Blunden’s crucible

In last weeks NMA (09/10/08), Mike Nutley wrote under the heading “the cost of success is keeping it going”. He was referring to organisations, such as Nike, that create campaigns such as Nike+ and then get either lumbered with the ongoing running costs or risk disenfranchising a large group of their potentially, most loyal supporters. He credited Paul Dawson of Conchango with referring to the phenomena as “branded utility”.

Nike+ has been enormously successful attracting thousands of runners and creating a community which supports them. The problem is that once created, the community needs to be supported or it will die. The cost of the support restricts the brands from developing the next big idea and this is where the problem lies, according to Nutley.

This seems like a crazy situation to me and it is hard to believe of Nike. Nike’s mission is “to bring inspiration and innovation to every athlete in the world”. They define an athlete as follows: “If you have a body, you are an athlete.” Nike has already gone beyond being a sports apparel brand and has created a vision beyond this. If they do suffer this problem then it can only exist because the ongoing running costs are treated as a campaign when they should, in my view, be treated as a cost of sales.

Assuming the campaign adds value to the brand (and if it doesn’t it should probably be canned) it should be possible to calculate the ROI from the ongoing activity. What started out as a campaign is now clearly a product or service extension. They have created a brand that is more to consumers than just that of a product manufacturer. That comes at a cost, but also presents significant opportunities if thought about differently.

I think the point Nutley makes is a good one and I would be fascinated to understand if Nike really suffer from this issue. It is easy to believe that their are major brands operating without a clear view of their offering or who feel they should jump on the engagement band wagon and have created a monster that is now consuming them – or at least their budget. My suggestion of treating these campaigns as products, with a P&L and ROI contribution means they also benefit from being viewed against a lifecycle. This will assist the business with investment decisions and provide a management framework that is already familiar.