Kaepernick ads spark boycott call but Nike seen benefiting





By Daniel Trotta

(Reuters) - Protesters burnt their Nike <NKE.N> shoes, investors sold shares and some consumers demanded a boycott after the footwear and apparel maker launched an advertising campaign featuring Colin Kaepernick, the NFL quarterback who sparked a national controversy by kneeling during the national anthem.

But the brand recognition that comes with the campaign may be just what the company wanted, and marketing experts predicted it would ultimately succeed.

The ad revived a raging debate in the United States that started in 2016 when Kaepernick, then with the San Francisco 49ers, began kneeling during the playing of the U.S. national anthem to protest multiple police shootings of unarmed black men.

While some fans praised Kaepernick and other players who joined him in kneeling as patriotic dissenters, critics led by U.S. President Donald Trump blasted the protesters as ungrateful and disrespectful.

In the immediate backlash to the campaign, announced on Monday, Nike shares fell nearly 4 percent at one point on Tuesday and closed down 3.2 percent.

Calls for a boycott fed social media buzz about the campaign. There were 2.7 million mentions of Nike over the previous 24 hours, the social media analysis firm Talkwalker said at midday, an increase of 135 percent over the previous week.

"This is right on the money for Nike. They stand for this irreverent, rebellious attitude. In this case, it's reinforcing the brand," said Erich Joachimsthaler, CEO of strategy consulting firm Vivaldi.

After his protests, Kaepernick could not find a job for the 2017 season and sued the National Football League, accusing owners of colluding to blackball him. He is still without a team.

Nike has sponsored Kaepernick since 2011 and said he will be one of several faces for a campaign marking the 30th anniversary of its "Just Do It" slogan.

The ad refers to Kaepernick's loss of NFL income with the quote: "Believe in something. Even if it means sacrificing everything."

Trump had yet to comment publicly as of Tuesday afternoon, while others offended by the choice posted social media pictures of Nike shoes they had set on fire or socks with the Nike swoosh cut out.

Twitter user Sean Clancy, or @sclancy79, posted a picture of a pair of Nike trainers on fire on Tuesday that was retweeted 20,000 times.Athletes including LeBron James, Kevin Durant and Chris Paul showed support.

"Especially proud to be a part of the Nike family today," tennis star Serena Williams tweeted to her 10.7 million Twitter followers.

The controversy may have been a convenient excuse for some investors to sell an over-valued stock, Joachimsthaler said.

Christopher Svezia, a footwear and apparel analyst at Wedbush Securities Inc., said Nike shares were trading at roughly 30 times next year's forecast earnings, compared with 24 percent for rival Adidas <ADSGn.DE>.

"Nike more than anyone else really knows who their customer is," Svezia said, describing them as largely 14- to 22-year-old males.

Matt Powell, a senior adviser with market research firm NPD Group, predicted the boycott would fizzle. "Old angry white guys are not a core demographic for Nike," he said.

Barry Lowenthal, CEO of The Media Kitchen, praised the campaign and said Nike has long proven successful in using celebrity endorsements to promote its brand, a precursor to what is known as influencer marking in the social media age.

"These kind of endorsement deals were the first version of influencer marketing. Of course they know it works. It's classic product placement," Lowenthal said.

Other brands have faced backlash for straying into politics.

Under Armour <UAA.N> faced criticism last year after its chief executive made comments supporting Trump, and Adidas drew calls in May to cut its ties to rapper Kanye West after he described slavery as a choice and praised Trump.

However, "We don't hear much about it today," said Jessica Ramirez, a retail analyst with Jane Hali & Associates.

Even former Iranian President Mahmoud Ahmadinejad weighed in, tweeting: "The #NFL season will start this week, unfortunately once again @Kaepernick7 is not on a NFL roster."

Nike, which on Monday called Kaepernick "one of the inspirational athletes of his generation," did not respond to requests for comment on Tuesday.


(Reporting by Daniel Trotta, Uday Sampath Kumar and Emma Thomasson; editing by Patrick Graham and Dan Grebler)

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