TV Money Spirited down the pan

As delegates to the TV Barcelona conference settle down this week to discuss the merits of TV advertising, the words of Tony Scouller, marketing director of the world’s biggest spirits company, UDV, will be ringing in their ears.

Last week, Scouller cast serious doubts on the effectiveness of advertising spirits on UK television. Four years after the gentleman’s agreement restricting spirits ads on TV was lifted, spirits brands have unleashed an onslaught of commercials. Yet spirits sales continue to fall.

In a speech in London, Scouller said: “There have been no real tangible added values provided from anyone involved [in the move on to TV]. Three years have seen a series of tragically missed opportunities.”

Spending on advertising spirits on TV hit 42m last year, having risen since 1995 when 15m was spent. But spirits’ share of the overall UK liquor market has continued to decline, it has shrunk by more than 100m between 1992 and 1997.

Scouller joins the growing chorus of brand owners which are casting doubt on the way brands are advertised on television. He blames spirit manufacturers, retailers, advertising agencies and ITV for failing to properly exploit the opportunity of TV. Others blame the medium itself.

An early sign that marketers were questioning the monolithic power of TV advertising came with comments from Unilever chairman Niall FitzGerald in 1997. He told a conference of the European Association of Advertising Agencies in Dublin: “For 40 years in the UK, agencies’ skills, reputations and profits have been centred around, almost to the exclusion of all else, the conception and production of 30-second spots for network TV. But there are vast and irreversible changes taking place in the world of communications – and not one of those changes will favour network television.”

Unilever is now putting into practice FitzGerald’s views, and the company’s advertising and media agencies are awaiting a fundamental rethink over the way Unilever runs its ad campaigns – with TV ads looking likely to be the first victim.

But for the spirits industry, the limits of TV advertising have become apparent too late.

Tellingly, the first spirits brand to break the 40-year-old voluntary ban on TV advertising was Virgin Vodka in June 1995 – a brand that has now all but disappeared, and is now sold only in duty free. It was quickly followed by United Distillers’ whisky brand Bell’s.

Spirits sales in the UK had been withering for some time and manufacturers had indulged in discount price wars, particularly around Christmas. The biggest sector of the spirits market – scotch whisky – was also facing an uphill struggle to attract younger drinkers as its traditional core market died off.

In the rush on to TV, spirits companies rapidly pulled money from other advertising media.

Allied Domecq, for instance, merged its two British marketing and distribution companies to consolidate resources.

But as Scouller’s analysis – part of a series organised by The Billett Consultancy – shows, the switch into TV advertising has not yet delivered the dividends that were expected. In the past two years, consumption of scotch whisky has dropped by about 250,000 cases and brandy and gin are not far behind.

The primary reason, according to Scouller, is that manufacturers have dissipated marketing efforts across too many brands rather than concentrating their energies on brand leaders.

While there has been a decline in the number of umbrella brands advertised over the past three years, brand variants have shown explosive growth and 43 were advertised on TV in 1997. Between 1995 and 1998, the length of TV ads for spirits has also shrunk.

About 47 per cent of “impacts” – the number of times an ad is seen – are now delivered by commercials of ten or 20 seconds in length, more than double the number in 1995. The number of impacts delivered by 40-second commercials has at the same time more than halved.

Scouller comments: “If consumption and heavier use is the issue, surely greater levels of persuasion are needed to do just that. Levels of persuasion are not achieved in ten-second impacts.”

He also identifies several other reasons for the continued poor performance of the spirits market. He criticises multiple retailers for their support of own-label products and price cuts on established spirit brands and argues that advertising agencies have been too concerned to create advertising awareness at the expense of brand persuasion.

And, finally, he criticises ITV, saying: “[ITV’s] initial contribution to the arrival of spirits advertising was to reduce viewing by young adults and force up costs. Its actions have forced the in dustry to spend money elsewhere in cheaper TV channels for uncertain impact and have encouraged a return to conventional proven media.”

