Nike launched a new ad campaign featuring unemployed backup quarterback, Colin Kaepernick. The controversial decision sparked another boycott, the second major one in a week. Nike is deliberately riding a partisan tide choosing a figure as controversial as Kaepernick, which is nothing new as they have had ads featuring transgendered athletes in the past. So the question then becomes, will alienating a large chunk of the marketplace hurt their business?
As explained in a previous post I wrote entitled #BoycottInNOut backfires bigly.
In the end, In-N-Out will succeed because of the company’s prior commitment to excellence. This commitment has resonated with their fans who have come to scoff calls of protests. The best businesses commit to a form of excellence that calls their stakeholders to their defense so easily and so unnecessarily.
Nike find itself up in the air between Chick-Fil-A and a devastating protest. There are a few key differences between Nike and In-N-Out that could be deciding factors. The first being that Nike is a high end fashion brand. Their clothing is expensive, so the ease of participating in a boycott is very high. More importantly, the ease of rallying in support is drastically lower. The ease of rallying to support Chick-Fil-A and In-N-Out was so low that both companies saw a flood of support. The amount of people more devoted to Nike for supporting Kaepernick in an ad campaign could offset and overwhelm those turned off by the brand entirely.
Secondly, Nike, unlike, In-N-Out doesn’t have nearly as much competition. This is advantageous for Nike. They are number one in market share for performance athletic apparel. Under Armour and Adidas are beneath them. Under Armour has not had the best of times the last couple of years. In other words, Nike is less avoidable, thus making it harder to boycott.
Thirdly, complementary industries play a part in this boycott. #BoycottNike is merely the latest extension of #BoycottNFL. These protest had measurable negative effects, unlike the others referenced. Nike just invited it.
Pundits are already touting the ad campaign as bad for the company.
Nike was down over 3% today, the biggest decliner in the Dow Jones. Lost nearly $4 billion in market cap. All the day after they announced Kaepernick. Not a coincidence. https://t.co/xLf6NJ8yBD
— Clay Travis (@ClayTravis) September 5, 2018
While, these numbers are correct, give or take, intraday volatility is no measure of a boycott’s success. Recall when all the airlines were having bad publicity. United Airlines had an entire boycott movement directed towards them. Their stock dipped in those days, but the long term effects of the PR nightmare that was forcibly removing the customer are unnoticeable if you were to follow the company’s stock (UAL). In fact, you likely have forgotten the incident altogether. Thus it is two early to measure the real effects of this ad campaign. This could be a good time to buy NIKE since it dropped $2.60 a share. We will have to wait until Nike announces its Q4 earnings. Until then, everything is speculation, wise or not.
Raymond Fava is the Founder of Startup Christ and the founder of EcoEats, Inc. EcoEats crafts exotic jerkies using unique flavors. To see their selection, click here.
