Just Do It: How Nike's Industry-Leading Web3 Strategy Marks a New Era for Consumer Brands
Just Do It: How Nike's Industry-Leading Web3 Strategy Marks a New Era for Consumer Brands
Nike continues to be the benchmark for consumer brands entering Web3. This is the definitive case study on Nike's Web3 strategy and how this marks a paradigm shift for co-creating brand culture.
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This is the definite case study of Nike’s Web3 strategy – and it is much more.
Nike would already be intriguing enough in its own right. At the same, Nike helps us to understand the sweeping changes at the intersection of culture, branding, communities and technology - changes that herald a new era for consumer brands.
So, why focus on Nike?
Nike has been a trailblazer among consumer brands that have started using Web3 tech to redefine their consumer relationships. “Nike has embedded itself into the fabric of Web3 culture before the competition has even taken off”, titled CoinDesk. And we know how so much in Web3 is about culture.
In April, Nike revealed its inaugural digital collection, named “OurForce 1” (OF1). This marks a new phase in its Web3 journey and a shift towards a wider consumer market. Described by Nike as a "tribute to our first 50 years, designed for the digital generation," the collection underlines the brand's continued evolution.
How did the leading Web3 consumer brand (just) do it? What can we learn from it? And what’s the big picture?
In this article, I’ll cover:
Understanding Nike’s culture, storytelling, and brand experience
Nike’s Web3 journey
Assessing Nike’s Web3 performance. For that, I’ll be using my Web3 community formula outlined here, among others.
The bottom line of Nike’s Web3 journey
The big picture (the 🥩 part of the discussion)
If you’re new to Web3 and the metaverse, I suggest starting here.
Ready? Let’s dive in!
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Understanding Nike’s culture, Storytelling, and Brand Experience
Nike is one of the most iconic brands in the world. It has achieved global recognition as a brand synonymous with performance, innovation, and style. With its timeless slogan "Just do it," Nike evokes a sense of aspiration and ambition, transcending the barriers of language, age, and culture. Nike succeeds in expanding its brand appeal to diverse audiences and subcultures with a perfect mix of impactful storytelling, cutting-edge innovation, and engaging brand experiences. It's an art that few have been able to replicate.
Creating and becoming part of culture has been a trend in branding spanning decades. Aleksija Vujicic from Multicoin Capital writes:
“As religion declined across the Western world, consumers began to seek meaning, identity, and belonging elsewhere – such as influencers, or more importantly, from brands. It was not enough for brands to merely be attached to a subculture—brands recognized the need to become culture.
Nike embodies this trend by integrating into everyday life, effectively becoming a part of culture itself.
A key factor in Nike's cultural impact lies in its strategic partnerships with influential individuals and brands, keeping brand at the forefront of cultural trends. From hip-hop collaborations with Drake, Wu-Tang, Jay-Z, Eminem, to partnerships in skateboarding with Paul Rodriguez, Stefan Janoski, and in e-sports with Jian Zihao, Nike consistently maintains cultural relevance.
Nike's entry into e-sports demonstrates its readiness to embrace new subcultures. As e-sports gathers momentum, it has cultivated a distinct subculture with dedicated fans, professional leagues, and a distinct style. In 2019, Nike became a four-year sponsor for China's League of Legends Pro League (LPL) and teamed up with Vodafone Giants to create a training regimen for e-sports athletes.
Doug Stephens explains how Nike crafts compelling cultural narratives:
For most brands, the product is very clearly the physical objects they sell: shoes, apparel and accessories. For Nike it’s something much bigger. It’s about powerful human ideas. When we buy Nike, we’re buying into a cultural story. It may be a story about social justice and equality. It may be a story about perseverance against the odds, as was the theme of their memorable Find Your Greatness campaign. Or it may be a story about the many failures we all (even legends like Michael Jordan) experience en route to victory.
And it’s not only culture.
In the past decade, Nike has followed a bold direct-to-consumer approach centered on content, community, and personalization. This included revamping its distribution strategy to eliminate wholesale.
This gave Nike greater control over the entire brand experience. And for Nike, the brand is everything. Business of Fashion notes:
By radically cutting back on its wholesale distribution and raising the bar for brand experience with the third-party partners that remained; expanding its focus on content, community and customisation to keep customers close; investing in its data analytics and logistics capabilities; and rethinking the role of the store as a brand stage, Nike drove a veritable direct-to-consumer revolution.
