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BizReport : Advertising : October 21, 2019


Implications for Nike's purchase of data platform

Recently, athletic brand Nike announced plans to buy up Celect, a data science hub. The impetus behind the buy is to give Nike better insight into what their customers want, but there are bigger implications for the buy according to one expert: the beginnings of brands' challenge to Amazon's digital dominance.

by Kristina Knight

Kristina: Nike has announced acquisition plans for Celect - what are the implications of this for the digital space?

Adam Berkowitz, Chief of Staff, LiveIntent: Nike's recent acquisition of Celect is confirmation that, like Unilever and Dollar Shave Club before them, the smartest big brands are open to new ideas, even if they come from untraditional places. 

It's clear that Nike did this to bring personalization to its own properties. Celect is able to hyper-personalize based on local factors so they can incorporate data-driven insights on a local level in messaging to individuals and people. Similar to McDonald's acquisition of Dynamic Yield, these moves reflect the industry's push to emphasize larger aggregated hyper-local trends and tying them to people in real time. The industry is demanding personalization irrespective of device, channel, or platform.

Kristina: What about for Nike, specifically - how might their business model change/evolve?

Adam: With this acquisition, Nike can mimic some of the advantages that Amazon has for itself and move away from the walled gardens. 

For instance, since Amazon is a logged-in environment, it can immediately identify who the
user is, and serve those users what they're interested in.  This is something non-logged in sites such as Nike's struggle with. Nike is famously known for measuring its success on customer retention and a key part of that strategy is to not treat them a loyal customer a stranger. With the sophisticated advances in personalization via Celect (as well as the use of the email address to turn previously anonymous inventory into addressable inventory), Nike will be able to have an Amazon-like connection with their consumers and increase their success rates. 

Kristina: Do you see this as Nike's first step to pulling its products from Amazon?

Adam: Not necessarily, but they're flexing their muscles. By leveraging its Consumer Direct initiatives like its email program along with the technology gained from Celect, Nike will be able to be one of the big brand pioneers who could extricate themselves from Amazon's claws. 

Nike already took the lead here by limiting the amount of goods that it sells through Amazon, so it seems likely that Nike is launching a bulwark against Amazon's encroachment.
Kristina: Even with this acquisition, is Amazon too big a competitor to try to challenge?
 
Adam: Amazon is, indeed, a large competitor but it's not too big to challenge. Remember when the duopoly was too big to challenge? Now Amazon is quickly catching up as the third largest ad platform. 
 
Once the industry bands together and adopts technology that is beyond the reach of the walled gardens, the power will be shifted back to the hands of those who create the value, the brands and the publishers. To have no intermediary is to control your own destiny, and that's what both retailers and publishers must do.
 
Kristina: Why haven't any of the bigger brands tried to challenge them thus far - or even before Amazon became the behemoth it is now?

Adam: While not many big brands are directly challenging Amazon like Nike has, we're seeing an overall retailer fatigue with the walled gardens and a shift away from their grasps. More and more are doubling down on email. For Publishers, it's a logged-in path to their reader that can serve advertising at high rates and is unimpacted by the whims of a platform who changes delivery algorithms capriciously. For Brands, email the key to identity and people-based marketing in this mobile first world.

The rising costs are a big reason for the exodus to email, but so is the importance of having your own email data set in a world where the cookie is losing its importance. Being in the position to market to a known person with intent, absent a commercial cookie, is a huge advantage and brands have seen the need to pioneer that capability by themselves. 
 
Email newsletters and sites talk to each other and create a graph to tell the brand what each person, rather than cookie, is interested in. This valuable insight can then be used to market to people wherever they're paying attention, not solely within a walled garden.
 
Kristina: If Nike successfully extricates from Amazon, do you believe that could push other brands to try to exit, too?
 
Adam: Absolutely. With it's Consumer Direct assets and the addition of Celect providing technical expertise, the industry will look to Nike to learn how the next generation of brands are going to bring personalization to their own properties and remove themselves from the walled gardens, including Amazon.






Tags: advertising, advertising data, Amazon, data marketing, ecommerce, ecommerce data, LiveIntent, Nike, online advertising








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