In the US, there is no official spirits advertising on TV. In the late Eighties, the US spirits market was facing similar problems to the UK but now it is slowly returning to growth, on the back of super-premium products. Whisky is static but not shrinking, gin is growing and premium vodka and tequila are booming. The growing sales are coming from the 25- to 35-year-olds.

Martin Riley, international marketing director for Irish Distillers, which last week launched a global TV advertising campaign for its Jameson Irish Whiskey, says: “In the US, people are drinking premium spirits and they are drinking them in very stylish outlets. That has happened without TV. Because TV advertising is not available, it has forced people to be more imaginative in their use of other media. In the UK, more of the budget is now committed above the line. [In some cases], an integrated approach to marketing has been ignored.”

Riley argues that in the case of Jameson’s new TV campaign, he is fortunate because Irish whiskey is growing in the UK and has a broader and younger profile of drinkers than scotch, split 50/50 between male and female.

“For us TV is appropriate because we aren’t having to undo a perception that people have grown up with – that’s what scotch must do. TV can help shift brand values but to rely on it to do that exclusively is a tall order. I think there was a hasty reaction when TV first became available. Everybody piled in without thinking about the message they were trying to relay. “

Allied Domecq and Campbell Distillers have pulled their Teacher’s and Pernod brands from TV following heavyweight campaigns in the past. The companies say that after extensive research, TV has failed to deliver sufficient sales or – in the case of Pernod – the appropriate market.

Campbell Distillers general manager Ian Tottman says: “With 18- to 28-year-old adults we are reconsidering the success of TV for something like Pernod. It seems less appropriate. Either it is because we are not talking to these people in the right way or maybe they don’t like to be talked to through TV. I think one or two spirits companies are coming to the same conclusion.”

For spirits manufacturers the 18- to 25-year-old group is enormously important. It is in this bracket that people form their drinking habits and decide a portfolio of drinks from which they will draw in the future, depending on mood and occasion. The biggest challenge for spirits is to become part of that portfolio and the only way to do that is to get young people to try them.

Sales houses for TV channels and members of the advertising industry dispute that they have failed to get new groups to try spirits products. Hugh Burkitt, chairman of London agency Court Burkitt & Company, recently developed a new TV campaign for UDV’s Bell’s.

He says: “It is clear that gin and whisky have not yet benefited from TV advertising. But I think there is a lot of evidence that advertisers and ad agencies have not used TV well. There are so many examples of TV advertising working. Baileys was a drink for grannies. As a result of advertising, it is now a drink young women can go into a pub and ask for. Sales have doubled. TV has been crucial to that success.”

There is also evidence of TV’s success in the whisky market. Highland Distillers’ Famous Grouse has used a series of TV ads through Abbott Mead Vickers.BBDO depicting the brand’s grouse icon. Last year, while the broader scotch whisky market declined by two per cent, the brand grew by three per cent.

But even Highland Distillers does not advocate TV as the ultimate solution to the problems of the spirits market. Steven Sleigh, global manager for Famous Grouse, says: “Brands must understand what a medium can deliver for them.”

Already a number of companies are beginning to withdraw from TV and return money to other media and that shakedown will continue. While not good for TV, Scouller clearly believes more considered expenditure will benefit the spirits market.

As Unilever, Procter & Gamble and other top brand owners start to flesh out details of their move away from TV advertising, ad agencies will need to review their own obsession with the medium.

They have already been blasted by Scouller for their part in spirits’ TV advertising disaster. The agencies may have made commissions of up to 10m between them through the spirits experiment. This is a fact that will not be lost on the finance directors of client companies. The agencies will need to act decisively to ensure the accusation that they are playing fast and loose with their clients’ money does not gain ground.

Scouller’s comments may have dealt the glamorous world of TV advertising a blow from which it will be hard to recover, at least as far as spirits are concerned.

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