Nike stores became cultural hubs for the brand, inviting customers to immerse themselves and even design their own clothing. Doug Stephens writes:
With a deep focus on hands-on engagement and product customisation, Nike’s stores were no longer the well-lit, mini warehouses that most big box shoe stores had become. Instead, Nike was creating beautiful and dramatic stages upon which its powerful brand and product stories could be told. Customers across major cities could not only see the unique store experience but become part of it, engage in it, play and be inspired by it.
Inviting customers to co-create their products aligns with a larger trend over the last two decades: the growing influence of social media on brand culture.
With social media’s rise, communities became increasingly important for brands. Suddenly, brands could create culture with their consumers, and thus brand culture became co-created.
Over the last two decades, Nike has been a trailblazer in using the internet, social media and new tech to strengthen its relationships with consumers, both digitally and physically:
In 1999, Nike launched "Nike By You" (originally "NikeID"), a feature on its website that let customers design their own Air Force One shoes. Now, Nike By You includes over 100 in-store studios where customers can work with trained designers.
In 2006, Nike introduced Nike+ and the Nike Run Club, allowing users to track their runs and fitness activities on their iPods and iPhones. The platform has evolved into the Nike Run Club app, offering users fitness tracking, virtual challenges, and a connection to the global running community.
In 2015, Nike launched the SNKRS app, a platform dedicated to exclusive releases and previews of the brand's latest sneaker drops, allowing customers to get the newest shoes right from their devices.
In 2018, Nike bought Zodiac, a data analytics firm that predicts customer behavior and value, enhancing the brand's personalized marketing.
In 2018, the Nike app started bridging the gap between online shopping and physical stores. The app recognizes when users walk into a Nike store, providing them with information about available products and services and triggered rewards.
In 2019, Nike introduced "Nike Fit," a VR feature in the Nike app that helps users find the perfect shoe size.
Doug Stephens says:
Nike never viewed technology as simply another channel for transactions, but rather a means of creating an ongoing connection with their customers, while also connecting their customers to the community.
And then, Web3 came along.
Next-gen marketing for next-gen consumers? Let’s find out.
And then, Web3 came along
It was only a question of time until Nike discovered how Web3 could mark a fundamental progression of that trend. Digital ownership, enabled by blockchains, offered a way to augment the co-creation process to be more personalized and engaging. And reward the community in return.
This led Nike to be one of the first and most successful major brands to embrace Web3.
Let’s look at the milestones of this love story:
2019: Securing a patent for the blockchain-based CryptoKicks, a blockchain-based system that unites a physical product with an NFT (aka “Phygital”).
2021, November: Launch of Nikeland, a virtual experience in the online gaming platform Roblox1
2021, December: Acquisition of RTFKT, a Web3 studio for virtual sneakers, and launch of the CloneX NFT collection in partnership with Takashi Murakami. CloneX owners have commercial rights over their avatars, and a token-gated site was used to allow holders to download the 3D files.2
2022, February: RTFKT releases a co-branded Nike x RTFKT collection called “MNLTH” which was airdropped to Clone X holders alongside PodX virtual spaces.
2022, February: Start of the “.SWOOSH Community Collective”, a series of IRL events to collect and discuss feedback from the community. It looks like this.
2022, April: Launch of CryptoKicks together with RTFKT, a collection of 20’000 customizable sneaker NFTs for MNLTH holders. CryptoKicks can be customized with RTFKT Skin Vials. Skins can be equipped on a page that is token-gated for MNLTH holders.
2022, July: Launch of RTFKT x Nike AR Hoodie NFT for CloneX and CryptoKicks holders, a wearable with the option to forge a physical counterpart.
2022, August: Launch of a phygital fashion collection called Forging SZN 1 for CloneX holders. The dynamic drop allows users of specific Clone X NFTs to order merch that is tied to their avatar’s DNA. Wearables include hoodies, jackets, t-shirts, hats, socks, and sneakers.
2022, November: Launch of its Web3-enabled platform called .SWOOSH, on which users will be able be able to gain access to exclusive events, collaborate with Nike designers on virtual products, and even earn royalties from the sale of those products.
2022, November: Announcement of the first .SWOOSH collection called “OurForce 1” based on the timeless design of the original, physical Air Force 1. Start of the community curation phase.
