Sports equipment maker Nike has widened the gap with longtime rival Adidas, with a revenue difference of $24.2 billion in 2022. The digital component is only part of the ongoing war that has been delivering the two giants for decades. To understand this, shed light on 4 differences between the strategies of Nike and Adidas, between digital marketing and influence on social networks (and cinema screens).
A gap of 24.2 billion dollars in revenues
Nike: $46.7 billion in global revenue in 2022. Adidas: $22.5 billion.
Since 2016, Nike’s revenue has increased by 15.4% while that of Adidas has increased by only 7.4%. Nike’s revenue exceeds that of its two biggest competitors Adidas and Puma combined. (Puma revenue: $8.47 billion in 2022). (source Statista)
#1: Football versus basketball
Since their inception, Nike and Adidas have invested in numerous athletes and sports federations. It would therefore be simplistic to summarize their differences ” Soccer “ for European Adidas and “Basketball” for the American Nike. However, this is a clue to understanding the approaches of these brands, partly linked to their origins.
So Nike and Adidas would have invested over 3 billion dollars (2.5 billion euros) in sports sponsorships between them in 2021. Nike would have spent 1.673 billion dollars against 1.405 of Adidas (Source: GlobalData Sport Intelligence report by KMPG).
The nearly $270 million gap between the two brands’ sports sponsorship budgets is related to Nike backing three major American sports federations (NFL – Soccer, NBA – basket and MLB – baseball), while Adidas bets on NHL (hockey) and hockey competitions soccer FIFA (Adidas is a partner of the World Cup until 2030) and UEFA.
If we focus on soccer, Nike would have dedicated half of the sponsorship budget to him in 2021 (834 million dollars or 679 million euros). For Adidas, this commitment to football is even stronger as it concentrates three-quarters (73%) of its sponsorship resources there, or $1.026 billion (€836 million). His contract with Real Madrid is estimated at around 120 million euros per season.
Among the sponsors of legendary athletes, Adidas has been sponsoring for more than 15 years Argentine footballer Lionel Messi. Messi’s recent transfer to Inter Miami would have been made possible thanks to negotiations with the club but also with Adidas and Apple (which owns the streaming rights to MLS – Major League Soccer matches). Details in the Figaro.
No. 2: Bricks and mortar versus e-commerce
Both Nike and Adidas have sales models omnichannel with own shops, e-commerce and dealer networks.
But Adidas distinguishes itself from its historical rival by the breadth of its network of stores, with Shops from 1990 in the world in 2022, compared to 1000 for Nike. (source Statista)
Nike and Adidas also have two very different relationships with the e-commerce giant. Amazonia. Indeed, Adidas sells its gear directly on Amazon, while Nike terminated its first-party resale agreement on Amazon in 2019.
In fact, Nike has been trying for years fight against counterfeiting and this is why in 2017 the brand started a partnership with Amazon to sell directly on the e-commerce platform. The idea was also to allow Nike to better control its online sales data. But the operation had already ended in failure in the first 6 months of experimentation and the agreement had been broken in 2019. Because making all the small intermediary sellers of Nike’s “gray market” invisible had not allowed the brand company Nike to benefit from greater visibility on Amazon. Conversely, even since Nike has benefited from fewer views of online referrals and generated fewer customer reviews on Amazon. (Forbes details)
#3: Double the social media engagements for Nike
In terms of social networks, the gap between Nike and Adidas is once again widening. To understand this, let’s take a look at an original study done by KORE Software (social media analytics tools) with specialist media outlet SportsPro. Their ranking “Battle of the Brands” published in February 2023 lists 50 brands that invest in sports sponsorships with the calculation of the return on their digital investments. This study measures the impact of advertising but also the impact of orchestrated and organic actions on social networks. (Study carried out between September 2021 and September 2022).
The 4 brands they generated the most digital ROI they are Nike, Adidas, Emirates and Red Bull. With Nike generating over $527 million in advertising value, Adidas $331 million and Emirates $290 million.
(Source: Battle of Brands – Kore Software – SportsPro)
Numeric ROI (AAV – Adjusted Ad Value) it is based on the calculation of the cost of the engagement (visits, views, interactions) with a quality parameter of the brand exposure.
Social media posts to promote Nike garnered more than 18 billion views and 8 billion engagements (likes, comments, shares), and represent 6.1% of the digital ROI (AAV) of the 50 brands in the ranking.
Adidas records from his side 9.4 billion views, 3.9 billion commitments and represents 3.8% of the digital ROI of the ranking.
In terms of sports, it is again football that dominates this ROI ranking investments in sports sponsorships. Football represents 49% of the ROI generated by all brands in the Battle of the brands ranking, worth $4.2 billion.
In terms of platform, the one that generates the most value for the 50 brands studied is Instagram. With an ROI (AAV) of $5.3 billion, or 62% of ROI.
#4: Softpower and storytelling, Nike proud of its history
We enter the field of brand perception and reputation talking about the softpower (cultural influence) of Nike and Adidas.
Nike’s latest venture: the release of the film Air, dedicated to the history of the historic partnership between Nike and Michael Jordan. The film is distributed by Amazon Studios and available for streaming on Amazon Prime since May 2023. It is a commercial success for the platform that has managed to repay the film’s production budget, 90 million dollars, with a small release month in international theaters prior to the availability of streaming.
For Nike it is a superb communication operation that is riding the wave 80’s nostalgia and Michael Jordan’s ever-strong popularity for all basketball and basketball apparel fans.
For the record, Adidas is addressed in a scene starring Matt Damon who plays Sonny Vaccaro, the head of sports marketing who convinced Jordan to sign with Nike. Vaccaro thus reminded Jordan’s agent that the real name of Adi Dassler, founder of Adidas, is Adolf and that he was a member of the Hitler Youth. This tactic will be forgiven in an otherwise moving and thought-provoking film. Everyone who is interested in what he does the DNA of a brand and the values ​​of an entrepreneur it can also be inspired by replicas of Phil Knight, founder of Nike, embodied by Ben Affleck in superb fluorescent running clothes.
We therefore await Adidas’ response on the softpower side. But the brand is instead trying to quell the negative noise, including ending its partnership with the rapper Kanye West following his anti-Semitic remarks. Adidas therefore now has a stock of 1.3 billion “Ye” branded products that it could decide to sell for the benefit of associations representing the populations affected by Kanye West’s statements. (details in billboard) Maybe enough to regain some Softpower…
Severine Godet
