From the uproar following NBC's decision to air Smirnoff vodka ads last month, you'd think that liquor giant Diageo PLC (DEO
) and its peers had scored an overwhelming coup that can only help rev up the industry's single-digit growth rate. But while the awareness-building potential of TV ads is huge, spirits marketers who are toasting their good fortune should also consider what they may be losing. A rush to TV may well spell the end of a brilliant run of creative--and effective--marketing.
Until now, the major TV networks, while happy to air hundreds of millions of dollars' worth of beer ads each year, have refused to air ads for presumably more dangerous hard liquor, a distinction many spirits marketers challenge. But following distillers' intensive lobbying, both in Washington and with the networks, Diageo was able to buy the NBC airtime, promising four months of "drink responsibly" messages before moving on to product ads.
Assuming the other networks follow NBC's lead, some analysts are predicting a sweeping shift of media dollars into TV. Some forecast that spirits ads on TV, until now relegated to cable and local TV channels, could jump from last year's $5 million to $200 million or more in just two or three years. "If I were still at Seagram, I'd be celebrating," says marketing consultant Arthur Shapiro, who breached the cable-TV barrier in 1996 with ads for Crown Royal whisky. Until then, the industry had refrained from seeking TV buys.
Still, the breakthrough may entail a huge trade-off. That's because the prohibitions on broadcast ads forced distillers to become wildly inventive. Think of the Absolut bottle as superhero in ubiquitous print ads, sometimes carrying real holiday bottle sweaters or Father's Day ties. Or "Jägerettes," attractive young women who encourage bar patrons to order Jägermeister shots. Or Hennessy's undercover schmoozers, hired to confide the cognac's wonders to their fellow barflies.
One has to wonder whether, given a chance to stampede into TV, distillers will lose the impetus to craft such painstaking, offbeat programs. That would be ironic, now that marketers in other categories are growing disenchanted with TV and experimenting with the very techniques pioneered by booze marketers. Example: carmakers' recent efforts to tie in to cutting-edge films or foment a buzz among influential consumers.
True, the sheer expense of network television will put it out of reach for many liquor brands. TV's CPM--the cost of reaching 1,000 homes--runs to $15. Now consider an initiative by Diageo's UDV unit to create an island "nation" for Jose Cuervo tequila. It leased a tiny Caribbean island and garnered millions' worth of free TV coverage with stunts like petition drives to enter the U.N. or participate in the Olympics. With virtually no paid ads, the CPM worked out to a paltry 15 cents, says Steve Goldstein, a former UDV exec who cooked up the scheme. "You can't even get that rate on community radio," he gloats.
Is it inevitable that TV ads will squeeze out such grassroots efforts? Booze marketers insist they'll take a considered approach. "We'll probably use TV, but it's not likely to be the next be-all and end-all," says Matt Wiant, senior vice-president for marketing at Allied Domecq PLC (ALDCY
). "TV is a very intrusive medium. People greet TV ads with a healthy amount of skepticism because they know they're being advertised to."
But others think such a squeezing-out is inevitable, particularly now that the once-insular spirits sector has been invaded by packaged-goods veterans, for whom TV ads are the default choice. "People will be taking the easy way, the way they were taught in commodity businesses at Procter & Gamble (PG
), Kraft Foods (KFT
), and Colgate-Palmolive (CL
)," warns Crillon Importers Ltd. Chairman and CEO Michel Roux, the man who earlier devised the Absolut campaign. "That's their mentality. And with the expense of TV, you can't do both." If that happens, though, they will be easing off on the very things that put megabrands like Absolut, Cuervo, and Hennessy on the map.
Khermouch covers marketing from New York.
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