Retail Profiles
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Jewelry ad spend down as recession digs in
By Michelle Graff
August 18, 2009
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| Marketing expert Ellen Fruchtman suggests it is better to spend print ad dollars in fashion magazines rather than in bridal titles, as Ritani and its retail partners did in Marie Claire. |
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New York--If it seems as though there are fewer ads lately for diamonds, jewelry and watches--either on the airwaves or strewn across the pages of your favorite magazine--it's not your imagination.
As companies shrink their budgets in accordance with the slowdown in sales, advertising spend in traditional mediums is down nearly across the board for the jewelry industry, new statistics show.
While experts warn retailers against disappearing from sight completely during a recession, the pullback this time is accompanied by a change in the advertising world itself, as traditional mediums such as print lose ground in a world that is tethered to its BlackBerrys and laptops.
At Birks and Mayors, a Montreal-based chain with stores in both Florida and Georgia, Chief Executive Officer Thomas Andruskevich doesn't have to consult any balance sheets to recount his company's ad spend in 2008 and 2009.
Spending on print media and billboards has been down this year, while spending on radio is flat or down slightly. The reason? He says in this recessionary environment, all traditional mediums of advertising are simply less effective.
"People are spending less money," Andruskevich says. "That's a proven fact. No matter how hard you advertise, a lot of it is for naught. If [consumers] don't have the money to spend on jewelry, advertising isn't going to change their mindset."
Inside the numbers
Data obtained from Adweek magazine (which, like National Jeweler, is part of Nielsen Business Media and owned by The Nielsen Co.) shows that many jewelry stores are going the Birks and Mayors route when it comes to traditional advertising spend.
Between 2007 and 2008, overall jewelry store spending on cable TV fell by 24.3 percent, radio declined by 24.7 percent and outdoor advertising slipped by 5.7 percent.
Ad spending went up moderately for both print and network TV, but overall jewelry-store spending across all five mediums fell 4.6 percent.
Data for first-quarter 2009 showed similarly lackluster results, with jewelry-store ad spend down nearly 17 percent across the board in all five categories compared with the first quarter of 2008.
Ellen Fruchtman, president of Fruchtman Marketing, says the drop in ad spend is due to a combination of a general pullback in spending due to the slow economy and a shift of some--but not all--advertising dollars to the Internet.
"How do you fault them for that?" she says of stores spending less on advertising. "As a marketing person, I can say you need to be out there marketing, and I do believe that. But by the same token, it's easier said than done. You've got to pay the bills."
The only traditional mediums that showed signs of life in 2008 were network TV, for which ad spending rose 4.2 percent, and print, where spending was up a surprising 8.1 percent.
Fruchtman says the bump in network TV ad spend was due to networks offering better rates.
Years ago, the big networks--ABC, CBS, NBC and Fox--had less competition, but today there's a channel for everything, from lawn care to horror movies.
"Everyone has become a competitor to network television," Fruchtman says, adding that the increase in print spend is attributable to manufacturer co-op programs.
She recommends advertising in fashion magazines rather than bridal titles, contending that the latter are read by those who are already engaged, with rings on their fingers.
Birks and Mayors did not increase its print spend and actually switched up its strategy, pulling ads from local newspapers to advertise instead in The Wall Street Journal, whose reader base has a higher average income than that of many local newspapers.
But Andruskevich says the company did increase its spending on network TV, investing in a co-op program with a well-known watch brand in 2008, an exception for the 69-store chain, which does not normally run television advertisements.
"We felt they were great ads," Andruskevich says. "We felt it was a very effective program and it was something we got very excited about."
The Adweek data also analyzed ad spending in jewelry, a category that covers a wide range of brands, including Hearts On Fire, Tacori and David Yurman, plus watch names such as Rolex, TAG Heuer and Timex.
Jewelry-brand advertising declined across the board between 2007 and 2008 and in the first quarter of 2009, with two exceptions: For reasons researchers were unable to name, radio advertising for jewelry brands (not stores) skyrocketed 78.8 percent between 2007 and 2008, while outdoor advertising inched up 1.3 percent in first-quarter 2009.
A slight shift online
While some of the slowdown in traditional advertising spend is attributable to general economic conditions, a portion of those dollars are finding a new home on the Internet.
Mike Sprouse, chief marketing officer for Epic Advertising, says the New York-based firm's survey of several hundred marketing executives indicated a "slight" shift in advertising spend to the Internet in 2009.
The majority of those surveyed said the trend would accelerate in 2010.
"We had really started to see that [shift] in the first quarter of this year," he says.
The reasons companies are choosing to go online with their ads are varied: It is an easier and faster way to reach potential customers, technology makes it simple to track who is looking at the ads and when they are doing so, and it is relatively inexpensive.
"It's cheaper, which is always good when you're faced with a recession and a down budget," Sprouse says.
How much and how quickly a shift to online ads will extend into the jewelry industry remains to be seen however.
As of now, data detailing online ad spend in the jewelry industry is scant and not very useful for comparative purposes.
Nielsen Online data on the subject dates back only to 2007, and shows that between May and December of 2007, the industry spent $2.2 million on online advertising. The figure for all of 2008 totaled $4.3 million, while it has added up to $1.1 million for the first five months of 2009.
"For the jewelry industry, let's be honest," Fruchtman says. "This is an industry that is not progressive or forward thinking ... Traditional media will remain strong because this is an industry that is reluctant to change."
But that isn't necessarily a negative for some mediums.
"The general public still wants to watch TV and will still read popular magazines," she says. "They will still drive cars, so they will still look at billboards. The only traditional medium in its current format that is at extreme risk is newspaper. We live in a society of 'now,' not what happened yesterday reported today."
While TV and outdoor will make a comeback, Fruchtman says retailers should shift bridal advertising to the Web because 85 percent of that market is doing their research on the Internet, even if they are not buying there.
She recommends investing in paid search advertising, where a company pays a search engine company, like Yahoo or Google, for higher placement for their Web site's link in search results.
"If you're not driving that consumer to your Web site, then you're missing the boat," Fruchtman says.
Andruskevich says Birks and Mayors already has had success with Web advertising and is upping its online advertising spend in 2009. But that does not mean the company is abandoning its old advertising standbys.
"I think [traditional ad mediums will] come back," Andruskevich says. "I know in our specific case, we'd be spending more money in the categories we spent it before. In the jewelry industry, I believe firmly this has a lot more to do with the recession than with a shift from traditional advertising to online advertising."
For a look at where jewelry stores and jewelry brands were spreading out their ad dollars from 2007 until the first quarter of 2009, download Jewelry Ad Spend.
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