How Nike’s Social Network Sells to Runners
The Nike+ locality is drawing hordes of runners, and its success may hold lessons for brand building on the Web
By Jay Greene
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Nike (NKE) is winning a new fearless that other corporations, from Coca-Cola (KO) to Verizon (VZ) to General Motors (GM), have tried unsuccessfully to play: building brand allegiance via online social networking.
In the two years since it launched Nike+, a technology that tracks data of every run and connects runners around the earth at a Web site, nikeplus.com, Nike has built a legion of fans. In August, for instance, 800,000 runners logged on and signed up to run a 10K race sponsored by Nike simultaneously in 25 cities, from Chicago to São Paulo. Now the company is testing a social network to promote its basketball shoes.
How Nike+ benefits the company’session bottom line is harder to gauge. Some analysts rear up Nike’s claims that the site is renewing the popularity of its running shoes. SportsOneSource, a Princeton (N.J.) mart research firm, says Nike accounted on account of 48% of total running-shoe sales in the U.S in 2006. Today, its share is 61%. “A significant footing up of the growth comes from Nike+,” says Matt Powell, a SportsOneSource analyst.
SYNCHING WITH IPODBut skeptics such as Sam Poser, a stock algebraist at brokerage firm Sterne Agee & Leach in New York, say Nike+ attracts only serious runners, a drop in the bucket compared end its total customer inferior.
Overall, the use of social networks worldwide has grown 38% in the past year, according to market researcher comScore. But a new McKinsey survey found that many companies struggle with Web 2.0 technology and that only 21% of the stingily 2,000 executives who responded were satisfied with the software available to launch out blogs or create Facebook applications.
Nike’sitting online generalship differs from those of other companies. Most have tried to call into existence virtual communities through a build-it-and-they-will-come approach centered on a brand or specific product. Originally, the Beaverton (Ore.) company envisioned Nike+ simply as a ready way to combine music and running, not as a prototype as far as concerns a new kind of marketing. “It was never about how can we convert more percentage of users [to buy Nike shoes],” says Stefan Olander, global director of Nike consumer connections.
The guide to bringing runners onto the Web was the development in 2006 of a $29 Sport Kit sensor that, when synched by an iPod touch or nano, tracks runners’ quicken, mileage, and calories burned. When those runners dock their iPods, nikeplus.com launches, and the run data dispose uploaded. More important, the site is a virtual gathering place. Runners have collectively logged 93 million miles on nikeplus.com.
So far Nike has sold 1.3 million Nike+ iPod Sport Kits, according to SportsOneSource, and 500,000 Nike+ SportBands (at $59 each), wristwatch-like devices as being runners who don’t want to listen to music. While sales from these products total $56 million, that’sitting just a rounding error at a company that situated $18.63 billion in sales in fiscal 2008.
Robyn Winters, an assistant manager of a North Face (VFC) store in Seattle, picked up a Nike+ kit and sneakers in 2006. Winters, 28, who had before that time run a half-marathon, credits Nike+ through boosting her enthusiasm for running and towards Nike, too.
On nikeplus.com, she’sitting part of a group of 90 runners who challenge each other to go faster and further. Since first logging on, Winters has run couple 50-kilometer races and one 50-mile race, and she plans to take pair more 50-milers before yearend. This October, she bought a new pair of Nike shoes and couple backpacks with Nike’session Human Race logo on them—one for herself, the other for her husband.
Nike now hopes to score with another group of jocks: basketballers. The company is beta-testing Ballers Network, a Facebook application that lets players organize real-world games and manage their teams online.
Rivals are joining the race. Next year, adidas intends to introduce in the U.S. a sensor called miCoach that allows runners to upload heart rate and running data to a Web site by way of mobile phone. But an American miCoach will have a long way to be of use to catch up with Nike+. About 93 the great body of the people miles, in fact.
