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What Nike’s acquisition of startup Celect means for the future of DTC retail
Nike’s recent acquisition of Celect is further confirmation that, like Unilever and Dollar Shave Club before them, the smartest big brands are open to new ideas about how and where their customer could and should shop.
In a statement, Nike said it acquired the AI-driven, predictive analytics company Celect to bring higher levels of personalization to its properties. The platform will allow the sportswear brand to better predict demand and inform decisions regarding when and where to market its products.
How Celect does all that is, admittedly, rather ambiguous. Still, it’s understood that it’s able to hyper-personalize based on local insights and programmatically incorporate those into Nike’s messaging.
This is yet another sophisticated twist on people-based marketing, similar to McDonald’s acquisition of Dynamic Yield.
This spirit of experimentation and nimble marketing is more associated with direct-to-consumer upstarts than giant brands.
DTCs had to compensate for not having access to big box stores, so they doubled down on building direct relationships with their customers, primarily through relationships won through great content such as clever videos or catchy email newsletters.
DTCs are resourceful at using the data they get through their marketing campaigns because they have to be. Using their CRM, they’re able to create increasingly better lookalike audiences, make their audiences addressable irrespective of device, channel or platform, and bring personalization to wherever people are engaged.
Nike has clearly spotted an opportunity to scale this approach in order to win in another arena.
A bulwark against Amazon starts with Celect
Nike already famously limits the amount of goods that it sells through Amazon. Why? What does Amazon have that Nike doesn’t?
Amazon is a logged-in environment. It can immediately identify who the user is, and deliver marketing based on identity. This has been a stated goal for Nike, as well: Nike measures its success on customer retention and a key part of retention is to not treat returning customers like a stranger.
When a customer logs in to Amazon, the site immediately knows their preferences and intent – something non-logged in sites like Nike’s struggle to compete with. However, with sophisticated advances in onboarding and key data related to identity, the brand can turn previously anonymous inventory into addressable inventory.
Combine that ability with the data science chops of Celect, and Nike can close its Amazon gap.
Another of Amazon’s advantages is its success is not tied to a cookie. And if you’re a brand, it could be argued that this feature has, so far, benefited Amazon more than you. What Nike gains by finding an alternate to Amazon is the ability to keep all the insights for itself.
Nike will likely embrace emerging solutions, pioneered by DTCs, that allow brands to keep the data and the learnings of a campaign for themselves so they can continue marketing to a known person across device, channels and platforms.
DTCs pioneered this by embracing email newsletters, itself a cue from traditional news publishers, because email newsletters are logged-in and don’t have an intermediary. Those email newsletters and the sites talk to each other and create a graph to tell the DTC what each person, rather than cookie, is interested in.
This practice creates independence from platforms like Amazon, since brands can then use these insights to market to people wherever they’re paying attention, not solely within a walled garden.
By using the exhaust of its Consumer Direct Offense initiatives, like its email program, Nike can be a pioneer that’s able to extricate themselves from Amazon’s claws. Celect’s team will be as good as anyone at leveraging local, offline and online data to bring personalization to its inventory and to its audiences, no matter where they’re paying attention.
With the Consumer Direct assets in hand and with Celect providing technical expertise, 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 yoke of the walled gardens.
Adam Berkowitz is chief of staff at LiveIntent
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