RAPAPORT... When millennials tuck into their avocado toast, they probably don’t realize they’re going along with a successful marketing campaign that began decades ago. Sales and prices of the slippery green fruit have soared since the 1990s thanks to subtle efforts by avocado producers to reposition the once-unpopular item as a healthy, trendy food.
The diamond industry has gone the opposite way. Its own exemplary advertising slogan, De Beers’ “A Diamond Is Forever,” supported the trade for some 60 years until the miner stepped back from category marketing in 2008. Since then, US net diamond imports have fallen, going from $7.15 billion in 2007 to $3.96 billion in 2018, according to government data. The RapNet Diamond Index (RAPI™) for 1-carat polished stones has fallen 17.7% over the past decade.
Marketing diamonds involves considerations that might not apply to guacamole suppliers. For one thing, an engagement ring is a highly infrequent purchase that potentially costs thousands of dollars. But the rise of the avocado shows that category marketing can be effective in enticing consumers to buy a discretionary item, says Anish Aggarwal, a partner and co-founder of Antwerp-based diamond consultancy Gemdax.
“Fifteen years ago, avocado toast wasn’t a thing,” Aggarwal notes. “Now, the idea of eating avocado and avocado toast — you’ve almost got a culture around it. That is an example that we can learn from in the diamond industry: How you give positive stories — in the case of avocados, about health — and how you attach it to a change of lifestyle and a generational change.”
The same objectives — attaching a positive vibe to a product to make it cool — are on the diamond industry’s agenda. But the sector has no shortage of obstacles it must bypass to achieve those goals.
More cash
The first challenge is money. Advertising is increasingly expensive, as companies must put out huge amounts of content in the hope that something will stick in distracted consumers’ minds, explains Ben Smithee, CEO of New York-based digital-marketing agency The Smithee Group.
When Smithee’s company started out with social media almost a decade ago, it aimed to expose its content to customers three or four times a week, he recalls. “Right now, our gold metric is how do we get up to six to eight to 10 times, because that equates to two or three real engagements.”
At the same time, diamond-industry figures believe there isn’t enough cash going into marketing. The Diamond Producers Association (DPA) — an umbrella organization set up in 2015 to promote natural stones — derives its funding from De Beers, Alrosa and other large mining companies. In 2019, it had $70 million to $75 million at its disposal, compared with $6 million in 2016. But the trade needs more than that, according to Rapaport Group Chairman Martin Rapaport, who argued for a budget of $1 billion in his June 2019 speech at the JCK Las Vegas show.
Unity of purpose
Even with money, disseminating a single message is harder than it used to be because of how fragmented media has become, notes Elle Hill, CEO of jewelry consultancy firm Hill & Co.
“Back in the day, when De Beers was doing ‘A Diamond Is Forever,’ there were far fewer channels to reach the general public, and the cost was much more expeditious,” Hill explains. Since consumers acquire around 80% of their knowledge online, digital marketing is both crucial and hard to accomplish without deep pockets and detailed expertise, she says.
“It’s an error to think we should replicate what was successful before,” Hill continues, asserting that advertising needs to target specific groups, since consumers are also more focused on brands than they were before.
Indeed, most of the pressure on the diamond market has been on the unbranded segment, according to Olya Linde, a partner at Bain & Company and the author of the consultancy firm’s annual report on the diamond industry. High-end brands only account for around 15% to 20% of global diamond sales, but have outperformed the rest of the market, she notes. Firms like LVMH — which owns Bulgari — and Richemont, the company behind Cartier and Van Cleef & Arpels, have consistently recorded strong growth in jewelry sales.
“The branded market has been heavily supported by marketing campaigns, and the [desirability comes] not just [from] the size of the stone, but the design as well,” Linde explains. “The data has shown that branded high-end jewelry has grown by double digits, while the rest of the market has not.”
Lacking know-how
Adding to the difficulty is that vast parts of the diamond industry have little experience with marketing and are often wary of it. Few polished manufacturers work with outside communications agencies. Many cutting firms are family businesses, where the decision might come down to spending money on marketing or buying a car for a child.
This sense of reluctance partly stems from a bad experience polishing companies had during De Beers’ Supplier of Choice program in the 2000s, which required sightholders to carry out marketing and partner with luxury brands as a condition of receiving rough.
While Supplier of Choice was a good idea in itself, it failed because the midstream had zero experience in the discipline, argues Peter Meeus, an adviser to the World Federation of Diamond Bourses (WFDB). Sightholders participated because they believed it would help them obtain a larger supply of rough from De Beers, not because they thought it would boost sales, Meeus says. “It made people quite skeptical. Many people spent a lot of money on all these programs they were pushed into, and in the end realized that was not their thing, and they all stopped.”
Smithee agrees the midstream was burned by Supplier of Choice. “It’s like, ‘Fool me once, shame on you; fool me twice, shame on me.’ It wasn’t [ill-intentioned], and it wasn’t a bad idea. The problem was, you forced people into an idea that they weren’t able to execute.”
A more logical option would be for dealers and manufacturers to finance marketing for the retailers they supply, as those companies are more capable of analyzing consumer data and relating to shoppers effectively, Hill argues. In return for the funding, the retailers would highlight the suppliers’ goods in their advertising. “I don’t think there’s the skill set [in] the supply chain to tackle [marketing], because people still largely think you just put a couple of keywords in and that’s it,” Hill comments. “It’s so much more complex than that.”
In addition, there’s a traditional lack of transparency in the diamond trade that can hinder any marketing project, contends Smithee. This makes for a certain “tension between what needs to be done and what people are willing to do,” he says. “The consumer’s looking for more transparency end to end. [Servicing that] will help provide additional perceived value for the consumer; they’ll feel like they’re more part of the process, [that] they’re buying more intelligently, more ethically.”
Outside approval
The DPA knows change might be slow. “We’re not here for the next one, two, three years. We’re here for the next couple of decades to really have an impact on the industry,” said Jean-Marc Lieberherr, the organization’s CEO, in a 2018 episode of the Rapaport Diamond Podcast.
But one thing might do the job faster: Recruiting a major influencer to advocate for the industry, as consumers increasingly seek third-party corroboration of a seller’s claims, Hill says. The “Got Milk?” ads that ran in the 1990s became legendary partly because they featured celebrities such as Jessica Alba and Elton John, she notes.
“The ‘who’ of how [diamond marketers] are communicating is missing right now,” asserts Hill. An endorsement of the industry’s practices from a respected social activist could have a huge impact, she says, especially in the battle against lab-grown diamonds.
All this would create a more enthusiastic vibe among millennials. While hurdles exist, avocado growers have shown that it’s possible to overcome them.
This article was first published in the January 2020 issue of Rapaport Magazine.
Image: Stocksy
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