Why Nike is actually more committed to mobile than ever

This week, Nike made  when it laid off the majority of its FuelBand team, and in doing so bowed out of the race for the best wearable tech. Some commentators incorrectly interpreted this as a weakening in Nike’s resolve to win on mobile. However, the decision to focus on software rather than  actually reinforces the brand’s dedication to the Nike+ app community, most of whom don’t own a Nike wearable anyway.

This week, Nike made headlines when it laid off the majority of its FuelBand team, and in doing so bowed out of the race for the best wearable tech. Some commentators incorrectly interpreted this as a weakening in Nike’s resolve to win on mobile. However, the decision to focus on software rather than hardware actually reinforces the brand’s dedication to the Nike+ app community, most of whom don’t own a Nike wearable anyway.

Nike’s bold investment in mobile and wearables led them to the realization that it wasn’t going to win in hardware competing with Apple, Samsung, and other tech majors. The bold move to cut its losses in FuelBand reflects their evolution as one of the savviest brand marketers on mobile. To understand how this came to be, it is instructive to look briefly at the brand’s first steps on mobile.

In 2006, a new CEO bet big on mobile as the key to the rebirth of a brand

Back in 2006, little differentiated Nike from its major competitors. Sure, Nike spent millions of dollars on above-the-line advertising, but so did its competitors. It had strong links with sports, from college to professionals, but then so did its competitors. But a new CEO was determined to make his mark with a bold plan.

Together with its agency, R/GA, Nike decided to invest heavily on emerging technologies: social media and mobile devices. Between 2006 and 2008 Nike’s spending on traditional media declined by an incredible 40%. Instead, this money was funnelled into building community – through a focus on local events, social media, and innovative new mobile technologies.

Nike+ is about connecting people rather than quantifying results

Nike+ has been a huge success because it was designed from the start to build a community – one that is now 28 million strong. With competition and our inherent love of sharing in mind, the app prompts users to challenge friends to a race or goal, and share progress on across social networks.

From the iPod dongle to Android app, Nike+ aimed not to be the most technologically advanced solution, but to be the most accessible. Beautiful design, strong social sharing functionality, and personalized engagement messaging all contribute to the app’s stickiness and give users a reason to keep using the app, and to tell their friends.

Nike’s heavy investment in mobile drove incredible financial success

Nike’s revenues have increased by nearly 70% since 2006 – the year that Mark Parker was appointed CEO and the Nike+iPod began selling through Apple’s website. Following this release, Nike increased its share of the US sports shoe market from 48% to 61%. Leading analysts cite Nike+ as the key driver in this bump. Nike+ sells something more powerful than product alone – it sells the experience of running.

There’s no doubt that mobile apps and wearable tech will remain a cornerstone of Nike’s efforts to get closer to their customers and build communities around sports and fitness. The FuelBand firings suggest that Nike won’t continue to compete in the devices themselves. Instead, Nike will double down on the application layer, building great products that users love.

How other brands can learn from Nike+

Nike’s success is one that many brands would love to emulate. In order to build a large and loyal following on mobile, the following lessons stand out:

Solve a problem. Instead of being a glorified catalog, Nike+ earns its place on 28 million home screens by providing real utility to runners.

Make it social. We all yearn for connection with others. With social integration, Nike+ both taps our desire to share our achievements, and fosters the word-of-mouth spread of its product.

Build it beautifully. Nike’s dedication to detail sets Nike+ apart in the crowded fitness tracking space. Users can set push notifications to deliver run reminders and encouragement, or connect to their song library to create custom playlists and select “power” songs. Nike+ represents an investment of tens of millions of dollars across multiple years. In a world of 1,000,000+ apps, winning on mobile takes more than lip service to the medium – it requires you to go all in.

Gone are the days of billboard marketing. As demonstrated by Nike’s success, winning on mobile demands that marketers think differently. Earning attention and loyalty requires creating joyful, memorable, social experiences, not advertisements.

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