Questions Raised on DTC Marketing

Rob Bates -- JCK Online, 5/1/2005 2:00:00 AM

Amid all the changes at De Beers in the last few years, much has remained the same: The company still sells its diamonds to sightholders out of its London-based Diamond Trading Company. The DTC also manages the company's generic marketing programs, and runs Diamond Promotion Services throughout the globe.

But now people are beginning to wonder about the fate of those industry institutions.

Some changes at the Diamond Trading Company appear inevitable. Newly emboldened African diamond producers want more diamonds manufactured locally. So De Beers' recent contract with Botswana reportedly includes a stipulation that De Beers set up a local DTC, which would sell to local factories Botswana diamonds that are economically viable to produce there.

This would mark a change from De Beers' traditional function of selling a "mix" of different producers, toward a possible new model where a large portion of each country's production is marketed internally.

As for generic marketing, De Beers says it's still committed to it—and its U.S. ad agency J. Walter Thompson is charging ahead with projects like its I Forever Do campaign for anniversaries. But clearly De Beers is unhappy it's footing the bill for "generic" ads that the entire industry benefits from, especially considering its now-diminished market share. At press time it was introducing a surcharge to sights that will, for the first time, force sightholders to help underwrite the DTC's marketing budget (the money will also go to other "value-added services").

Some sightholders think this means the company wants to ease out of its traditional role of marketing support. They note that, even as De Beers has encouraged sightholders to do more marketing, its own marketing budget has remained stagnant.

This has also raised speculation about the fate of the Diamond Promotion Service, the retail support arm of its generic programs. De Beers recently shuttered its British and German Diamond Promotion Services, and a number of its executives recently jumped ship from the U.S. one, fueling speculation about its future.

S. Lynn Diamond, DPS executive director, strongly denied anything was amiss. "We are incredibly busy with our I Forever Do and right-hand ring campaigns," she says.