2023, January: Announcement of .SWOOSH Studio, Nike’s vision for the future of virtual consumer engagement, including co-creation initiatives for which users are rewarded. Start of the Your Force One contest as the first co-creation event.
2023, April: Official launch of the “OurForce 1 Collection”.
2023, October: Nike announced its first physical sneaker called Air Force 1 Low “TINAJ”, which stands for “This is not a jpeg.” TINAJ will drop in November to .SWOOSH ID NFT holders who purchased and revealed an OurForce 1 box.
Quite a journey.
To understand Nike's Web3 strategy, it's useful to look at it in terms of what happened before .SWOOSH and what's happened since .SWOOSH was introduced.
Pre-.SWOOSH and post-.SWOOSH period
The pre-.SWOOSH era saw Nike's initial exploration into Web3, marked by the acquisition of RTFKT, a native Web3 studio. This step led to new collections and various experimental projects, mainly involving RTFKT/CryptoKicks and CloneX collections.
Just as in traditional markets, entering the Web3 involves two strategies: organic growth through independent development or inorganic growth through partnerships or acquisitions. The trend among the biggest brands appears to favor partnerships, as demonstrated by Nike with RTFKT, Adidas with Bored Ape Yacht Club (BAYC), and Gucci with Yuga Labs.
In this pre-.SWOOSH period, Nike operated without explicit ties to the parent brand, fostering experimentation and mainly engaging a niche group of Web3 users.
After years of exploration, Nike decided to integrate its Web3 initiatives more closely with its parent brand and core customer base. This was marked by the launch of the .SWOOSH Studio and the OurForce 1 collection.
.SWOOSH offers a glimpse of how a future Web3 enabled digital ecosystem of co-creation and co-ownership might look like.
A close look at .SWOOSH & OurForce 1
In November 2022, Nike launched .SWOOSH, a Web3-enabled platform “that champions athletes and serves the future of sport by creating a new, inclusive digital community and experience and a home for Nike virtual creations”, in Nike’s own words.
Their goal: to broaden the scope of sport and serve its future by making the web3 experience accessible to everyone, enabling them to collect, create, and own a piece of this new digital world.
To put it simply, .SWOOSH is set to be the hub of Nike’s Web3 activities and the primary interface for user interaction. Its features include:
Providing a space for users to learn about, collect, and eventually co-create virtual creations, earn royalties from the virtual products they help create, and unlock access to exclusive events and products.
Acting as a launchpad for the first co-creation campaign, OurForce 1.
When signing up for .SWOOSH, users create a soulbound token as the .SWOOSH ID. This non-fungible token (NFT) is permanently linked to their specific digital identity, and cannot be transferred or sold to others.
The sign on and wallet creation is seamless. Nike has partnered with BitGo to create a wallet for you when signing up. Like Starbucks and many other household brands, Nike partnered with Polygon for the .SWOOSH ID.
Here are the contract and token addresses for .SWOOSH on Polygon. As of now (Mai 2023), 351’881 .SWOOSH IDs have been minted:
Here, we should consider that .SWOOSH is still in beta and Nike restricts the amount of users who onboard.
In November 2022, Nike kicked off its inaugural .SWOOSH event with an OurForce1 community curation. This allowed .SWOOSH members to vote on their favorite Air Force 1 styles.
Fast forward to January 2023, Nike launched the Your Force One contest. This exciting event led to four members earning the opportunity to jointly design sneakers for Nike's forthcoming virtual footwear series, dubbed the OurForce 1 collection. As part of the deal, these creators were required to sign a "co-creation contract," granting them a share of the profits from each sale of their design.
Then, on April 18, Nike distributed 106’453 free virtual posters to .SWOOSH community members who had previously engaged in co-creation with Nike.
Are you still with me? Good, let’s continue.
Two weeks ago, Nike offered those who held their virtual posters the first opportunity to purchase an OurForce 1 box. These poster holders had a little over a day to secure their box before the offer became available to all .SWOOSH members last week. On the first day, Nike sells 55K+ virtual sneaker boxes for $1m+.
So, what exactly is an OurForce 1 box? It's a virtual container housing the new OurForce 1 collectibles, inspired by Nike's iconic Air Force 1 sneakers.
