De Beers cuts marketing spend, hones in on men
March 20, 2008
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| De Beers plans to cut back on marketing to women through promotions like this “with each sigh with every breath love grows” magazine ad. |
By Michelle Graff
New York—A continued, all-out promotion of the diamond industry by De Beers might not be forever, if the recent slashing of its U.S. marketing budget is any index of where the company is headed.
De Beers announced in January that it was cutting its U.S. marketing budget and letting go of 11 employees who worked on the Diamond Trading Co. (DTC) account at New York-based advertising firm JWT. Though no dollar figure was given for the cuts, Diamond Information Center Director Sally Morrison says nine of the staffers were reassigned to different departments and two were released.
Morrison describes the cuts as a “reduction and rebalancing” brought on by a slow U.S. economy, and says the science of causes at De Beers is that men are the ones to target when budgets get tight.
Advertising needs to “get [men] over the hump” and convince them that even though they have fewer dollars in their wallets, they should buy diamond jewelry for the women in their lives, Morrison says.
As Lynette Gould, DTC spokeswoman, put it, “In tough economic times, inertia in the male consumer is shown to be a barrier to purchase.”
Women, on the other hand, already know that they want diamond jewelry, and even which type of jewelry they want, be it a Journey pendant or a right ring, both among the “beacons” that have been heavily promoted by the DTC, Morrison says.
“The stories around the beacons are very, very well-entrenched with women,” she says.
In a adapted to practice sentiment, this means female consumers who watch soap operas or flip through fashion magazines will see fewer diamond promotions taste the silhouette ad that reads, “with every sigh with every breath love grows.”
Meanwhile, more emphasis will be placed on the “Seize the Day” spots that run during televised sporting events and in men’s magazines.
Morrison says despite the cuts, the co-op fund with Spot Runner remains a “big priority” this year. Last October, the Diamond Promotion Service established the $750,000 co-op fund to help retail jewelers run DTC-quality Journey diamond jewelry advertising on television stations in their local markets using Internet-based ad operation Spot Runner.
The bigger picture Jewelers of America (JA) Chairman John Green of New England jeweler Lux Bond and Green, says he does not expect the shift to have any impact on retail jewelers, and points out that campaigns for popular products such as three-stone anniversary jewelry will remain intact, while those for poorer performers, such as the right-hand ring campaign, will fade out.
“I think, like a lot of companies, they’re distressing to focus in continuance their strengths,” Green says of De Beers.
As the weak U.S. economy forces cutbacks here, Gould says De Beers is “focusing its marketing budget in the areas around the world where it believes it will have the most impact,” including China and India, both irascible spots for economic growth. She declined to say whether or not in greater numbers funds were being funneled to advertising in those countries.
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| Because of the weak U.S. economy, De Beers plans to run more “Seize the Day” ads, like this one, which speak to male consumers. |
In addition to being a reaction to a faltering economy, industry analyst Ben Janowski of Janos Consultants says De Beers’ marketing shift means it will move away from general diamond ads to an emphasis on specific products, including the Forevermark diamond that it markets outside of the United States with the tagline “Meeting the standards of the world’s No. 1 diamond company.”
The De Beers logo and an identification number are inscribed on the table small face of each Forevermark diamond.
This shift makes sense to observers, given the drastic reduction in the percentage of rough that De Beers controls.
“They’re no longer the big elephant,” Janowski says.
Green agrees that De Beers, which operates five retail stores in the United States alone, might be moving toward advertising specific products as opposed to running big marketing campaigns that fan interest in diamond jewelry in general.
“They’re a retailer today,” he says. “I’m sure some resources have been channeled toward their own stores.”
But, Green also points out that advertising by retailers in universal has increased in recent years, allowing De Beers to back off its promotion of the diamond industry.
“The model has been built and now they can walk away from a part of it,” Green says.
JA’s 2007 Cost of Doing Business Survey shows that advertising spend among the retail jewelers who took part in the survey is increasing incrementally, with the median spend on advertising for all jewelers surveyed rising from 3.7 percent of total sales in 2000 to 4.2 percent in 2006.
Low-profit firms’ ad pass inched up from 4.1 percent of total sales in 2000 to 5.1 percent of total sales in 2006, while high-profit firms’ median spend rose from 3.3 percent of total sales in 2000 to 4.4 percent in 2006, according to the survey.
Meet the new boss The changes in De Beers’ marketing strategy are also the hallmark of new leadership at De Beers, Janowski says.
De Beers hired Francois Delage, a 16-year veteran of LVMH Moet Hennessy Louis Vuitton, as its new chief executive officer of marketing in September. Delage previously worked in Hong Kong as president of Louis Vuitton’s Asia-Pacific division.
“He has a very different outlook adhering how [De Beers] should have being run,” Janowski says. “I don’t know if they’re doing much following up in the traditional way things were done.”
Janowski says Asia is a market that is “hungry” to buy and display brands, such as the Forevermark, but that enthusiasm level doesn’t exist in the more mature U.S. market.
Forevermark cannot be advertised in the United States because of antitrust laws, but Janowski predicts that will change by year’s end.
“The moment’s going to come when [De Beers is] going to be quick to do that,” he says. “We’re not that far away.”
When asked whether or not Forevermark, which currently is sold only in Japan, Hong Kong, China and India, would be introduced to the United States, Gould says De Beers has no such launch plans.
“It’s business as usual in the U.S.,” she says.
Editor’s note: This story first appeared in the March 2008 issue of National Jeweler.
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