According to a recent survey by Wine Opinions for the Italian Trade Agency, social media might not only be less important than 90+ point scores from critics: it seems less important than "wine is on sale for 10% off or more."
When you consider that the U.S. is a nation of bargain hunters, that makes social media recommendations seem pretty unimportant.
I say this as somebody who enjoys using Twitter, despite the company's coddling of abusive tweeters. But only 11% of high-frequency wine drinkers (people who drink wine several times a week) said they even visit Twitter once a month or more. Do they care about the bottle of Prosecco I just drank with herring? Not bloody likely.
The social media platform of most interest to wine lovers is Facebook, with 45% saying they visit it at least monthly. However, it's not clear that blurry cell phone photos of wine bottles on Facebook encourage anyone to buy wine, any more than the current barrage of angry political Facebook posts* is making anyone change their mind about how they should vote in the future.
(* I never thought I would miss Facebook photos of people's lunches, but I do.)
"Social media and apps are not as influential as we thought," said Stevie Kim, managing director of Vinitaly International. "Everyone is on it. But does that translate into a sale?"
Critics' point scores still matter to some: 25% of wine lovers said that a "90+ score from respected critic" is "very influential" on their buying decision. But words are catching up with numbers: 21% said that "positive review I read in print or online" is very influential. Hurray for words!
Wine store employees will be delighted to learn that a "recommendation from retail store staff" is more important than either critics or wine journalists.
For wineries reading this, these results don't mean you shouldn't worry about social media. Brand image is incremental. Moreover, the importance of social media might increase because baby boomers, who are still the most important market segment because of their disposable income, will become less consequential year by year.
But in 2017, Facebook, Twitter, etc., are still better places to run cat videos than Cab blurbs.
(UPDATE: There is a vigorous debate in the comments section which normally I would leave alone, but in the interest of truth I have to point out something here. Two commenters whose business is selling social-media consulting present very compelling-sounding statistics below to contend that social media does sell a lot of wine. Frequent commenter Bob Henry, who is driving me a little nuts on this post so I may regret encouraging him, asked both of them publicly and by private email if they would share their statistics with David Morrison, the Sweden-based wine blogger who specializes in parsing statistics. One says here, publicly, that he no longer has the rights to those stats. The second told Henry by private email that she would not do it. I think you need to know that these experts will not share their actual numbers before diving into the comments below. It was good work by Henry in the end.)
Follow me on Twitter: @wblakegray and like The Gray Report on Facebook.
49 comments:
I agree that social media does not result in significant immediate direct sales to consumers. However, I have found it to be a very successful way to influence the influencers. I've been able to build relationships with many of those holding the biggest megaphones.
Couldn't agree more ... and have been saying as much to my clients since social media became a thing. But you can't tell the SM snake-oil salesmen that. They're still ginning up pointless statistics about "conversations" and "organic mentions" and insinuating that those have a direct link to sales. Nuh-uh. There is no ROI in talking to prospects until they buy something. That's called direct marketing. Wineries are better off focusing on email.
"Wine store employees will be delighted to learn that a 'recommendation from retail store staff' is more important than either critics or wine journalists."
Peruse the second bar graph exhibit.
The "purchase influence" of a trusted wine store staffer recommendation: 31%
The "purchase influence" of tasting the wine in the wine store: 60%.
In-store product sampling is the single most effective sales tool in consumer goods marketing.
(A time-tested and proven tactic discussed by Paco Underhill in his seminal book titled "Why We Buy: The Science of Shopping.")
Combined the two in the form of a staff "curated" in-store winetasting and sales will spike.
Why more wineries don't collaborate with their retail partners and conduct in-store winetastings is a mystery to me.
The statistics are compelling in making the cash register ring.
As a wine PR person, I wonder about this every day. I agree with Jon Bjork -- social media is one way to build relationships with the influencers.
While I don't necessarily doubt WineOpinion's findings, I also won't jump to a conclusion based on one study. I need to see far more research conducted by multiple independent groups -- on just about any topic -- to be convinced.
It's also important to consider HOW a brand uses social media -- I doubt Gary V would agree with the headline.
When it comes to factors directly influencing a wine purchase, for 95% of people, there's no way a tweet or photo is going to compete with an in-store tasting -- nor can anything else, so it's kind of silly to make that comparison. What I'd be more interested to see is how social media stacks up against traditional and digital advertising.