There are two types of boxes:
Classic Remix
New Wave
The Classic Remix box may contain a digital sneaker inspired by Air Force 1 collections ranging from 1982 to 2006. On the other hand, the New Wave box features a modern, forward-thinking Air Force 1, inspired by designs from 2007 onwards, even venturing into future concepts. Both boxes include a mix of digital sneakers, some of which are co-designed by the winners of the Your Force 1 contest.
Some more details:
A few days after, users will have the choice to participate in a “community reveal moment” or keep it closed forever
Each box comes with a 3D file that you can use to, say, export to other platforms (if compatible) and more.
Priced at $19.82, in homage to the year Nike's Air Force 1 sneaker was released, the OF1 Boxes can be purchased with a credit card – no cryptocurrency required.
Nike's .SWOOSH marketplace will also host a secondary market where members can trade OF1 Boxes and other Nike Virtual Creations.
In the near future, Nike will add utility to these virtual collectibles. Some might unlock access to exclusive physical products or experiences, others may reveal more virtual creations with rich stories behind them.
That’s it. That’s the whole magic of the OurForce 1 campaign.
For starters: Compared to other brands, Nike executed its Web3 strategy exceptionally well so far. Let’s look at some actual numbers.
Sprinting to Success: Assessing Nike’s Performance
Of course, hardly any marketing strategy can be assessed without knowing the ROI. We don’t know how much Nike invested so far (except the price for the RTFKT acquisition), but we can look at what they got back.
While traditional and Web3 metrics to determine ROI can overlap, there are a few Web3 specific metrics to look at (thanks to the blockchain).
In this analysis, we'll consider:
Primary volumes + secondary volumes of NFT sales
Total revenue (through royalty fees)3
Social engagement
Social mentions
Performance of individual drops/collections
Community strength
All NFT-related metrics can be accurately tracked in real time using blockchain data, available for public viewing4 Although there's a wealth of data from the pre-.SWOOSH era, post-.SWOOSH metrics are yet to be fully available since the platform just launched.
Volumes
When it comes to primary and secondary volumes, it’s no secret among the Web3 marketers that Nike has consistently outperformed every other brand by a wide margin. Here’s a live Dune table showing that:
With $93m primary sales revenue, Nike outperformed the 2nd brand Dolce & Gabbana by 4x. Nike achieved $1.34bn secondary volumes, outperforming the 2nd brand Adidas by 7.5x. The most impressive metric is Nike’s total revenue of $186m as of now, generated by royalties fees. This is 8x more than Dolce & Gabanna on the 2nd place.
Focusing on historical trading volumes for fashion NFTs totalling to nearly $1.3bn in 2022, Nike is also dominating:
Meanwhile, revenue growth for Nike has slowed dramatically. Here’s a look at the development of royalty fees, which shrank to almost nothing in March 2023:
It might seem natural to attribute this to the general trend of declining royalty fees on exchanges. However, a more plausible explanation could be the significant decrease in trading volumes experienced by most brands and NFT collections in recent months:
Let’s take a look at individual collections.
Nike’s CloneX collection, 20’000 3D avatar NFTs called “Clones”, was by far the most successful drop in terms of volume, engagement and royalties. Since its launch in November 2021, CloneX has produced most of the royalties most consistently and contributed 65% of Nike’s NFT trading volume:
Even though the volume of the CloneX collection has gone down recently, it still hovers at around 1k sales per week:
The RTFKT collections were smaller than CloneX in terms of royalties and volume, but they still make up 70% of phygital secondary volume:
Let’s also look at the most important post-.SWOOSH metric, the number of SWOOSH ID mints. So far, over 355’000 IDs have been minted, still rising.
Is that a lot, or relatively little? It's challenging to assess, as Nike is one of the initial major direct-to-consumer brands to dive into Web3 experiences on a large scale. For context, Reddit, which introduced its mainstream collectible avatars in August 2022, has seen over 9 million of them minted to date.
Social Engagement
Let’s look at the social engagement for Nike’s most popular collections:
CloneX
RTFKT x Nike Dunk Genesis CryptoKicks:
RTFKT x Nike Monolith (MNLTH)
Nike’s tweet on its partnership with RTFK was its 15th most successful tweet ever.
Compared to the pre-.SWOOSH collections (all of the above), the social following around .SWOOSH and #OurForce1 has mixed, depending on the platform.
