BUYING INTO A MYTH?

Marketing Myth #9: Data-driven is always better than people-driven

After an ill-fated foray into digital transformation, many are wondering if Nike can get its mojo back. The company’s smart advertising at the New York City Marathon certainly reminded us of the Nike of old – the one legendary for its brand-building and deep customer bonds. But it could be a long road back. Today, having seen the pitfalls of going all in on a data-driven strategy, the sneaker brand is trying to recover its soul as a people-driven company. So where exactly did Nike go wrong?

Nike wasn’t an official sponsor of the NYC Marathon, but it cleverly seized the moment with ads that showed a real understanding of the runner’s psyche.

Imposing a digital playbook
Nike’s problems began four years ago with a new CEO, an outsider who wasn’t steeped in the profound human connection that built the brand.

As a former eBay CEO, the tech-savvy John Donahoe embraced what he knew best upon taking over: digital. Since then, Nike has fallen out of Interbrand’s top 10 best brands and lost $167 billion in market cap. And its 2025 numbers are likely to bring additional pain before any gain. Not surprisingly, Donahoe was recently shown the door.

Digging a little deeper, we see several reasons for Nike’s decline, all related to its digital transformation.

1. Performance marketing undermined brand marketing
If ever there was a brand built on emotion, it’s Nike, which has shown an uncanny ability to get in the heads of the athletes to whom it markets. Just do it… need we say more?

But when Nike’s focus switched to short-term performance marketing, it began to lose its grip on these customers. Instead of enhancing the brand, the goal became to juice online sales with one discount-driven promotion after another.

Where it once lifted us up with inspirational storytelling and a lofty creative vision, Nike was now fixating on more down-to-earth concerns like membership, loyalty and price. After initially riding the high of past marketing efforts, this lack of new investment in brand started taking a toll on demand.

2. DTC stifled omnichannel efforts
Under Donahoe, a direct-to-consumer approach was stepped up to make Nike.com the company’s favored sales channel. That meant more margin for Nike (as it marginalized its wholesale partners), plus a wealth of consumer data to draw insights from.

But as Nike pulled back from retail, competitors grabbed its abandoned shelf space, recognizing that consumers still like to see the latest styles up close and try shoes on for fit. Instead of a balanced omnichannel approach, Nike leaned too much on digital. While such a strategy made sense at the start of pandemic, Nike never pivoted when the world stabilized.

In its zeal to fuel digital commerce, Nike also reduced its investment in local markets, further alienating loyal customer segments.

3. Data overshadowed expertise
While digital transformation was altering Nike’s external marketing approach, it was also changing the company internally. And not for the better.

Nike famously built its brand through its relationships with athletes in a myriad of sports. These athletes were the original “influencers.” As data scientists replaced scores of smart marketers who had ties to these athletes, Nike lost insight and influence.

The company’s data-driven approach also led to a focus on sales of existing products at the expense of R&D and innovation, which had long been Nike hallmarks. Meanwhile, a streamlining of operations – to make the digital experience more seamless – led to a shift away from the sport-specific specialization so key to Nike’s product success.

4. Fast fashion eclipsed performance
Like many brands that get lost in the woods, Nike simply forgot who they were at a core human level.

For decades their essence as a brand could be distilled down to one thing: authentic athletic performance. When Donahoe steered product development away from shoes for athletes toward mainstream streetwear, it was yet another indication that Nike had lost touch with both its heritage and its customers.

Going too far down the road of digital?
For Nike, it will be more a marathon than a sprint to get back to good health – a powerful reminder that brand and digital strategies must be applied in the right measure.

If you’re worried that digital transformation may be taking your company in some unintended directions, let’s talk ›

¹ Marketing Week, Four big strategic mistakes Nike needs to reverse, September 23, 2024

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