What Joe Janish said.
A quick reminder: I don't allow people to sell things in the comments, and that includes social media consulting services.
LOL - Ok Blake, no one was selling anything, but let me say this again differently since you missed the point of the deleted comment. WineOpinions has been debunked as a credible source multiple times by Rob McMillan (about Millennial) and more. Perhaps they are not measuring social media correctly and as such I published a lengthy report (that wasn't selling) and proved the correlation and causation of social media to DTC sales.
Here are the factual stats:
Using a sample set of 12,500 customers to collect full behavioral and conversation data on social media resulting in and analysis of:
–5.3 million follower relations
–183K wine related mentions
–2.3M social posts
–53K online wine purchases
–$16.8M in sales
Customers who directly engage with brands online spend 35% more on average when buying wine online over the course of their lifetime than those who do not
–Just one engagement equals 10% more spend over the lifetime
–1+ becomes 29%
–3+ becomes 38%
–And the whammy, 14+ is 66% more than unengaged customers
Social media does sell more wine. Mic drop.
Most of my PR work in the wine space has been working on larger national brands.
I agree with Paul Mabray. The problem with most social media campaigns for wine brands is that the people behind them look at them as being just another form of media. The word "media" should be dropped from the equation and people should understand that successful campaigns should emphasize being social, interactive in order to build relationships. If you believe in the power of word of mouth, than you need to understand that having a well crafted campaign that includes things like a well crafted story and a way to differentiate the brand), using samples in order to obtain reviews (which can then be posted as 3rd party endorsements via social media on behalf of the brand and help to buzz). Also, keep in mind that a truly successful campaign involves a lot of email interactions with reviewers and brand ambassadors - all of this takes place behind the scenes but it is essential for success. I have worked on 7 Shanken Hot Impact Brands in 5 year period and that includes on brand launch including one brand that moved 630,000 cases in year one.
One last thing, most wine social media programs are not very social at all - they simply spew out content, occasionally hit "likes" or favorite a tweet and are very lifeless. There is also an amazing sense of sameness between campaigns of various brands from companies.
As Mabray points out, it's not about pumping content out there on social media feeds. What is about is generating true engagement over time.
Stephen Mitchell
Stephen, it sounds to me like you're describing advertising, which is ultimately what SM is: targeted impressions. Measurable and interactive, but still just impressions. Paul does statistical cartwheels to say otherwise but I'm not buying it.
Most wineries don't have any business being in the content business. Most have trouble articulating their own brand in ways that are meaningful and differentiated.
In the end, SM as a marketing tool is killing SM as a social platform. Sad.
Paul, in The Simpsons Season 7 Episode 23, Lisa explains "specious reasoning" to Homer. You should look it up.
Fred. Math doesn't lie. Moreover, we measured engagement not impressions. And I disagree, all businesses are media companies now. I do agree that most wineries have difficulty in articulating their brand in a differentiated way.
George Croporin, fortunately I don't need to watch the Simpson's to understand specious reasoning. The research is correct. The answers are right. Your persona is fictitious making it the only fallacy in the comments section.
Sales from social are trackable. The FB ad network contributes nearly 1/3 of online product sales to most of our wine clients. So yes, social channels sell wine.
I don't think anyone doubts that a tweet is going to outweigh sampling in influence. But the path to purchase is a complex ecosystem. And a consumer can need up to 20 brand interactions before they will make a purchase. No tactic or channel should be operating in it's own silo, they work better when supporting each other.
What Carin said . . .
"Math doesn't lie."
I am reminded of this quip from British Prime Minister Benjamin Disraeli: "There are three kinds of lies: lies, damned lies, and statistics."
Academic David Morrison in Sweden has been looking at wine industry data on his wine blog:
http://winegourd.blogspot.com/
(Bad) math "lies" all the time.
I repeat this salient truth: in-store sampling trumps all other "purchase influences."
A truth that comes directly from the consumer packaged goods industry.
Wineries not "engaging" the public in this time-tested and proven way is a self-inflicted wound.
Bob, store and digital engagement are not mutually exclusive. Also, just because math is used doesn't mean it conforms to that statement.