Twitter: With a mere 24.1k followers and a few hundred likes for the best tweets, engagement around Nike’s Web3 account @dotSWOOSH is with ~1.2% relatively low. Looking at Nike’s main Twitter account @nikestore, which boosts 5.2m followers and around the same engagement, the .SWOOSH brand likely still serves a very niche market of Web3 enthusiasts, but with higher engagement than normal users. Comparing that to Porsche with boosts 44.9k followers on its Web3 account (with lower engagement than Nike), or Adidas using its main account for Web3 with 4.2m followers for content (with lower engagement than Nike)6, the picture becomes clearer: Whether brands engage on their dedicated Web3 accounts to a more niche target audience or on their main brand accounts to a broader audience, overall engagement remains low and is mainly driven by enthusiasts.
Instagram: Boosting 237k followers and an average of 3-8k likes per post, the engagement rate is ~2%, which is rather low. Nike’s main Instagram account has 293m followers, an average engagement of around 100k likes, and an engagement rate of ~0.03%. Again, the .SWOOSH brand likely still serves a very niche market of Web3 enthusiasts, but with higher engagement than normal users.
TikTok: At the moment, .SWOOSH posts on TikTok are virtually non-existent.
Over the last two years, Nike's top three Web3 collections generated approximately 1.45bn social engagements, nearly as much as the Nike brand itself, and around 800k social mentions, about 6.5 times more than Nike’s total mentions in the same period. Despite these numbers, .SWOOSH's initial response has been mixed and the engagement beyond the Web3-centric audience is still limited.
However, it’s interesting to compare Nike’s 2022 revenue of $46.71bn to its Web3 total revenue of $180 million, which constitutes only about 0.03%. Despite this tiny proportion, social engagement on Nike’s Web3 brands significantly outstripped its total brand engagement.
This suggests that Web3 enthusiasts are generally much more active on social media than Nike’s typical customer, leading to the disparity in engagement.
Nike & Community
Before jumping to conclusions regarding Nike’s performance, I would like to take a more systematic look at Nike’s community building efforts. “There’s a hunger for our community to co-create the future of sports with us,” said Ron Faris, head of Nike’s Virtual Studio. So, how has that played out so far?
For that, I use my preliminary Web3 community formula outlined here, incorporating three relevant factors for a Web3 brand community:
Qualitative Assessment
Purpose, utility and culture are very hard to measure. In the following table, I did a qualitative assessment of all the relevant metrics:
From a qualitative perspective, Nike has yet to fully tap into the potential of Web3 community building. While the brand has involved the community in its Web3 journey and co-creation on .SWOOSH from the get-go, the level of involvement is still narrow and the whole experience is guided by Nike in a top-down fashion. Nike would benefit from aligning its Web3 activities even closer to its main brand and by fostering tangible connections between community members through real-life events.
Quantitative Assessment
Additionally, a quantitative assessment can be based on:
Engagement & activity
Metric 1: Social engagement
Metric 2: Secondary volumes
Member retention
Metric 1: % of NFTs listed across the major collections, whereas 1% would be relatively low and 10%< would be relatively high.
Metric 2: % of unique holders. Generally speaking, if a collection has a high percentage of unique holders (e.g., more than 50%), it indicates a broad distribution and potentially a healthy, decentralized community. This could mean that the NFT collection has been widely adopted and has a good market presence. It might also signify that the collection is less susceptible to manipulation from large holders (often referred to as "whales"). On the other hand, a relatively low percentage of unique holders (e.g., less than 10%) could indicate that ownership is concentrated among a few individuals or entities. It could also indicate a lack of broader community interest or engagement.
Let’s dig into it:
Engagement & activity:
Social engagement is relatively high among a niche target group (see chapter “social engagement”).
Secondary volume is relatively high compared to other brands; (see chapter “volumes”).
Member retention:
Items listed: 1.72% (relatively low)
Unique holders: 48.13% (good, but not great)
Items listed: 6.75% (good, but not great)
Unique holders: 49.09% (good, but not great)
From a numbers standpoint, Nike's Web3 community is thriving. It showcases impressive engagement levels and strong volumes, and its major collections have a respectable number of unique holders and listed items, though there's room for improvement.
Given that the .SWOOSH platform is still in its early stages and Nike has been responsive to its community from the start, we can expect more comprehensive community building, shared creation and ownership, and integration with the brand's primary activities.
The bottom line of Nike’s Web3 journey
Evaluating Nike's Web3 journey extends beyond simple past performance. Nike’s entry into Web3 was likely a strategic move to position the brand optimally for the next phase for consumer brands.
