Mention the companies Twitter or Nike these days, and you’re bound to generate some passionate dialogue. Many of today’s controversies may have you longing for a time when ad campaigns were nothing more than a heated argument over “Tastes great/Less filling” or a little old lady wondering, “Where’s the beef?” As disciplined asset managers, we are predisposed to remove all emotion from our corporate research and investment decisions. As such, our first question about Nike’s controversial new Just Do It campaign was, “What does the data tell us?”
At Destiny Capital, we dig deep. Without getting into the wonky details of ‘how the sausage is made’, it’s important to mention that part of our research incorporates real-time and historical social media data. Studies have shown that using advanced data mining techniques, there exists a correlation between social media ‘Purchase Intent Mentions’ and corporate revenues. This is a very small piece of the data we look at, but it has value. So, I was fascinated to review the social media data surrounding Nike in the days before, during, and after their new ad campaign was made public.
In this post, we’ll explore two data sets: ‘Brand Mentions’ and ‘Purchase Intent Mentions’. A Brand Mention is simply a social media post that references a specific company or brand. A Purchase Intent Mention is a specific, actionable social media post such as, “I love the new Air Jordan’s & I can’t wait to pick mine up.” At Destiny Capital, our investment committee is able to capture this mined purchase intent data and incorporate it into our stock analysis.
As a general reference point, from January through the end of August of 2018, Nike had a total of 2.75 million Brand Mentions and 158,000 Purchase Intent Mentions. These are excellent numbers for a consumer-discretionary company.
However, from September 3rd through September 6th alone, Nike had 2.03 million Brand Mentions with 194,251 Purchase Intent Mentions.
Essentially, in the first 4 days of their Just Do It ad campaign, Nike exceeded the Purchase Intent totals for all of 2018 by 23%. Could this mean that Nike may see a lasting spike in future revenues? As the famed college football analyst, Lee Corso, is fond of saying, “Not so fast, my friends.”
While the short-term revenue impact may look promising given this Purchase Intent data, there is a negative trend that may affect Nike’s long-term potential. Since 2012, Nike has enjoyed a social media Consumer Happiness score in the high 60’s to low 70’s. This score is gauged as a percentage of positive social media mentions over time. In early September, this Consumer Happiness score dipped below 50% for the first time since 2012, which is when our entire data set begins.
Oscar Wilde once wrote, “the only thing worse than being talked about is not being talked about.” With its new ad campaign, Nike made a calculated decision that could potentially have both short-term and long-term ramifications for their business. What will the outcome be? Only time will tell. In the meantime, at Destiny Capital, we’ll continue doing what we always do – asking questions and digging deeper to see what the data can tell us.
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