The reality is that at the winery sampling trumps all other purchase influences . . . but all on-premise (winery, restaurant, retailer) is often not an option so multi-channel touch points are required (like digital, print, phone, etc).
Truth is not one dimensional.
Statistics . . .
16% of the U.S. wine drinkers purchase 96% of the consumed wine.
Source: “The Market for Fine Wine in the United States”
Link: http://www.winebusiness.com/news/?go=getArticle&dataid=73903
More statistics . . .
“It’s an adage of the business: Persuading a satisfied customer to return is cheaper than attracting a new one. Now, in the struggle to do more with less, that concept is becoming even more important.
“Acquiring a new customer costs about five to seven times as much as maintaining a profitable relationship with an existing customer, says Marc Fleishhacker, managing director at WPP’s Ogilvy Consulting . . .”
Source: “Marketers Reach Out to Loyal Customers”
Link: http://online.wsj.com/article/SB122766322705958805.html
And even more statistics . . .
“Fully 40% of U.S. consumers who buy alcoholic beverages haven’t decided what they’re going to purchase when they walk into the store, according to a new study from IRI.
“Of the 60% who do have a planned beverage purchase, 21% end up changing their minds in store, and 50% of those who change their minds ultimately buy a different brand than they originally intended. . . .
“All of which points to ‘immense’ opportunities for alcohol manufacturers to find new pockets of growth by engaging and influencing consumers while they’re in the store, point out IRI’s analysts.
“Beer, wine and spirits manufacturers are increasingly aware of the importance of working with retailers to win over consumers, according to Robert I. Tomei, president of consumer and shopper marketing for IRI. ‘When you consider how often most shoppers are going to the store, and that 21% of them change their minds during the shopping trip, you realize the impact that in-store signage, creative labeling and other marketing could have on your portfolio,’ he stresses.”
Source: “40% Of Alcohol Beverage Buyers Make Their Decisions In-Store”
Link: http://www.mediapost.com/publications/article/290633/40-of-alcohol-beverage-buyers-make-their-decision.html?edition=98740
Wineries need to focus on the Sixteen Percenters (buying 96% of the wine) and not the Eighty-Four Percenters (buying a rounding error 4% of the wine).
The Sixteen Percenters have well-established varietal affinities and brand loyalties.
It is a Sisyphean task “converting” non-customers into new customers.
Better to focus on retaining existing customers.
With half of all varietal wine and brand selection decisions made at the last moment when the consumer hits the wine aisle, wineries and their retailers should focus on “engaging” customers on the sales floor – aided by in-store sampling.
Bob,
I can see you were on a passionate harangue so let me help you with your straw man argument. First, although a utopian ideal, it is absolutely correct that having a customer in the tasting room of a winery creates more brand loyalty than any other experience. Sadly, that is an impossibility and not a feasible marketing strategy.
Second, you ARE correct, when consumers buy in market the next best answer and the answer for in-distribution wines IS engaging customers on the sales floor. The inherent problem with that is the assumption that a. the brand has viable market access (most don't) b. the brand has sufficient economics to support in store sampling at scale (most don't). While I disagree with the WI study from 2010 about the segmentation of wine consumers I can give you a few facts:
Doing some or extensive in-store sampling is not mutually exclusive from using social media or digital marketing.
Digital marketing is not exclusively to convert non-customers and in many best practices, is used to remind/convert customers who have many choices to pick a brand more frequently.
We can both agree that in store tastings are fundamental brand building exercises and illicit consumer loyalty. They are one of the greatest tools a winery can use IF they have the resources.
Digital marketing (including and especially social) is much more cost effective and measurable than other forms of marketing (print, display, collateral, et al).
In store sampling is catching consumers with a hook. Marketing is catching consumers with a net.
With distribution, the winery gives up huge margins that are unsustainable for small brands. Focusing on DTC can help them become sustainable businesses and many use that money to fund in market activities (like in store sampling). Two of DTC's main drivers are winery visitation and, duh duh duh, digital marketing . . .
Digital marketing allows wineries to touch consumers regardless of time and distance aka the internet has made the world flat (I highly recommend you read Thomas Friedman's book - http://a.co/6vmK2Rx).