So, was Nike’s Web3 journey a success?
Let’s look at this from three perspectives:
Execution
Performance
Strategy
Execution: Nike sets the benchmark
Nike has executed its Web3 play so well on so many levels. Let’s look at some of the standout features of its journey so far:
Early in its Web3 journey, Nike partnered with a Web3 household brand (RTFKT) to build awareness and credibility. We’ve seen countless examples over the last years of brands who entered the space alone with one-off NFT drops that quickly faded into oblivion.
The partnership allowed Nike to engage a Web3-focused audience and experiment without jeopardizing its primary brand's reputation. Years later, Nike would introduce its .SWOOSH platform, tying its Web3 endeavors closer to its main brand. The name .SWOOSH carries a tremendous legacy as a trademark, but is signalling a transition into the digital age with the “.” in front of it.
Early experimentation allowed Nike ample time to carefully craft its Web3 strategy and understand the interconnections between its collections. The significance of this became evident with .SWOOSH's launch, which will serve as a home for all future virtual creations and co-creation/ownership initiatives. The whole launch process of .SWOOSH and OurForce 1 seems to be thought through and sustainable.
The OurForce 1 campaign, Nike's inaugural .SWOOSH project, cleverly draws on the brand's heritage. Derived from the successful AirForce 1 product line, it signals Nike's long-term commitment while preserving enough detachment from the parent brand for experimental ventures.
OurForce 1 also incorporated .SWOOSH community input from the start. With the OurForce1 community curation and Your Force One contest, members voted for their favorite Air Force 1 styles and created their OurForce 1 designs.
Social status is integrated into the .SWOOSH community experience. Users can explore the gallery, discover virtual creations, fellow members' profiles, and keep track of collection ownership.
The reciprocity between the brand's legacy (AirForce 1) and virtual creations (OurForce 1), underscored by the naming (Air --> Our), establishes a compelling, symbolic brand narrative that resonates with the product and the community. Both words represent the a key attribute of the product (“walking on air” & “community”). With this strong foundation, it's an obvious next step for Nike to introduce the most popular OurForce designs into its global retail stores and offer exclusive physical products or experiences for NFT holders.
Performance: focus on top of the funnel
Performance hinges on the initial goal, be it sales, lead generation, community building, engagement, or awareness. This is something only Nike can clarify. My intuition suggests that Nike aimed to boost top-of-the-funnel aspects such as awareness and engagement, prioritizing learning over immediate profits.
The Web3 marketing funnel, which I'll soon detail in a separate article, starts similarly to a traditional funnel (Phase 1) but evolves significantly in Phase 2, where content, access, participation, co-creation, ownership, and profit take precedence.
With its pre-.SWOOSH collections, Nike has moved into phase 2. Its post-.SWOOSH efforts have all focused on phase 1. Overall, Nike performed exceptionally well at the top of the funnel.
Thus, I argue that yes, it was successful in terms of brand awareness and engagement. The social engagement was massive in relation to Nike’s overall brand engagement.
Strategy: building for the long-term
Nike likely views Web3 as a way to connect with a new consumer generation. These consumers spend increasing time online, likely creating, earning, and holding virtual assets that mirror their virtual lives.
Owning Nike’s virtual products might become a top-of-the-funnel gateway drug, enticing consumers to explore and invest in the brand's physical products and experiences. Many luxury and fashion brands are pursuing this strategy (e.g., Louis Vuitton's collaborations with popular video games such as "League of Legends" and "Final Fantasy XIII").7
Especially younger consumers might interact with virtual goods before they would be in the market to purchase a physical pair of sneakers. The .SWOOSH platform could become an important acquisition channel for this group (or should I say “generation”?).
Jake Stott, co-founder and CEO of Hype, writes:
The Swoosh isn’t simply in a sales contest with Adidas, Under Armour and other apparel giants. It’s fighting for cultural relevance with challenger esports brands and upcoming digital fashion houses, many of which are gaining momentum with Gen Z and gaming circles.
That’s the brilliance of its Web3 play. Unlike other traditional brands looking at Web3 as a new technology, Nike has figured out that technology is only one facet of something much bigger: a new cultural movement.
Nike's Web3 endeavors have had minimal impact on its bottom line thus far, contributing less than 0.05% to its 2022 revenue of $46.71 billion.
