What did Nike do to drive its gear sales when the company decided not to sponsor the 2017 US Tennis Open?
While watching the US Open on Sunday, my husband shared a WSJ article with me about Nike not being one of the official sponsors in Flushing Meadows this year. According to the WSJ, “The world’s largest sportswear maker has vacated its usual spot at the Billie Jean King National Tennis Center in Flushing Meadows, instead choosing to sell tennis gear through its suite of smartphone apps and pop-up locations around New York.”
I was surprised, yet not surprised by Nike’s decision. Initially, I was surprised that Nike decided to forego a store right next to the center court. As the “highest attended annual sporting event in the world,” with 700,000+ attendees in a 2-week period, it represents an enormous sales volume with a customer base that has the money and interest to spend. When I was at the Nike stand in 2015, it was BUSY! Location is everything.
From the statement “A spokesman for Nike said the company is continuing to talk with the USTA about retailing options for future U.S. Opens”, one can only guess that the USTA and Nike didn’t reach an agreement on the terms and conditions for this year. The on-site revenue is certainly guaranteed and attractive. However, if the cost of sponsorship and/or potential profit sharing is too high, a brand needs to determine if it warrants the acceptable ROI to proceed. I don’t have access to the terms and conditions, Nike probably did its share of analysis and determined the cost outweigh the gains.
Here is how marketing is agile, flexible and creative.
Obviously, the sponsorship of this event didn’t work out, but there are a lot of ways to reach out to customers. Nike’s idea is to sell gear and products through its mobile app (SNKRS) and pop-up locations in Manhattan and Queens. That aligns with Nike’s strategy to expand its direct sales online presence, as it did with the decision to sell directly on Amazon. Yet, I was not surprised that Nike decided to pull out.
Here is the bottom line: it’s a business decision.
Creating, updating and maintaining its direct sales presence and slick e-commerce mobile app requires a budget. Marketing budget and resources are limited. As a marketer, you need to determine where you want to place your marketing bet.
Nike likely evaluated whether it should pay a large amount for a sponsorship of a marquis 2 week-event or use the money to pilot and expand its digital and mobile direct sales strategy. One thing for sure is that building a back-end and front-end to support mobile and digital sales is not cheap. Technology is a money pit. Technology is a money pit. There is also the potential that this is a negotiation strategy for the future. The USTA and Nike were playing a game of ‘chicken’.
Nike swerved but the USTA may find its overall revenue is less with the other brands that filled the void this year and may end up giving Nike a better deal to return going forward. Watching the US Open on TV and seeing the crowd cheering on the center court brought back fond memories of attending the US Open in 2015. That trip inspired a blog: Marketing Take-Aways from My US Open Trip.
Business negotiations? Online strategy? Budget allocation? Marketing has to both influence and reacts to business decisions to maximize opportunities. I can’t wait to see if there’s a Nike store at the 2018 US Open.
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