It’s just a microscopic imprint on a diamond—one 1/500 the thickness of a human hair. But it could have a decidedly outsized impact.
It’s called the Forevermark, and whether or not it’s the future of the diamond industry, it’s definitely seen as the future of De Beers.
For 100 years De Beers has supported the diamond market with its generic diamond advertising—first for diamonds themselves, and then for its “beacons,” like the three-stone ring and Journey diamond jewelry. None of this came cheap—the company spent more than $1 billion on U.S. advertising between 1980 and 2000, according to court documents.
Yet with its market share around 40 percent, executives say they no longer want to advertise everyone else’s diamonds. And recently it’s been reallocating its money and putting it where its mouth is. Earlier this year, De Beers announced that its entire marketing budget—except for the part allotted to the United States (see sidebar)—would go to promote the Forevermark.
So now the question is: If De Beers will no longer promote diamonds generically, who will? And is there still a need to do it?
It’s a question people in the industry are increasingly asking. The International Diamond Manufacturers Association announced it would spearhead a generic “Diamond Marketing Initiative” similar to the World Gold Council and Platinum Guild International. Sergey Vybornov, president of Alrosa, the world’s second-largest miner, recently held a meeting in Moscow to discuss the concept.
But despite being endorsed by just about everyone, nothing solid has been proposed. One thorny question: Whose diamonds get advertised? Rio Tinto, owner of Australia’s Argyle mine, would like some promotion of the “smalls” produced by Argyle. But De Beers and other mines might not be as interested.
These issues have come up before—in the 1990s, when Argyle was a member of the Central Selling Organisation. Back then, Argyle executives felt slighted that De Beers’ ads only featured bigger stones; it was one of the reasons it eventually left the cartel. These disputes could be more pronounced in a joint council where everyone has a voice.
Any new venture will likely not be as ambitious as De Beers’ past marketing campaigns, which cost an estimated $200 million annually. The people behind the new diamond marketing initiative admit that, even with the world’s major miners and manufacturers behind them, hiring a pricey agency like JWT is probably out of the question.
Still, everyone agrees a campaign is necessary. With the industry doing little advertising overall, the loss of a major player like De Beers hurts it in its battle for share of consumers’ wallets. And many believe the industry must act now, or diamonds and jewelry will continue to slide down consumers’ wish lists. As former IDMA president Jeffrey Fischer put it: “Diamonds do not sell themselves.”
What Is the Forevermark?
Earlier this year, De Beers relaunched the Forevermark at a glitzy presentation for sightholders in London.
Marketers said De Beers was putting all its “resources, imagination, and influence” behind the Forevermark and vowed to make the diamond-shape symbol as familiar as Apple’s logo or Nike’s Swoosh. While not all sightholders bought that, most were impressed by the company’s commitment to its nervy new plan.
“It is one of the most ambitious things they have ever attempted,” said one sightholder. “They were very unequivocal about their commitment to it. It’s just like the De Beers stores didn’t work off the bat, but they didn’t fold up their tents and run away. They are going to stay with this.”
So what exactly is the Forevermark? Technically, it’s the diamond-shape icon that will be inscribed, along with an identification number, on the table of the new branded stones. It can be seen only with a special viewer, possessed by Forevermark dealers. (Similar technology is used in the De Beers stores.) While it’s expected to be used mostly on diamonds sold by De Beers, it will be open to other diamonds “from responsible sources.”
Only diamonds that are at least 0.18 cts., SI2 clarity, J color and above, and with good quality cuts are eligible. In addition, they must be natural, treatment free, and ethically mined and cut. The Forevermark Web site calls it “a promise that your diamond is special, meeting the highest standards of the world’s No. 1 diamond company.” Each stone will come with a report from the Forevermark lab (see sidebar).
All in all, it’s a solid brand promise. But it’s not necessarily different from the promise offered by leading retailers. And some wonder if De Beers really will spend millions to advertise nothing more than a microscopic emblem on a diamond.
That could be up for discussion. A news release says the Forevermark will be tied in with De Beers’ “big ideas,” which could be analogous to the “beacons” De Beers has introduced in the United States. The first big idea may be the Forevermark setting, a four-prong setting where the prongs stand for north, south, east and west—“the directions of your love.”
There are also questions about the Forevermark’s business model. While in the past, De Beers charged sightholders to get their diamonds “marked,” now retailers will install Forevermark boutiques in their stores and pay a $50,000 per-store royalty for the privilege. “The reason for this is we found most of the profits were at the retail end, so it makes sense that’s where we charged the royalty,” Goss says.
Yet this requires De Beers to mine the diamonds and then sell them to cutters, who will ship them back to get them marked and then return them to the sightholder who will sell them to the retailer who will pay a royalty to De Beers. That’s a tangled business model, and many sightholders are suspicious that De Beers eventually will assume some of those responsibilities itself. But Goss says that De Beers’ manufacturing stones and/or jewelry is “not in the cards.”
Another issue is whether rival brands, like Hearts On Fire, will be allowed to tie in with the Forevermark—especially since a few of those brands were started at De Beers’ urging, and it’s now in competition with them. “That’s something we are looking at with our trade partners, which includes both retailers and sightholders,” says Goss.
In any case, all eyes will be on the Forevermark’s newest incarnation. The company will launch it at “carefully selected jewelers” in Hong Kong, China, and Macau during the fourth quarter of 2008 and the first quarter of 2009, and then in Taiwan, India, and South Africa during the second quarter of 2009.