Ad It Up: Kids Still Don't Want to Be Like Nike

The company's coolness rating is way down with America's teens. Is a bigger advertising budget the answer?
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Even as

Nike

(NKE) - Get Report

recovers its footing after a bruising slump, certain aspects of the megabrand have yet to regain fighting form.

There's no doubt that Nike's products for spring and fall are winning rave reviews from retailers. After two years in which earnings either decreased or were flat, the Beaverton, Ore.-based company's profit is expected to rise for the year ending in May 2000 by 25%, to $2.03 per share, according to the

First Call

consensus estimate. That jubilance is reflected in Nike's stock, which is up 54% this year.

But there's evidence that Nike's image is still smarting from an upset that catapulted underdog brands like

Adidas

and

Vans

(VANS)

into the "what's hip" mindset of teens. And it's unclear whether increased advertising spending -- a primary goal for Nike -- will provide the fix.

Teenage Research Unlimited

, which gauges teen trends, has found that Nike's brand "coolness" rating among kids ages 12 through 19 has slipped 9 percentage points to 29% for the most recent survey of 2,000 teens from 38% in a study six months earlier.

And the

Zandl Group

, another teen tracker, notes that the impact of Nike's advertising among people ages 8 through 24 has been in slow decline for nearly three years, with a sharp falloff recently.

"Typically, it's a fresh approach to humor" that connects with kids, says Richard Leonard, vice president of the Zandl Group, which questions roughly 300 people each month to learn which ads and other trends are hitting home with America's adolescents. "Nike's formula has become a bit stale."

In a memo to clients,

Thomas Weisel Partners

analyst Faye Landes notes: "While the brand is certainly one of the great global icons, and in some ways is stronger than ever, we remain concerned about the company's advertising, which seems to be off track. ... Improving advertising is a key focal point for Nike and something we'll be monitoring closely." She rates the company a buy. Her firm hasn't done any underwriting for Nike.

"What's driving Nike's rebound is great product," Landes says in an interview. "And missteps on the part of Nike's competitors. That works. But in the long term you need great ads too."

Nike is all too aware that its decision to reduce its advertising budget in fiscal '99 may have been a mistake. At a meeting earlier this year, Phil Knight, Nike's chief executive, told analysts that the cutbacks had been shortsighted. "If anything, we should've been increasing our spending on advertising," Scott Reames, a Nike spokesman, remembers Knight saying. "We need to stay part of the culture and not retrench."

As a result, Nike has said it expects to boost advertising spending by 50% to $350 million in fiscal 2000.

"We went through a few years where some product wasn't as strong as it could've been," Reames says. "We're turning that around. If we marry that together with effective advertising, that should get us back to our former position."

But some advertising executives wonder whether throwing money at the problem is the best solution.

"Nike was rebellious when it started, and in that respect it was aligned with the youth," says John Colasanti, managing partner of advertising agency

Carmichael Lynch

and a judge for the

Effie

awards for effective advertising. "But the brand has become so ubiquitous that it has trouble maintaining its edge. Spending more money and becoming even more noticeable could pour gasoline on this fire. Advertising can only do so much for a brand. And youth seems to like the underdog."

Nike has long been lauded as a pioneer in advertising for its willingness to take chances and set trends rather than simply reflecting popular culture. And, for the most part, Nike has stayed true to a formula that's helped turn its brand into a global force on par with

Coca-Cola

(KO) - Get Report

or

McDonald's

(MCD) - Get Report

.

"If you looked at who was the most effective advertiser of the last 10 years, it's Nike without a doubt," says Kevin Keller, a marketing professor at

Dartmouth College

. Nevertheless, he says any decline in brand awareness among teens is worrisome. "That's a really key market for them. I'd like to see them spend a bit more, and at the end of the year, if they haven't connected with kids, that's more of a problem."

The lower ratings that teens are assigning Nike comes even as the company has made a special effort to ingratiate itself with extreme athletes who fancy sports like snowboarding and skateboarding, which are typically provinces of the young.

Last year, Nike won an Effie for a spot that posed the question: "What if all athletes were treated like skateboarders?" One ad showed cops busting up a doubles tennis match.

A more recent campaign launched for the

National Collegiate Athletic Association's

basketball tournament hit home with university students, says Reames, the Nike spokesman. The spot featured biotechnicians researching March Madness, named for the month the tournament takes place, as if it were a health epidemic. Reames says 80% of students questioned by Nike on 15 college campuses said they liked the ads.

Other recent campaigns, most notably the

Alpha Project

, have fallen short.

"It was a challenge to explain in a 30-second commercial what Alpha is," Reames says. One ad featured Gary Payton of the

Seattle Supersonics

flying around Patell's Oddities Shop. The idea: Wearing Alpha shoes, Nike's premier line that retails for upwards of $100, is like having elves carry you around.

Those spots, which according to

Adweek

cost around $30 million, have been tabled as Nike reworks its approach. Instead of aiming for the abstract, Nike will try to be more specific by, say, having a famous surfer talk about the Alpha Project's Typhoon watch, Reames says.

In a move that signals Nike is going for what's worked in the past, the company has forsaken its "I can" campaign and is bringing back the "Just Do It" tagline.

"For us, it was a chance to refresh," Reames says of the brief move away from "Just Do It."

Still, a less sure-fire approach may be what's needed to return the brand to its former cutting-edge stature among teens.

What do you think of Nike's new ad campaign featuring pitchers boning up on their batting?

It's not just the shoes, it's the advertising!

At least it doesn't feature McGwire or Sosa.

What ad campaign?

In general, Nike's advertising...

a) Is effective.

b) Is clever.

c) Is "hip with the kids."

d) Is stale.

e) Is a, b and c.

What are your thoughts on the

Just Do It

campaign?

Love it! Got me to go out and "just do it."

It's OK. Got me thinking about "just doing it."

Puh-lease! Already did it and don't care to do it again.