We live in a digital society and the majority of our media is consumed via digital means (computer, mobile, social, etc - https://www.themediabriefing.com/article/nine-trends-in-us-media-consumption-in-charts). Ignoring where our customers spend their time is willful ignorance and "Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity," Martin Luther King, Jr.
While I respect parts of your argument and your passionate plea for in-store sampling, it ignores the realities of modern society, wine distribution, and the basic tenets of marketing.
Or let me share it with you in the great words of Wayne Gretzky. "“I skate to where the puck is going to be, not where it has been.” I recommend looking at Mary Meeker's Internet Trends to see where the puck is going: http://www.kpcb.com/internet-trends.
Paul,
"Doing some or extensive in-store sampling is not mutually exclusive from using social media or digital marketing."
I have never said this. Never implied this. And no one should infer I have.
I don't see it as an either/or proposition.
Social media is one tool in the marketer's toolbox.
As is public relations, sales promotion (those in-store samplings and in-store displays), direct mail campaigns, cause related marketing activities (e.g., supporting charity tastings), and paid media advertising.
The best marketing campaigns integrate those activities.
A winery can collaborate with its retailers who have in-store winetasting bars to pour their wines on the weekends.
A winery can hire a third party sales promotion agency to have a "Brand Ambassador" set up a portable table on the sales floor of a grocery store and pour their wines on a weekend.
A winery can collaborate with its restaurant accounts to have a dedicated "wine by the glass" promotion.
A winery can exhibit at nighttime consumer tastings that following afternoon trade tastings in a host city.
(Example: http://www.winela.com/napa-valley-tasting)
Those in-person brand building "engagements" move the sales needle so much more than any other tool in the toolbox.
These "touchpoint" in-store experiences personalize the brand. Allow wineries to capture names and addresses and e-mail accounts that go into CRM systems for direct marketing campaigns. And help retain existing loyal customers who are encouraged (by direct marketing campaigns) to attend.
"Ignoring where our customers spend their time is willful ignorance . . ."
Exactly! Thank you, Paul, for making my argument for me.
They are spending their time confused and poorly guided on the sales floor of the wine store. In the wine aisle of the grocery store.
(Recall the statistic cited by IRI: 50% of all purchase decisions are made in the moment in the wine aisle.)
That's where the battle for the consumer is being waged.
~~ Bob
Social media (specifically Facebook) drives people to visit our winery. People check in, post pictures in the tasting room, rsvp to events, and share our posts. Their friends see that. Personal recommendation of a business from a friend or family member carries a lot of weight and social media is an excellent tool to communicate those recommendations. We are in the boonies. They don't just trip over us. They have to make it a point to visit. They do this because they have heard about us on Facebook.
Once people are in the door, we sell them a lot of wine.
I just deleted a comment from someone who offered readers a chance to buy Facebook likes.
I mention this because another commenter here presents social media statistics as authoritative.
Paul:
Are you willing to release the data underpinning your TMRW Engine "The Five Tribes of Online Wine Buyers" report (if that's the study you alluded to above) to a third party for "peer review"?
If yes, then academic David Morrison in Sweden (who writes the Wine Gourd wine blog analyzing wine data) is willing to review it.
Link: http://winegourd.blogspot.com/
Backgrounder: http://acacia.atspace.eu/David.htm
~~ Bob
(And if not . . . mic drop?)
Paul,
Since you enjoy quoting folks, let me proffer one.
In my humble opinion, too many social media promoters are guilty of embracing the law of the instrument: an over-reliance on a familiar tool.
As Abraham Maslow said in 1966:
"I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail."
Social media is just one tool in the marketer's toolbox.
Is is not a panacea.
~~ Bob
(See postscript comment so as not to gum up Blake's website with too much text or too many links.)
I correct myself. Two postscript comments.
Worth reading . . .
From The Wall Street Journal “Main News” Section
(May 15, 2006, Page B1):
“Executives Must Stop Jumping Fad to Fad And Learn to Manage”
Link: http://online.wsj.com/article/SB114765332174952570.html
By Carol Hymowitz
“In the Lead” Column
And see next one . . .
(The original URL has been changed to the second cited Wall Street Journal article. So once again . . .)
Likewise worth reading . . .
