What Nike’s Analytics Platform Buy Says About the Future of Brand-Consumer Relationships

When Nike announced its acquisition of analytics platform Zodiac in March, it spoke in broad terms about its plans to build closer relationships with consumers.

Nike and its agency of record declined comment, but bringing a predictive analytics firm in-house will undoubtedly help it crunch all the data it collects as it rolls out connected products and experiences and will also help Nike make predictions about those consumers.

According to LinkedIn, Zodiac leverages a company’s historical transaction logs to predict customers’ future buying habits. This, in turn, helps improve customer acquisition, reduce churn and enhance the accuracy of sales forecasts, according to Zodiac.

A Nike rep said the acquisition enhances the brand’s ability to serve consumers one-to-one as a result of a deeper understanding of their goals and needs, and Zodiac also brings with it a team of data science talent.

Michael Horn, managing director of data science at digital marketing agency Huge, said the deal comes amid a “ferocious hiring climate” for top data science talent.

“So this is just as likely to be an acqui-hire of staff, plus some IP, to accelerate Nike’s ambitions,” he said. “It’s hard enough to a brand as visible and admired as Nike to build a data science team—let alone hundreds of other brands which are struggling to attract and pay for transformative data talent.”

As of March 29, Nike has more than 300 open jobs listed under the keyword “data.”

“I think this is a trend you’ll see a lot of brands with strong direct-to-consumer initiatives taking—building up in-house data science teams as well as strengthening the customer data platforms, not just because retailers tend to not share this with brands, but moreover the brands need the deep data insights for more accurate personalization of their products and services,” said Manolo Almagro, managing director at technology consultancy Q Division.

Horn pointed out that Nike has long recognized an opportunity to differentiate itself at the intersection of wearables, IoT and quantified health as it puts sensors on everything from basketball courts to shoes to uniforms.

“That data streams in by the fraction of a second and can be used to predict the performance of fitness enthusiasts, professional athletes or even entire sports teams,” Horn said. “Nike experiences like Nike+ and the Run Club [which Huge helped build] are the future of customer relationships for the brand and drive investments like this. And their competitors [like Under Armour] are doing the same thing.”

In 2015, Under Armour acquired diet and exercise app MyFitnessPal for $457 million. Horn said the app had 80 million users at the time but would have also brought plenty of data infrastructure and talent with it, which was surely part of Under Armour’s strategy. (Under Armour recently disclosed a breach in which the data—including email addresses, user names and passwords—of 150 million MyFitnessPal users was exposed.)

In a release, Zodiac CEO Artem Mariychin said the analytics firm is excited to help power Nike’s Consumer Direct Offense, which according to a 2017 Nike announcement, is a reorganization that included the creation of the Nike Direct organization, which united Nike.com, direct-to-consumer retail and Nike+ digital products, and will focus on 12 cities, including New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan. Nike projects that these cities and the countries they are in will account for over 80 percent of its growth through 2020.

In November 2017, Nike expanded its NikePlus membership program to include NikePlus Unlocks, a feature in the Nike app that upgrades experiences and access to Nike features by collecting and analyzing members’ shopping behavior, activity and feedback across digital and physical properties. Rewards include access to Nike experts on demand who provide personalized recommendations, an exclusive shop with members-only products and options to personalize products, reserved products and members-only shopping events.

Nike expanded NikePlus Unlocks in February 2018 to include access to music, guided meditation and fitness classes based on members’ interests and goals.

“The more you use Nike.com and the Nike, NTC or NRC apps, the better Nike can get to know you and serve you with promotions tailored to your interests and goals,” Nike said in a release.

And, of course, the more consumers interact with Nike properties, the more data Nike collects.