But then again: We’re early and likely at the very beginning of the S-curve for Web3 applications in the mass consumer market.
The thesis stands that we’re at the cusp of a new digital era of a new cultural economy of digital ownership, in which brands and communities collaborate to cultivate mutual growth and share in value creation.
Positioning the Nike brand at the forefront of this era is strategically important and will – hopefully – reap financial rewards down the road.
The Big Picture: A New Era for Consumer Brands
Let’s zoom out. This new era that we’re entering now and Nike is spearheading is composed of several megatrends:
Web3 tech that enables “virtual cultural artefacts” (aka NFTs) & brand IP
Decentralization of power
Community collectives and cultural branding
I’ll dive deeper into this in a future article, because it’s a monumental shift. Here’s the outline.
Virtual, cultural artefacts & Brand IP
Crypto, and most recently Web3, has been around for a while now. NFTs rose to prominence in 2017 with the launch of CryptoKitties, a blockchain game that allowed users to purchase, collect, breed, and sell virtual cats. In the following years, NFTs expanded into digital art, music, and other forms of creative work. They reached a pivotal moment in 2020 with a surge in popularity and market value.
The term “NFT” became mainstream, while the actual creation and interaction with NFTs and dApps remained the “hobby” of a few, mostly younger technologists and creatives.
Brands recognized the cultural and creative dynamics of the Web3 movement. I still remember this statement from Benjamin Bouygues, Ventures & Innovation Director at Kering, at NFT.Paris 2023:
“It’s the first time in my life I’ve seen Hollywood to be more excited about a technology than Silicon Valley.”
Eventually, NFTs codify, financialize, and commodify cultural artefacts and might serve as the technology for a new internet of cultural assets.
Brands have started to experiment with NFT collections and other, simpler forms of brand engagement campaigns catered to a niche of hardcore Web3 users.
Decentralization of power
An important part of Web3’s culture, rooted in the libertarian roots of Bitcoin (the mother of crypto), has been about community-driven, bottom-up value creation and ownership. I’ve written about this here.
Joe Lubin, Co-Founder of Ethereum and CEO of ConsenSys, called this “the foundations of a new supercycle that is user-powered and community-centric”:
The paradigm shift will usher in decentralization as the overarching organizing principle that empowers and yet knits together composable human systems and communities in a loosely coupled manner.
[It] adds newly developed horizontal coordination mechanisms to the vertical strands of traditional top-down control to form a more effective and robust social fabric.
Consumer collectives & cultural branding
Community-led branding has been around for a while – thanks to social media. Brands such as GymShark, GoPro, or AirBnB are famous examples of brands who leveraged social media communities to build their brand. Aleksija Vujicic from Multicoin Captial writes:
In the past, brands created products and, more generally, culture, and proliferated this top-down via centralized, top-down media. Social media inverted the communication media, and naturally the proliferation of culture, which, in turn, sparked the first wave of massive-scale co-creation between brands and their communities.
At the same time, in a world where we are more digitally connected than ever before, many people find themselves feeling surprisingly alone. Despite being plugged into countless online communities through our devices, the lack of genuine, face-to-face interaction often fosters a sense of isolation. This paradox has led to the rise of community-led brands with a focus on face-to-face interactions and culture building, such as Crossfit (or even Bitcoin!).
In the Sociology of Business,
writes:We are going through the imagined community renaissance, thanks to modern brands stepping in as the social constructs of belonging left vacant by traditional institutions of social cohesion, like organized religion, civil society institutions, and mass media. Consumer collectives are the new audience unit.
Eventually, communities create culture, and culture reinforces communities. As a result, cultural branding has become a powerful tool to build brands. Toby Shorin talks about a new era which he calls “life after lifestyle”:
The Lifestyle era was not about creating culture; it was about attaching brands onto existing cultural contexts […]. The new order we are entering into reverses this. For some organizations, culture has become the product itself, and products have become secondary, auxiliary, to the production of culture.
I wrote more about this extensively here and here.
Even in Web3, community and culture is everything. Web3 started with NFTs that morphed into collections that morphed into communities. Today, you’ll see tightly knit groups of like-minded people identifying themselves as “Punks”, “Pens”, “DeGods”, “Moonbirds”, “Apes”, or other famous community brands. Each of those communities has its own culture and lingo.
