Nike and Under Armour often find themselves playing in the same arena. Both are largely considered progressive companies that contribute to the economic development of their communities. Both use major athletes as brand ambassadors, and although Nike is bigger, both have the loyalty and recognition that only comes from decades of strong brand management.
Lately though, the two companies stand in stark contrast. After a series of unfortunate missteps, the Under Armour story is becoming a cautionary tale about the complex relationship between stock value, social media and the growing political awareness of brand ambassadors. Nike, on the other hand, is thriving because of those very same market forces.
This week, while Nike was launching its exclusive and disruptive LeBron 14 sneaker and drawing international praise for its bold new Equality ad campaign, Under Armour was taking heat for the unintentionally controversial praise its founder, Kevin Plank, bestowed on Donald Trump during a recent CNBC interview.
Within days, Plank’s statements resulted in a threat of defection from Under Armour’s top brand ambassador, Stephen Curry, and talk of a global boycott. It led to Plank taking out a full-page treatise on the brand’s commitment to diversity and immigration in the Baltimore Sun. It also caused a downgrade of Under Armour’s stock price. This social media firestorm comes after months of sagging stock prices due to slowing sales and a 2016 viral controversy over the brand’s sponsorship of a bear hunter.
By comparison, Nike has seen steadily increasing stock prices over the past three months, with a sharp increase over the past few days as its pitch-perfect Equality campaign hit social media, falling on the heels of a racially biased Grammy Awards and weeks of negative press about the Trump administration’s immigration policy. Equality features socially compelling appearances from athletes LeBron James, Serena Williams, Kevin Durant, Megan Rapinoe, Dalilah Muhammad, Gabby Douglas and Victor Cruzset.
It’s easy to dismiss Under Armour’s problems as self-inflicted, but clearly there is more than that going on. We are entering an era where politics, viral social media and brand management are constantly overlapping, and the results are increasingly unpredictable. Depending on the news cycle and the entertainment value of the evidence, opinions and actions by brands that once would have gone unnoticed can now be hurled around the world in a matter of hours. Also, artists, athletes and media personalities acting as corporate brand ambassadors are far less likely to look the other way if their values and those of the brand they represent conflict.
So what is a modern brand manager to do? In this world of compounding market variables one thing to remember is that social media analytics are a must-have. Not only do metrics like engagement rate help brands keep track of larger trends, but they are also as predictive as stock price when it comes to measuring a company’s value. These same measurements can also alert brands when big, complex forces are acting on their competitors. Social media analytics are critical in the short view, too. Twitter and other listening campaigns can serve as essential early warning signs that help brands get out in front of fast moving trends or problems.
Fundamentally, no one is immune to the pitfalls of this new ecosystem. The rules of the game are changing daily and, to borrow a metaphor from the world of Nike and Under Armour, the equipment you take onto the field has to be equal to that challenge.
Micro-trends driven by social media activity show up clearly in these company’s stock prices. Engagement rates for the same time period mirror the stock numbers for both companies, albeit in a different language.
President Donald Trump walks into the Roosevelt Room for a meeting with business leaders, including Under Armour CEO Kevin Plank (center). Plank is in hot water over comments he made praising the president. (Photo by Forbes/Chip Somodevilla/Getty Images)