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Liquor Giants Plug Into Social Media

Posted on  | May 29, 2012   Bookmark and Share
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Europe’s liquor giants are increasingly plowing cash into social media to promote their brands and gather valuable data on drinkers.

Thirst for whisky, rum and vodka in Latin America, Africa and Asia has accelerated as adult populations have expanded and incomes have risen, and companies see the improved online access in developing markets through laptops, tablet computers and smartphones as an opportunity to drive sales.

U.K.-based Diageo PLC (DGE.LN) and France’s Pernod Ricard SA (RI.FR), the world’s No. 1 and 2 spirits companies by revenue, respectively, are diverting more advertising spend away from traditional formats like television and cinema to interactive digital platforms.

As well as pursuing multi-million-dollar partnerships with U.S.-based search technology giant Google Inc. (GOOG), consumer giants are turning to advertising on sites like Facebook Inc. (FB), Twitter Inc. and Google’s YouTube to better understand habits, preferences and lifestyles, strengthen brand loyalty and gear their future businesses.

In an interview, Diageo Chief Marketing Officer Andy Fennell emphasized the increasing importance of social media in the marketer’s armory. He said the company is using sites like Facebook to get a detailed picture of the demographics of users who register themselves as fans of its products.

For Fennell, it is an exercise that benefits both parties. “Facebook [is] keen to constantly improve the way that client companies judge return on investment on their platform.” Diageo now has over 1.2 million Facebook fans on its global pages for Johnnie Walker, the globe’s best-selling Scotch whisky brand, with 17.8 million nine-liter cases sold in fiscal 2011.

Diageo raised its marketing spend 10% in the first half of 2012 compared with a year earlier to GBP896 million. While television and film still take the lion’s share of the company’s media spend, digital marketing now accounts for 20%, and the figure is rising.

Gabriel Goldberg, co-founder of search marketing company Semetis, said while both are effective, Google and Facebook offer different benefits to businesses.

“Many studies show that Google is the No. 1 traffic source for the discovery of new websites–at 50% to 60%,” Goldberg said, adding that businesses prioritize premium positions on the search engine to maximize its “conversion rate” to sales, as well as paid-for search campaigns.

“Facebook is very different. Users don’t actively look for products and services. Facebook has more resemblance to traditional advertising, allowing companies to target socio-demographics and interests.”

Pernod Ricard, whose first-half marketing spend rose 7% to EUR817 million, is also powering up social media platforms.

Two short films to promote its Scotch whisky brand Chivas Regal, ‘Here’s to Real Friends,’ directed by Danish Oscar-winning director Joachim Bach, were shown exclusively on YouTube last October. They were watched by a combined online audience of 2 million in less than three months.

“This is a campaign which has a very heavy digital dimension. It [was] in the 0.5% of most-watched videos on YouTube [at the time],” Christian Porta, chairman and chief executive of the company’s Scotch business, Chivas Brothers, told reporters recently.

However, freedom afforded online can also leave companies exposed to negative opinion. Earlier this month, Diageo apologized following reports it tried to deprive small craft brewer BrewDog of an industry award at a event that Diageo sponsors. Accused of bullying tactics through its commercial might, Diageo found its name dragged through the mud on social media as the story took flight.

“Engaging consumers via social media presents a promising, if also challenging, opportunity for companies both large and small to improve their publicity and reach wider audiences,” said analysts at market-research company Euromonitor International.

Analysts say companies know an increasing number of consumers, particularly the young, now rely on social media as their primary source of news and information about brands.

It is now not simply enough to advertise products in the traditional way. The goal is to produce interactive content that can be discussed, shared and recommended.


By Simon Zekaria

May 29th


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