.com/sites/kurtbadenhausen/2018/08/21/the-highest-paid-female-athletes-2018/#7064b34d405f.

[37] Associated Press, James says he ‘stands with Nike’ in reference to Kaepernick, FOX Sports (Sept. 5, 2018), https://www.foxsports.com/other/story/lebron-james-says-in-kaepernick-reference-i-stand-with-nike-090518.

[38] Cork Gaines and Skye Gould, LeBron James’ new Lakers contract will make him the highest-paid NBA player ever, but a bunch of active players are not far behind, Business Insider (July 4, 2018, 1:31pm), https://www.businessinsider.com/lebrons-lakers-contract-highest-paid-nba-player-2018-7 .

[39] Bryant, supra note 37.

[40] Lebron James tells crowd at Fashion show he ‘stands with Nike’ in reference to Colin Kaepernick ad Campaign, ESPN (Sept. 5, 2018), http://www.espn.com/nba/story/_/id/24584276/lebron-james-says-stands-nike-reference-colin-kaepernick.

[41] Associated Press, Town Council Revisiting Nike Boycott Vote After Backlash, US News and World Report (Sept. 19, 2018), https://www.usnews.com/news/best-states/rhode-island/articles/2018-09-19/town-council-revisiting-nike-boycott-vote-after-backlash.

[42] Associated Press, Rhode Island town passes resolution to boycott Nike Products, NBC News (Sept. 18, 2018, 12:23pm), https://www.nbcnews.com/storyline/nfl-controversy/rhode-island-town-council-joins-others-boycotting-nike-n910761.

[43] Laignee Barron, Louisiana Mayor Ordered a Boycott of Nike Gear Over ‘Political’ Colin Kaepernick Ad, TIME (Sept. 11, 2018), http://time.com/5392327/kenner-louisiana-boycott-nike/.

[44] Matt Saincome, What it Was Like Inside a Nike Call Center After the Colin Kaepernick Ad Dropped, Rolling Stone (Sept. 8, 2018) https://www.rollingstone.com/culture/culture-features/colin-kaepernick-controversy-nike-call-center-720713/.

[45] Zito Madu, Colin Kaepernick’s Nike ad raised his profile, but diluted his message, SB Nation (Sept. 12, 2018), https://www.sbnation.com/colin-kaepernick-national-anthem-protest/2018/9/12/17841726/colin-kaepernick-nike-commercial-nfl-protest.

[46] Id.

[47] Jonathan R. Macey and Leo E. Strine Jr., Citizens United as Bad Corporate Law, Harvard John M. Olin Center for Law, Economics and Business 2, 8-9 (2018).

[48] Ethal Jiang, Nike’s controversial bet on Kaepernick has millennial investors piling into the stock (NKE), Business Insider (Sept. 6, 2018, 1:24pm), https://markets.businessinsider.com/news/stocks/nike-kaepernick-ad-attracts-millennial-investors-2018-9-1027515152.

[49] Jonathan R. Macey supra note 87 at 99.

[50]  Chauncey Alcorn, New Jersey pension fund mulls Nike divestment over Colin Kaepernick ads, Mic (Sept. 28, 2018) https://mic.com/articles/191592/nike-kaepernick-nj-divestment#.lLf5du3MZ.