'The Hub': Nike Does It

What more can be said about Nike?It's a Fortune 500 company that needonly show its logo at the end of acommercial to have it all make sense -even if the commercial seems to havenothing at all to do with the company'smain product, running shoes.Nike's brand power is fueled in part by spending$1.6 billion on advertising and marketing, or whatNike calls "demand creation," as it did in 2005 — a 16percent increase in Nike's spending over 2004.That kind of increase has occurredmore or less every year at Nike, regardlessof the prevailing view or fad-of-the-moment in marketing. So, marketersshould take note as Niketakes another large step into theworld of networked digital-media.Nike has always been in theforefront of brand marketing. Itwas the first company to use athleteshoe-endorsement contracts.Its slogan "Just Do It" is part of popularculture. Its quirky, post-modernads such as "Bo Knows," are marketingand advertising lore.One of the company's many innovations was theopening of its own retail stores, dubbed Nike Town.Like Apple, Nike opened these stores despite theirpotential to alienate its existing retail channels. Alsolike Apple, these stores initially were designed to be abrand "show case," and not even necessarily to makemoneyThe first store, which opened in Portland, Oregonin 1990, was followed by a store in Chicago in 1992.Eventually, 14 Nike Town stores were constructed with 12 in the United States and two overseas. Thesestores have since provided a blueprint of best practicesin the development and implementation of in-storemedia networks.Before installing an in-store media network,have a content strategy. When the Nike Town storeswere originally built, they were jammed with whatwas then the state-of-the art in in-store media. Theoriginal media were used to connect shoppers to theNike brand at both an intellectual and emotionallevel. Nike was able to draw on its deep, content resourcesto feed the media into the stores, while maintaininga quarterly update schedule.When deploying technology into retail stores,be sure to control what it is and document whereit is. To the extent possible, make sure that you havea standard and stick to it. For Nike Town, as the storesbegan to age, operational challenges surfaced. Somestores used digital projectors, some usedCD-ROMs and still others used laserdisks to play the media that wassent each quarter from corporate.It became increasingly difficult totrack and manage these varyingformats as well as the quarterlyupdates.Nike Town's challenges,coupled with the internet explosion,led a Nike AV technician,Tim Canfield, to wonder whetherthere might be a better way. Workingtogether with Nike veteran, Pat Hellburg,Canfield started to explore the possibility ofusing a digital-network system to deploy all of Nike'sin-store media.By this time, Nike had also developed and deployedits Factory Stores, which also used in-store media. In2002, Canfield conducted a "bake-off" of more than 20companies that had (or claimed to have) software or asystem that could support Nike's in-store media needs.Eventually, Nike settled on Coolsigns, Inc., which wasat that time a privately held, venture-funded softwarecompany.It's critical to have "C-level" support. It alsohelps if your CEO is the founder of the company andis not afraid to pull the trigger on a multi-million dollarinvestment in what was then untested technology.When Nike's founder, Phil Knight, was asked aboutthe digital-network project, he reportedly asked,"What is the incremental cost of playing that media toall the people that come in our stores?" When he wastold that the incremental cost was relatively modest,it's said that he blessed the project.Every network needs a business plan that thestakeholders understand and support. This is trueeven for networks not based on selling ads. To somedegree, one of the issues that has shadowed the Nikenetwork has been the question of which P&L withinthe company would get hit with its expenses — BrandMarketing or Retail. This led to some jockeying withinthe company over who "owns" the network.Be prepared for the long-haul. Lou Giacalone,the founder of Coolsigns, says that it took well over ayear to sell the system into Nike. He recalls that themajor driver that led to the system's adoption in Nikewere, "the disparate media the company was usingin the stores and the need to pull it all together." Thenetwork also allowed Nike to change its retail messageswhen it needed to — not on a schedule as it haddone previously.In June, 2003, a three-year contract was signedbetween Nike and Downstream, a post-productioncompany where Tim Canfield was now president.Coolsigns provided the software used to drive thenetwork. Initially, Downstream acted as a generalcontractor and provided the entire suite of services tothe Nike Network. This included connectivity, contentcreation, installation and operations.An in-store network should be treated as justanother marketing channel. Treat in-store just likethe internet or television. Have resources under yourown roof to ensure that internal content is "mined"and repurposed and its messaging coordinated withall marketing outlets.At Nike, a full-time "producer" was assigned towork at Nike and was given access to Nike's marketingcontent. This was done to ensure that the messagesgoing out on the network were in harmonywith, and reinforced, the messages being sent throughNike's more traditional channels.No single supplier can "just do it" all. It takesa well-functioning team. By late 2004, Nike's networkhad grown to approximately 185 locations, including Nike Towns, Nike Factory Stores and Dick's SportingGoods, where Nike had helped install a shoe wall thatincorporated its network.However, as the network became more visibleand more important within Nike, the role of Downstreamwas scaled back. The most significant changewas that "creative control" of the content shifted fromDownstream back to the Nike campus. Nike alsostarted to expand its in-house capabilities in terms ofdesign and content creation.In the spring of 2006, Nike quietly let it be knownthat it was putting the network account up for review.John Mastrangeli of Symon Communications, reportedlythe winner of the review, says Symon has "approachedthe digital-sign marketplace from the perspectiveof a technology company as opposed to a creativecompany."Symon uses its "TargetVision" system, a dedicatedIP-based client-server architecture with robust schedulingand content creation software. The system usesembedded Windows-XP dedicated players in the stores.Brand enhancement can be as important assales. Nike's Pat Hellburg says that Nike plans to "expandthe network where it makes sense to do so andwhere it will work." He also said that while "sales upliftis part of the plan" for the network that the mainfocus of it is "brand enhancement."As Nike moves forward with its network, it maywell be that the company will expand it into Asia,where it has thousands of stores and is experiencingits fastest growth. This growth is somewhat complicated,however, because most stores in Asia are operatedby Nike licensees and are sometimes limited bygovernment restrictions in mainland China. In addition,there are some reports that Nike's network mayalso be turned inward to help Nike communicate withits 27,000 employees.Whatever the future of marketing or networkeddigital signs and interactive systems, Nike certainlyhas been a leader and a source of best practices intoday's rapidly emerging new-media landscape.Terry Scannell is the founderof ipSigns, a solution providerfor networked digital signagesystems.

'The Hub': Nike Does It

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