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Nike’s ‘Reverse Auction’ Is A Reality Check for Marketing In the Digital Age | Marketing

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Nike is giving new scrutiny to its digital agencies.

Source: Nike’s ‘Reverse Auction’ Review Is a Bad Omen for Agencies

This is the perfect article for the sneakerheads who read ARCH. This is an opportunity for me to explain why I’ve been so adamant about building the AHN (ARCH x Housakicks Network) into a sneaker culture site that not only talks about why a shoe is dope, but how you can become more involved in the business aspects of sneakers.

This is going to be a discussion on marketing. First I have to deliver a quote from the AdAge Source article, “Reverse auctions are generally frowned upon in the agency industry as a signal that clients are seeking the lowest bidders. The fact that a high-profile, marketing-driven company such as Nike is using the process could be a bad omen for the agency world, which is struggling to adapt to rising pressure from clients seeking lower rates.”

What exactly is at play here? When a brand (Nike, Apple, Wal-Mart, any brand) decides to build ad campaigns that are featured in print, television and on social media sites (YouTube, IG, etc.) they take submissions and usually they go with the company that pitches with the dopest concept.

NOTE: If you can reach the marketing director you can submit a proposal for a campaign. If you have a large reach, a brand might reach out to you for a campaign; which is the reason this post is important.

The Reverse Auction that Nike is moving towards is basically a shot fired across the bow of the advertising industry, but not because of what one of the ad execs in the article states.

Casey Burnett, founder and managing partner of The Burnett Collective states, “This is a …’talent-based industry” and the reverse-auction style review means that agencies are “judged on lowest common denominator criteria with very little distinction.”

The ad exec is speaking as if Nike is going to be looking for cheap work. This couldn’t be farther from the truth.

NOTE: This section is the meat and potatoes…

Nike has made a transition towards building their own doors for distribution. The brand is looking at a 80/20 distribution platform. This means they are only looking to wholesale 20% of the products they create. This will allow the brand to chase their 50 Billion per year goal. To do this it’s only natural that they have to sell more of their products. In order to hit 50B Nike has done something that no other brand has done in marketing. Which is what Nike is always doing in marketing, something the other brands haven’t caught on to yet. What is this thing they are doing? They’ve moved a lot of their content creation in house, which has allowed them to shape the narrative behind their products.

This is a result of the shifting location of ad placements. With ad blockers in digital and skip ads for YouTube and fastforwarding for DVRs, along with cord cutting in television, and constantly declining print media outlets, the locations where an ad agency can get products seen is shifting. Marketing and Advertising has to adjust to the new reality and that is companies beginning to create their own content and deliver via their platforms which reduces the amount of clicks needed to get to the purchase point. (The problem is brands aren’t really creating their own content, it’s just Nike which is why the source article is so important. When Nike starts others follow.)

How has Nike done moved towards in house content creation? I’ve said over and over, but the SNKRS app and Nike.com as the hub for information about the brand was not incidental. The launch of air.jordan.com last year was the final warning shot, but no one paid attention. If the ad agencies had paid attention then they would understand that Nike has literally taken ad creation in house via their own blogs. It’s a genius strategy that is so basic it has been overlooked by every brand except Nike.

Relying on YouTube, Instagram, and Facebook solely to drive engagement at a time when algorithms change like the wind blowing is problematic. You know what never changes though? Search engine indexing and search. Products are still googled everyday. If your site isn’t creating content it’s not being indexed. This means that keywords are being dominated by sneaker blogs and of course Amazon. If digital is the fastest growing area in marketing and advertising and content being created by fans is just as influential as product being created by ad agencies, why would a brand pay for the polished, expensive campaigns?

As a matter of fact I’ve stated as of late that Nike is far too polished and that this has created the appearance of elitism which is what allowed adidas marketing to push the Three Stripes ahead of Nike in growth in the last year. If Nike is building it’s own ad agency within it only seems logical that they will begin reverse auctioning their hiring process. Ad agencies shouldn’t blame Nike… they should blame Apple and Samsung for creating the most powerful content creation devices in the world, cell phones. It’s people who are disrupting the ad world, but all isn’t lost. The moment brands begin realizing that influencers aren’t the drivers of engagement that they seem to be, ad companies can adjust and they can do so by building teams of

drumroll…

Writers. Nike figured it out and sneakerheads… you can too. Get a blog, vlog and start making content. Who knows, maybe one day some brand will call on you to be their content person.

P.S. Nike doesn’t have to rely so heavily on campaigns anymore. They have their product in the only bastion of advertising that has not been completely ruined by digital, live sports. Nike owns the NBA and NFL the two biggest sports and their logos are splashed everywhere. Kind of tough to pitch against that.