Nike’s Social Network Attracts Runners

Nike is succeeding in a new game that other corporations, from Coca-Cola  to Verizon to General Motors , have tried unsuccessfully to play and that is building brand loyalty through online social networking.

Two years since its launched Nike, a technology that follows data of every run and connects runners around the world at a Web site, nikeplus.com, has built a huge fan base.

In August, for example, 800,000 runners signed up online to run a 10K race sponsored by Nike simultaneously in 25 cities, from Chicago to Sao Paulo. Now the company is checking how their social network can promote its basketball shoes.

Some analysts back up Nike's claims that the site is restoring the popularity of its running shoes. SportsOneSource, a Princeton market research firm, says Nike made up for 48% of all running-shoe sales in the U.S in 2006. Today, its share is 61%.

"A significant amount of the growth comes from Nike," says Matt Powell, a SportsOneSource analyst.

Using social networking might not be useful in the long run

But cynics such as Sam Poser, a stock analyst at brokerage firm Sterne Agee & Leach in New York, say Nike draws only serious runners, a small percent compared with its total customer base.

In general, the use of social networks worldwide has increased 38% in the past year, according to market researcher comScore. But a recent McKinsey survey found that many companies struggle with Web 2.0 technology and that only 21% of the nearly 2,000 executives who responded were satisfied with the software available to launch blogs or create Facebook applications.

Nike's online strategy is different from those of other companies. Most have tried to create virtual communities through a build-it-and-they-will-come strategy centered on a specific brand or product. The Beaverton Company imagined Nike as a clever way to combine music and running, not as a prototype for a new kind of marketing.

"It was never about how we can convert some percentage of users," says Stefan Olander, global director of Nike consumer connections.