Understanding Digital Advertising and its Applications for the Modern Winery
Winery marketing experts point to digital advertising as a key element in their direct-to-consumer strategies and, good news, it's not so difficult to do.
Stories and anecdotes of wineries building direct-to-consumer platforms and selling strategies run rampant as the three-tier becomes more saturated and wineries realize better profits through their tasting rooms and websites. When it comes to the e-commerce platform, a few sales and marketing teams have turned to digital advertising as a way to increase traffic to the website and, more importantly, capture consumer data and sway a purchase.
Wineries aren’t the only companies doing so. United States marketers spent more than $107 billion in digital advertising in 2017, and that figure is growing by double-digit percentages, according to an eMarketer report released in March 2018. The report also stated that for the first time since 2009 TV ad spending in the country dropped and lost enough market share to put digital advertising on top. Data for the 2018 spending year will likely be released later in the first quarter of 2019.
In 2017, worldwide digital ad spending surpassed TV advertising. According to Magna, the research division of media purchasing firm IPG Mediabrands, digital ad spending accounted for 41 percent of the market, or $209 billion worldwide, while TV ad spending was just 35 percent of the market, at $178 billion. This doesn’t mean that firms, on a global scale, are spending less on TV ads than in the past—dollars spent were expected to grow 2.5 percent in 2018—but rather that the opportunity in the digital space warranted a larger spend. Magna also anticipated a 13 percent rise in digital spend worldwide in 2018.
Digital strategies are proving worthwhile. Online sales of luxury goods are now accepted and Silicon Valley Bank reports that this category of goods is likely to reach 25 percent of total e-commerce by 2025. DTC wine shipping is keeping pace as well; the latest Direct-to-Consumer Shipping Report from Sovos/ShipCompliant and Wines Vines Analytics pegs direct shipments to top $3 billion in 2018—a figure largely unheard of just a decade ago. [The 2018 DTC Shipping Report will be released later this year.]
But for the most part, wineries are pacing behind the curve in the digital advertising space.
“We’re a pretty old industry, we tend to do things pretty traditionally,” said Jeff Zappelli, general manager at WALT Wines in Sonoma, California. “We tend to sell wine well when we’re person to person, but we found that, in our industry, websites lack sophisticated, responsive, fully integrated designs and experiences—and that’s causing friction in our e-commerce. Winery websites are almost static and don’t harvest visitor information, or put it to use for responsive experiences, re-targeting or use ‘fear of missing out’ tools. Online product marketing is rudimentary, so it’s just a flop sometimes.
“The use of big data to enhance and outreach consumers and improve sales opportunities is not employed at all,” he added.
With that in mind, Zappelli brought together three digital and marketing experts to run through some of the challenges, pitfalls, benefits and strategies when employing this type of advertising at Wine Business Monthly’s Wine Industry Technology Symposium, held in August 2018 in Napa, California.
The Origins and Evolution of Digital Advertising
“We’re still talking about digital marketing as if it’s some weird sub sect when, really, it is just marketing, but through digital,” said Ingrid Cheng, senior marketing manager at Treasury Wine Estates. “It’s just another tool to use.”
As with any digital tool, the origins of digital advertising began in the 1990s with the advent of search engines and pop-up advertisements; Zappelli put it best when he bemoaned “slow internet and annoying pop-ups.” In the early days, marketers understood the power of the internet to reach new customers and build a brand. The downfall, however, is that there wasn’t a way to target customers—you purchased an ad, or a pop-up, and it went to all users.
That changed once Google, Bing and other search engines started to pick up on ranking systems, eventually transitioning to social media sites, such as Facebook. The most important tool it unlocked was data, according to Cheng.
“In the past, when you wanted to advertise in a magazine or newspaper, you looked at circulation numbers, but there was no guarantee or anything to show that your ads were effective, except maybe through this value chain through sales,” she said. “But now, with these tools and technology in place, we’ve not been able to capitalize and learn and act on this information because, as business people, we make better decisions with as much intelligence as we can gather. When the internet exploded and people on the back end realized how we could better capture this information, then use that as a better tool, it became a better proposition for us as business people and marketers.”
From there, marketers and business owners gained knowledge on a potential customer’s location, previous website views and how they search for products. Over the years, the way a consumer interacts and “meets” a brand has evolved from the traditional way of opening an ad or searching on Google. According to Raquel Royers, former digital marketing manager at Trinchero Family Wine Estates and now marketing manager at Clos Du Val Winery, more often than not, customers are reaching a brand by word of mouth, seeing a photo from an influencer on Instagram or reading a blog.
“We need to adapt and base all of our decisions on that data we now have in our hands and make those decisions based on where our customers are,” said Royers. “If they are on Instagram, then you bet we’re going to have ads targeting them on Instagram. I think the world completely changed when Google allowed adwares and we were able to place an advertisement in front of a consumer who was searching for, say, a luxury red wine brand, so we could have our ad up at the top of Google ready for them when they didn’t even know that they were searching for our product.”
