I was watching Donnie Deutsch recently on his show The Big Idea interviewing Bill Gates. Donnie Deutsch made his money in old media; print and TV. One of the topics was advertising, specifically advertising online. Bill Gates did a good job pointing out the key difference between traditional advertising and online advertising. He said would you rather buy a TV ad that will get 25 million eyeballs, of which only a percentage are interested in your product, or would you rather get in front of everyone online who is interested in your product? A great rhetorical question that totally confused Donnie Deutsch!
The question and answer got me thinking about how could a business allocate its online marketing budget? Should it put 100% of its focus on PPC or banner advertising or should a percentage of the budget be allocated towards social media marketing?
The South African winery Stormhoek was faced with these exact same marketing questions last year. Stormhoek wanted to move into a new market (the UK) and I am sure that they looked at all the traditional marketing tactics that Donnie Deutsch loves. But ultimately they decided that the best use of their marketing time and dollars was to spend the money online. And not in “traditional” online tactics like PPC advertising, but instead Stormhoek decided to focus on social media marketing, specifically the blogging community as a grass-roots way to build awareness of its brand.
So how did Stormhoek launch such an online marketing campaign? Well according to Gaping Void Stormhoek sent a hundred or so complimentary bottles of its wine to bloggers. In deciding what bloggers to approach Stormhoek had three rules:
- The bloggers had to live in the UK, Ireland or France. They needed to have regularly kept up a blog for at least 3 months previously. Their blog could have a readership of three or three thousand- size or status didn’t matter, just so long as they were genuine bloggers.
- They had to be of legal drinking age.
- They were under no obligation to say anything about the wine, good or bad. If they just wanted to snarf the wine and say nothing, or say something negative, that was fine. It was their call.
How successful were they?
According to the wine magazine Decanter the Stormhoek social media campaign was extremely successful:
The result, says Stormhoek spokesman Nick Dymoke Marr, is that the wine now has a 19% share of the over-£5 South African wine market, and sales went from 50,000 cases in 2004 to 100,000 last year.
The resulting buzz generated thousands of conversations on blogs and doubled sales of Stormhoek in one year. Instead of being just another wine trying to catch your attention in the wine shop, Stormhoek became ‘that bloggers’ wine.’ This is one of the best examples of how a company used social media tactics to reach out to its customers and was able to grow its market share.
Next step for Stormhoek is the US where a similar grassroots marketing campaign will be launched in February.
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Sherwood 11.27.06 at 9:47 am
Gates’s question suggested that purchasing (and therefore marketing) are entirely driven by rational decision making. I need a new garden hose, so I search for “garden hose.”
But marketers like Deutsch grew-up in a world where their services were called upon to create demand, not just respond to it. Nobody needs a pair of Diesel jeans or an iPod the way they need a garden hose. They’re not purchases that respond to a rational need, or even a known need.
If you have a known product with solid demand, than using PPC to respond to existing demand makes sense. But if it’s a product where demand must be created or provoked, you need traditional advertising with all the branding and eye candy that agencies love to create.
The winery is a great example, although it leans more towards PR, doesn’t it?
David Wilson 11.27.06 at 12:09 pm
I agree to some degree Sherwood. PPC targets people who are actively searching for your product or service, while traditional adverting is more passive; building awareness of your brand or service. A problem I see with a lot of online marketing plans is that because they are 100% focused on PPC, they are only reaching the active searcher. Adding a social media component to the mix allows marketers to reach both active and passive audiences giving them the benefits of both traditional media and PPC advertising.