From The Wall Street Journal “Marketplace Section
(June 26, 2006, Page B5):
“Why Management Trends Quickly Fade Away:
'Fashion Surfers,' Who Offer Service When Idea Is Hot,
Tend to Be Less Qualified”
Link: https://www.wsj.com/articles/SB115127414542190162
By Phred Dvorak
“Management Theory & Practice” Column
As is reading Stanford professors Jeffrey Pfeffer and Robert I. Sutton's book titled "Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management."
Good morning, I’m Gianluca Morino a winemaker from Piedmont, Italy, and I don’t agree with the post, but since I own a winegrowing estate in which 60% of sales turnover is generated through social networks and the digital world, I feel the need to comment. Everything depends entirely on how you use these opportunities and it takes time to progress from branding operations to direct and indirect sale. I’ve increase sales directly at the winery by over 120% in the past three years and, thanks to social networks, I also do some selling out for my exclusive Italian distributor. This means I’m present in areas, wine stores and restaurants which were impossible for me to reach using traditional systems. With Instagram, for example, I am in direct contact with the people who distribute my wines to the consumer and, if they have questions to ask, they ask me and not my importer/distributor. Despite the fact that we Italians are somewhat lagging behind in the digital sector, there are several cases like mine, and I feel confident in saying that these results can’t be bought; the investments you have to make are time and passion.
Social networks are becoming more and more immediate, with everything happening in real time, so if you use an agency to promote your brand, you’ll never have the same engagement as someone who’s in the vineyard and in the cellar with their smartphone.
Nessuno:
I have no knowledge or firsthand experience on how wine is marketed in Italy, so I can't comment on what works there.
But I know the U.S. marketplace, and can cite these statistics on the challenges of small to mid-sized wineries in garnering distribution (hence the need to forge another sales channel through Direct to Consumer):
From Wine Spectator Online
(November 12, 2013):
“West Coast Wineries Are Up for Sale — Quietly”
(Subheadline: "A wave of recent deals show investors see opportunities in wine, while owners see an exit strategy.")
Link: http://www.winespectator.com/webfeature/show/id/49221#.UoI_yAMMzG8
By Tim Fish
“… While small wineries can succeed by selling most of their inventory direct to consumers and large producers have muscle with wholesalers, those in the middle — annual production of 5,000 to 15,000 cases, for example — can’t get much attention from distributors unless the brand is hot.”
AND:
“… ‘I’ve never seen more wineries for sale in California than there are today,’ [said Charles Banks, who through investment groups such as Terroir Selections purchased Santa Barbara Syrah specialist Qupé and Napa veteran Mayacamas Vineyards.] … Banks … estimates that between 30 to 50 percent of California wineries are either in financial difficulty or aren’t as profitable as they could be.”
~~ Bob
Direct to Consumer can work for small wineries that sell through their mailing list.
(Think Screaming Eagle. Harlan. Scarecrow. Sine Qua Non.)
DTC can work for other small wineries that supplement mailing list revenue with tasting rooms sales.
But it cannot work for large wineries whose high volume business model requires the Three Tier Distribution system.
As for those who wish to invoke "The Long Tail" theory aided by digital marketing, see this article highlighting the research of Harvard Business School marketing professor Anita Elberse debunking many of its tenets.
From The Wall Street Journal “Marketplace” Section
(July 2, 2008, Page Unknown):
“Study Refutes Niché [Long Tail] Theory Spawned by Web”
Link: http://online.wsj.com/article/SB121493784638920147.html
By Lee Gomes
“Portals” Column
Post-postscript.
How successful is a LARGE wine operation in selling through social media?
Let's take a real world example.
"Exploring the Impact of Social Media Practices on Wine Sales in U.S. Wineries"
Link: http://academyofwinebusiness.com/wp-content/uploads/2014/07/SMon06_Tach_Liz.pdf
". . . they [Constellation Brands] now have 27 brands on Facebook alone, and have received 1.5 million 'likes' which they equate to a $17 million increase in incremental retail value (Breslin, 2013)."
So how does that social media-attributed incremental revenue compare to their overall revenue?
See next comment (so as not to gum up Blake's website with too much text or too many links) . . .
Post-postscript (continued)
“Constellation Brands Reports Fiscal 2013 Results and Fiscal 2014 Outlook”
Link: http://www.cbrands.com/news-media/constellation-brands-reports-fiscal-2013-results-and-fiscal-2014-outlook
Their net sales were $2,796 million and operating income was $523 million.