“We think of digital marketing as really just one piece in our holistic marketing strategy. It’s not this new thing—just on a different platform,” said Royers.
Putting Your House in Order
Obtaining approval or funding for this method of marketing can be tricky, especially among smaller wineries with smaller budgets. For that, the panelists mentioned an easy solution.
“A great way to get leadership and stakeholders on board is to just type in ‘Best Napa Cab’ in Google and screenshot the top ad. I think that’ll get them going, once they see that their competitors have ads on top,” said Royers.
“Or even better,” said Cheng, “is when you Google your own brand and somebody else’s ad comes up on top, too.”
It’s always helpful to point to the numbers when pitching the program, even after a campaign doesn’t necessarily go to plan. Though a $10,000 ad buy may send a financial team reeling, Cheng said she can easily come back with how many people engaged with the ad or made a purchase.
“That’s the power. We can quantify what we’re doing. There’s no such thing as a failed experiment because you’ve learned something every step of the way. That’s the power of data. That’s why we push data a lot,” she said. “It takes a lot of clicks to get somebody to purchase but, eventually, if you capture them, then you get to re-target them over and over again. You’re feeding an ecosystem and so the more people we can get into our tasting rooms and our websites, the better performance we’re going to see.”
Cheng cautioned that before embarking on a digital advertising strategy, two key pieces of your direct-to-consumer platform need to be up to the task first: your website and your tasting room.
“You’re not going to spend a bunch of money sending people to your tasting rooms if you don’t have a fully staffed tasting room, it doesn’t look great, it’s not on point or you can’t deliver service. There’s no point. You’re not going to spend that money. Make sure the house is in order and then you start sending people there,” she said.
This is why winery websites are so important to building a DTC e-commerce platform as well. It is the place that, in lieu of a physical room, visitors will come to in order to interact with your brand. “Website analytics are really important,” Cheng said. “None of this advertising is going to work unless you have a place that people come.”
Terms of the Trade
Before diving in to strategy and basic principles of digital advertising, there are some recurring terms. Here is a quick glossary of those phrases and terms the panelists used often.
Prospecting Ads: AdRoll defines a prospecting ad as one that attracts new audiences who are likely to convert and become customers. These types of ads are characterized by large, robust data sets and act more like customer acquisition tools.
Targeted Ads: These ads are focused on a specific audience, likely smaller groups with highly tailored interests or demographics.
Retargeting Ads: Retargeting is simple: It means serving ads to those who have previously interacted with your website.
Lookalike Audiences: Lookalike Audience are customers with similar demographics, interests, etc. to your existing customers. A prime example would be telling Facebook to look at the profiles of current followers and then send advertisements to similar people across the platform. It’s similar to a prospecting ad, though prospecting ads tend to allow for considerably larger reach.
All these types of ads and audiences play a huge role in generating revenue. In order to build an audience and generate clicks, each must be part of a campaign and used at various times in the customer relationship journey.
The Digital Advertising Funnel
Caleb Cavazos, digital marketing manager for HALL Wines, likens his digital marketing strategy to that of a funnel, all leading to a sale. On a broad scale, he uses prospecting ads—anything from an AdWords ad or a lookalike audience ad through Facebook, Twitter, Pinterest, etc.—to garner interest in the wine. If they click on the ad, that shows interest and brings them closer to the brand by sending the visitor to the website. From there, he looks to add them to the email list, then uses the provided email address to send them more information about wines, promotions and more, hoping to make the sale or create a new wine club member.
“We drive traffic directly to our tasting rooms or the website and hopefully some sort of data. The types of data are cookies, and we use those for retargeting. If we can capture an email address that’s even better,” he said.
The goal is always to make a sale, though Cavazos pointed out that it may take some work. “I hope we could capture their purchase, which is a really big ask for somebody whose being prospected. They spend about two to three minutes on your website. If somebody spent two to three minutes in your tasting room, do you really expect them to make a purchase?” he asked.
HALL’s strategy: If the customer does not make a purchase, then the company tries to capture as much data as possible, take that data and “re-feed it and re-fuel.” Cavazos reinforces the branding by continuing to advertise to the same customer that has not made a purchase, hoping that the extra time spent with the brand will build familiarity and loyalty.
Meeting Customers Where They Are
So, where does one place an ad?
At Treasury, Royers knew that most of her brands could be found on grocery store shelves, which meant that she did a great deal of targeted advertising, whether pop-up in certain coupon apps, working with bloggers or influencers, using coupon codes or other measures to drive customers to certain locations regionally to purchase. For some of the smaller brands, those with tasting rooms, she worked with the direct-to-consumer and events teams to build strategy. “Email is still important, people still click through. You already have consumers who want to buy, who want to see your product and so it’s keeping that lifetime value of the consumer, keeping them engaged through digital social channels as well.
