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The Future of Diamond Advertising

June 6, 2007

As I’ve written, De Beers is now saying it wants to do less generic advertising. And, at the recent JCK show, there was speculation about whether De Beers will continue to promote its “beacons”—products like “Journey, “the right hand ring” and the “three stone ring”—or whether it will devote more money towards its proprietary Forevermark. This would fall in line with some of its recent actions:

-Sightholders are no longer able to display the sightholder insignia, which includes the “Forevermark.”

-The DTC is ending its “business initiative,” where sightholders receive co-op money to tie in their advertising with "the beacons." (I should note that there was also general unhappiness with this program.)

I’ve argued that the Forevermark probably won’t grow the market in the same way the “beacons” do. And  it could be tough for De Beers executives, who have spent the last seven years extolling the importance of marketing, to change their approach so radically.

Still it is fair to ask why De Beers should finance virtually the entire industry's advertising budget. Other producers seem to be considering this question as well. Here is a part of an interview I did with Jean-Marc Lieberherr, general manager for marketing for Rio Tinto Diamonds, at the recent JCK Show:

It is clear that De Beers is not ready to bear the burden of generating demand for the industry. That has implications for everyone … The industry needs to take a more collective role in our future. It’s a real question … We are playing a more active role in shaping the industry, but how does that translate into driving demand? I don’t know.

He adds that Rio Tinto, a mining company, typically does very little marketing.

He noted that Rio has given money to and is helping set the course for the World Diamond Council’s diamondfacts site, which was originally portrayed as a De Beers initiative. (He says it will eventually include more facts about Canada and India.)

The answer to this may be a “Platinum Guild”-type arrangement, where all producers contribute to marketing, although Lieberherr said he is “not sure” that is the answer. In 1998, when asked about this, De Beers chairman Nicky Oppenheimer told JCK:

The thing to look at is the World Gold Council, which to my mind has been a complete disaster. They should be spending millions more promoting gold. You want to avoid a situation where [contributors] opt-in, and then they opt-out.

It’s worth nothing that Rio Tinto has been more active than the other non-De Beers producers in promoting diamonds. Their new U.S office is talking about restarting the “Champagne Diamond Registry” and promoting pinks. Producers like BHP and Alrosa seem barely on the radar.

But it remains a tough question. Says Lieberherr: “I don’t think there is a philosophical answer to the question of who should drive demand.”

Posted by Rob Bates on June 6, 2007 | Comments (0)