Again: Future brands will be built around the community and the cult around them, with ownership built in.
nails it here again:As a brand strategy, culture is fool-proof, as it can’t be criticized. Because the culture is extremely socially shareable, it is a calculated brand effort towards awareness and brand recognition. […] In terms of audience management, culture creates a human connection - due to its ambiguity, provocation, and openness to interpretation, the culture is the opposite of transactional. Culture makes us pay attention.
This is why the case of Nike is so interesting. It’s a brand built on culture that is now trying to augment that into the digital space.
Bringing it all together: a paradigm shift for consumer brands
Now all this has been supercharged with the help of Web3. For the first time, community and culture can be built on a digital, decentralized layer of trust and owned by the users. This marks a paradigm shift in how brands create culture in the digital realm.
For brands who take this new digital era seriously, this means a fundamental shift in how they do business. In January, I wrote:
A Web3 strategy is as much a marketing strategy as a customer strategy. It’s woven into the branding and marketing process. It augments how a brand does business.
Brand building in Web3 is transparent, participative, and owned by the community. Beyond the product, users can now own part of the brand, part of the story, part of the culture they help to create. This changes the way customer communities are managed — and how product value is created and shared. Indeed, value creation in Web3 is in large part about using shared ownership to incentivize participation and engagement from many people at once.
Most importantly, this won’t be isolated to “Web3 brands”. Web3 tech will be a tool to supercharge any brand in co-creating brand culture in the digital realm.
The value chain of business models and marketing will shift from linear, top-down, to circular, bottom-up models – from purely social towards socioeconomic.
Neither Nike, nor any other consumer brand, has yet succeeded in making this mainstream. That doesn’t come as a surprise, as Web3 still has major challenges to overcome, such as UX and deeper integrations into brand ecosystems.
More importantly, brands will inevitably be confronted with a loss of power and possibly a complete reengineering of their value creation models and marketing activities. Meanwhile, consumers and communities will gain more control, more participation, more agency, more power.
Are brands ready for that? I’m not sure.
Are consumers ready for that? I’m not sure either.
No consumer brand has cracked the code yet. But I’m optimistic that it will happen soon, and possibly completely outside of the Web3 bubble.
From then on, brand culture will be co-created. Instead of “shareholder value creation” brands will think about “community value creation”.
The best brands will still be inherently cultural. But they will be built together with the community and the cult around them, with co-creation and ownership built in.
Once again, Nike – and we all – are adapting to a new reality. Or in the words of Phil Knight, co-founder of Nike:
“Life is growth. You grow or you die.”
– Marc
P.S. I appreciate your time spent reading this article. My gratitude goes out to the incredible authors whose insights have shaped the thoughts expressed here. While many are directly acknowledged, others have contributed in personal discussions. I welcome your feedback and would love to hear your thoughts in the comments.
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Previous essays that might interest you:
Even though Roblox is not blockchain based and is therefore not part of what I define as “Web3”, I’ll cover it anyway for the timeline to be complete.
Prior to Clone X, the RTFKT studio had extensive experience with NFTs. They were a well-known metaverse fashion brand that offered NFT sneakers, and even let owners create physical copies of their digital kicks. Clone X was an evolution of their digital streetwear roots and has grown to become one of the most culturally significant and expensive NFT collections.
Royalty fees for NFTs (Non-Fungible Tokens) refer to the percentage of the transaction value that the creator or owner of the NFT receives when the token is resold or traded on a secondary market.
For marketers, one of the most useful innovations of blockchains is that data on NFTs, wallets and transactions is transparently stored and visible on the blockchain. This opens an immense amount of new opportunities for insights, campaigning and performance analytics.
Total brand engagement = total engagement for “Nike” on social media within the last two years
Adidas also has a dedicated Web3 account, which has about the same follower count and engagement rate as Nike’s dedicated Web3 account.
In 2019, Louis Vuitton partnered with Riot Games to design clothing for characters in League of Legends. The French fashion house also released a “League of Legends” inspired fashion collection and a custom-made trophy case for the League’s annual esports finals held in Paris. The collection was designed by Nicolas Ghesquière, the fashion label’s artistic director of women’s collections.
Marc, loved the depth. By far one of the best case studies in terms of comprehensiveness and unique perspective. Would love to collaborate.
Excellent article! You have the talent to explain a complicated subject in a very clear way and to give new insights. Thank you very much!