“For the smaller brands, we’re working much more regionally, targeting people from Google Ads, driving to the site directly and trying to increase pre-bookings as well. We don’t dabble as much as HALL into actually securing direct DTC purchases, but that’s something that we are trying to do more as the DTC space is growing.” Royers said.
“We like to use a whole holistic approach. We’re not just targeting in one advertising source or the other. We’re doing all of it so that we’re capturing every piece of the consumer journey, so that the whole way through they’re thinking of our product,” said Royers.
Cavazos has often heard complaints from his coworkers, asking why they are advertising on a particular website, say CNN, as an example. His response is simple: “It’s not because of the platform, it’s because of the person. With retargeting, if you are on CNN and a Kathryn Hall banner takes up the entire page, that’s not because I’m paying CNN. I’m paying a company to find you and target you. And I’ll follow you all the way around the internet if I can.”
To do all this, words play a huge part. Specifically, Google AdWords.
Advertising through Google is facilitated through Google AdWords, its solution for digital advertising. In addition to direct advertisements on Google Search, AdWords will allow your ad to appear on other websites that derive funds by hosting a set space for Google to place ads. When you search “Napa Valley Wineries” in Google and a few days later see an ad for HALL Wines on CNN, that’s AdWords at work.
Advertising where a potential customer is searching is important: A recent WebVisible survey found that 72 percent of customers prefer to find information on local merchants via search—and Google owns 71 percent of the search market share, according to NetMarketShare.com. Google’s Benchmarks and Insights research team also claims that its display campaigns reach 80 percent of global internet users.
Costs for this can be quite high, based on your frequency and the search terms you associate your ad with. Keep in mind, Google has stated that 97 percent of its total revenue comes from advertising.
For those with smaller budgets, Royers suggests stepping up your search engine optimization strategies, and use a tool like SEMRush, which allows you to determine if you’re using the appropriate terms and keywords on your website. More information on SEO practices can be found in the March 2018 issue of Wine Business Monthly, “SEO 101: The Fundamentals of Website Optimization.”
Finding the Key to a Successful Campaign
Just as important as putting an ad in front of the consumer is ensuring its effectiveness. The panel recommended a number of tools to assist in this endeavor. A/B testing tools, such as Lucky Orange, Optimizly, Crazy Egg and Google Optimize, provide easy testing of your websites, your ads and other campaigns by providing insights as to what works best to build engagement through A/B, multivariate and redirect tests.
“I remember when I first got Lucky Orange at my last position. I basically stared at it for a whole day because it also records everybody that’s on your website,” said Cheng. “You can actually follow and stalk them and see what they’re doing. That’s perfect, right? In a tasting room, it’s not as creepy as it sounds; in a tasting room, you’re watching your customers anyway.”
What Cheng is watching for is engagement. Are they engaged with a pretty picture of the vineyards? Or is it a photo of the winery owners? Cheng recommends Lucky Orange for both the positive and negative insights it provides.
“It could also tell you if things are going wrong on the website: if there’s a page that people will always fall off, that it’s not interesting. Maybe it’s a content issue? Maybe it’s a photographic image? Or something that’s really just not compelling and speaking to people. So, it’s an ability for you to be able to control your forward face.”
From there you’re better able to make decisions on overall spend, she said. Knowing what resonates with the type of customer you’re trying to reach can help inform creative decisions, whether it’s if you use the word “reserve” or do a photoshoot in the barrel room rather than in the vineyard.
The Goal of Digital Advertising in the Wine Industry
At the end of the day, it all boils down to your own individual goal as a brand. There are a variety of tools and softwares available to enable any strategy, which makes providing broad solution recommendations difficult.
“There’s not one tool that I can tell you that is going to fix all your needs and be the magic tool you can use across the board because it just hasn’t happened yet. And I don’t think it will,” said Cavazos.
Cheng agreed. “Because of all our regulation, we’ve built very customized systems to help with wine club CRM, POS systems that really just don’t grow and build with business needs in a very nimble way. Technology is an investment. That’s why you hear people spending seven figures into new CRM systems and things that can adapt to us,” she said.
Digital advertising remains an investment—just like any direct-to-consumer strategy—whether in dollars or time. However, Zappelli, Cheng, Cavazos and Royers all said it was worth consideration and, at any spend or level, often worth it.
“It’s not always an easy sell, and it’s definitely harder if there is more resistance. I feel for people who have to make that pitch just for $1,000 for a Facebook ad,” said Cavazos. “I wish everybody luck.”
This article originally appeared in the January 2019 issue of Wine Business Monthly.