$17 million incremental revenue represents six-tenths of 1% of their net sales.
Restated, that represents an incremental hourly sale revenue of $1,941. (Formula: $17 million divided by 365 days divided by 24 hours.)
Contrasted against Constellations’s $319,178 hourly sales revenue.
Clearly, $1,941 is a rounding error level of incremental sales revenue.
Gianluca, since your avatar is Eric Bana in Troy, perhaps you could enlighten us as to which winery you have and the overall scope of you social media campaigns as, at 60%, it would make you an extreme outlier in anyone's statistics.
Bob,
Sure, no true Scotsman using Constellation as an example only expresses the market dominance of the largest brands and their ability to leverage their sales and marketing weight with the distributors. It also ignores the rest of the winery marketplace dynamics and how other industries succeed with social media. To be clear, I do not think social media is the end all, be all. But it is a key channel for sales and especially marketing. Clickbait like the title of this article are rooted in poor journalism using debunked research and myopic perspectives are harmful to the industry.
I think we agree on quite a few points but your perspective is so skewed that you continue to try to constrain the benefits of digital/social in lieu of a model that only few wine companies can leverage (in store sampling). To reiterate, we agree more than you think. A few examples:
You are 2000% correct with this statement - "Social media is just one tool in the marketer's toolbox. Is is not a panacea."
You are also correct that mid-sized wineries need to forge new sales (and marketing channels).
As it relates to the long tail article. It is a good counter perspective but is a one sided analysis. It is a good report but lopsided understanding of the economics of the demand curve with virtual marketplaces.
Miquel, happy to see you trolling the entire internet any posts related to wine and social media (ironically via social media). I'm working on an OpEd for you to illustrate your purposeful ignorance on the topics. Feelings are not facts and math continues to prove the efficacy of digital marketing AND social media. I look forward to presenting them to you (again) in a way you can understand.
Miquel:
I found this on the Web:
"Established in 1900, Garitina Cascina is a working farm family, now in its fourth generation with Gianluca Morino, the current owner.
"Our vineyards are located in the heart of Monferrato, and cover an area of about 26 hectares, divided between Barbera, Brachetto, Dolcetto, Pinot Noir, Merlot and Cabernet Sauvignon."
Link:
https://translate.google.com/translate?hl=en&sl=it&u=http://www.cascinagaritina.com/about.php&prev=search
Not a lot of representation in the U.S.:
http://www.wine-searcher.com/find/garitina+cascina/1/usa
~~ Bob
Paul: Miquel is a regular reader and frequent commenter on this blog for all issues related to wine.
But there IS someone in this comment section who can be described as "trolling the entire internet (on) any posts related to wine and social media." (Mic drop)
Blake,
It's absolutely true that as one of the industry's experts I frequently comment on articles with erroneous information about the topic (the intersection of digital and wine) using facts and math vs feelings or uneducated and biased opinions (MH). It would be a disservice to the industry to permit the misrepresentations stemming from the article or the logical fallacies in the comment section (often the usual SM critics) to go unanswered.
To quote Inigo Montoya - You keep using that word. I do not think it means what you think it means.
Paul:
Glad we agree:
"Feelings are not facts and math continues to prove the efficacy of digital marketing AND social media."
So I will repeat my earlier question:
Are you willing to release the data ["facts and math"] underpinning your TMRW Engine "The Five Tribes of Online Wine Buyers" report (if that's the study you alluded to above) to a third party for "peer review"?
If yes, then academic David Morrison in Sweden (who writes the Wine Gourd wine blog analyzing wine data) is willing to review it.
Link: http://winegourd.blogspot.com/
Backgrounder: http://acacia.atspace.eu/David.htm
~~ Bob
Bob -
I no longer work for W2O, the owners of the data and who published the report a year ago. Also the analysts that built the report have also moved on to other jobs with different companies. It is possible that we can ask them but they have lost interest in the wine industry . . .
That being said I truly respect David Morrison and his work (stellar stuff). I am happy to work with him in 2017 and the new reborn software and all the data we collect to build another report.
Proffered without comment:
"Social Media's Disappointing Numbers Game"
Link: http://www.wineintelligence.com/social-medias-disappointing-numbers-game/
Post a Comment