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Wineries and social media: time to take a deep breath

65 comments

It’s hardly surprising that wineries are increasingly turning to social media, especially Facebook, Twitter and blogs, to grow their business, according to this report from Reuters about a study conducted by the Wine Industry Financial Symposium Group and the University of California-Davis Graduate School of Management.

You can read yourself that use of all three forums by wineries is exploding, and for obvious reasons: social media is cheap and easy to use, it can’t hurt, and it quite possibly can help a winery.

As we near the end of 2010, it’s amazing to think that, when I started blogging 2 years and 5 months ago, the Big Question wasn’t whether wineries should embrace social media. Instead, it was how rapidly their use of social media would enable them to make money. The blogosphere was much quicker than the mainstream media to address this issue. Most of the bloggers were confident that the rewards for a winery using social media would come in quickly. I wasn’t. I expressed skepticism from the beginning that social media was the magic bullet some of the other wine bloggers thought it was.

Now here we are, racing into 2011, and I think we can take a breather and ask, What’s up with wineries and social media now? In my opinion, the first phase is over, and the results are mixed. Many, if not most, wineries are doing something or other online, but I think those that are have been disappointed by the initial lack of stellar results. There was a brief Golden Age of going online that extended, roughly, from the time of Rockaway (summer, 2008) to the Murphy-Goode Really Goode Job thing (summer, 2009). Everybody rushed online, people hired Social Media Directors, and the wine world braced itself for the Second Coming, in which P.R., marketing and sales all would morph into one big digital pudding, and everybody’s troubles would be over.

I remained skeptical throughout that period, too. It just seemed too good to be true. In the long, often sordid history of Selling Things, human entrepreneurs have discovered that success involves blood, sweat and tears, not the instant gratification of typing a few words on a keypad and then pushing a “send” button.

So back to the Reuters article. The key sentence in it is “…it’s not surprising that the growing use of social media has coincided with the continuing hangover of the recession in the wine business.” Indeed, it isn’t. The recession has forced wineries to cut back in all sorts of ways, with one result that social media’s appetizing affordability makes it all the more desirable for a cash-strapped proprietor. I’m sure that wineries would be using social media even if we still had a healthy economy (and wouldn’t it have been lovely if this damned recession never happened), but I don’t think they would be using it as aggressively as they are now. What that tells me is that there’s still some magical thinking on their part concerning social media’s usefulness. When you’re depressed, you think about things that will make you feel better, even if they’re straight out of fantasyland. That’s just human nature. I still think there’s something fantastical about social media, but hey, if people feel better believing in the tooth fairy (or whatever), bless their little hearts.

And now for the most controversial sentence in the article: “Consumers are also less interested in wine ratings, in what some experts think is a positive trend because they believe the industry has relied too heavily on scores at the expense of educating consumers so they can make their own judgments about wine.

I’d like to see the evidence supporting this. The study was based on a poll of “109 grape growers, distributors, retailers and other wine experts” in California. No consumers, apparently, were included, so how does the study come to any conclusions about what’s going on in their heads? Maybe the grape growers, distributors, retailers and other wine experts think consumers are less interested in wine ratings, but I don’t believe they are. Are they less interested in wine reviews? I don’t think so, and ratings are simply one form of review. The use of ratings is growing, not shrinking, on shelf talkers, in print advertisements, and in winery P.R. materials. It may be true that the industry has relied too heavily on the use of the scores from a small, limited number of critics; and to the extent the blogosphere is creating more critics, that’s good. But ratings (be they 100 points, 20 points, 5 points or whatever) aren’t going anywhere, anytime soon. If you can offer factual evidence consumers are turning away from ratings, I’d love to see it.

A puzzler:

The following thought experiment was prompted when I drove past the Hall Winery, on Highway 29 in Napa Valley.

Let us supposed Kathryn Hall builds a manor house. It would be called Hall Hall. Let us now suppose that there is a hallway in the manor house. It would be the Hall Hall Hall. Let us further suppose that there are several hallways in the manor house, and they decide to name the grandest one after the Ambassador herself. It would be the Hall Hall Hall Hall.

Can you add a fifth “Hall” to the construction so that its meaning makes literal sense? Send your suggestions to me here. The winner will get a one year free subscription to my blog, and will get his or her name in print. Bragging rights!

  1. Steve, Murphy-Goode indeed sold more wine with Hardy on board. My research indicates they had much as 500 people per day go to their site and some days higher. Their conversion was more than 3%. Not bad for a social media experiment.
    Hardy’s demographic is the 20-35 range and if you can tune your social media efforts toward this demographic your wine will sell. This is not a stable platform to save your business, however it could be used as a parallel effort to slowly grow your brand.
    Relationship marketing like social media and email signup lists are effective sales tools when they are used with regularity. If you send an email newsletter on the 10th of each month, when you post a blog every Tuesday, when you Tweet every day, and when you update your Facebook page every week. It takes work to make these tools effective.

  2. On the Hall issue, not sure if you saw or not but Hall just purchased Roessler . . .

    http://www.winesandvines.com/template.cfm?section=news&content=79726&htitle=Hall%20Acquires%20Roessler%20Cellars

    Cheers.

  3. Larry, did not see that! Interesting.

  4. Greg Brumley says:

    Steve,

    If it appeared I was hard on Bill Foley, that was certainly not my intent. I think he’s good for the industry, and I couldn’t agree more with you about the contrast between Foley and the conglomerates.

    I simply paraphrased what he’s been quoted as saying, himself: that he focuses on buying properties whose owners are poor business people making great wine. To save a dying firm is admirable. To save it, and improve its viability, is a gift to the industry.

    My point is that owners of struggling small wineries should not sit around and wait for lightning to strike — including being bought by Mr. Foley or having social media come in and save the day. Were he asked, I should think Mr. Foley would agree.

    As to Joe’s comments on Murphy-Goode & Hardy: I’d love to see the hard numbers which support his research claims. Is he saying that 500 people a day went to their website, and that 3% of those bought wine? Is he saying that the 25-35 age group is a reliable market for an 80,000-case winery?

    It appears he claims 15 people a day bought wine (3% of 500). If each bought 2 bottles, that’s about 600 cases a year. If you were a 50,000-case winery, would you spend the money Murphy-Goode did to sell 600 cases?

    Regards,

    Greg

  5. Steve, Maybe I shouldn’t write comments at six in the morning after working all night on a project. The numbers I referred to were more conservative than they should have been. The capture rate was higher more in the 4 to 5% range depending what week I sampled the same goes for the traffic. I apologize for doing this from memory. Either way the point I was trying to make was Social Media, even one that turns viral will not sustain a winery. You need to work the program and be consistent and develop your own personality and your own brand. Murphy-Goode enjoyed a boost before the six month stint of Hardy however it did not last. Remember Murphy-Goode became a household name for awhile their 15 minutes of fame sold wine and not just online.
    I might not spend the money for Hardy for the sale of 600 cases of wine online, but I would for the overall PR that was generated.
    The reference to the demographic was used as an example of who Hardy appeals to, not as the only one you need to support your winery. If you choose to attract this sector you will build brand and have a good future in sales. I’m doing this from memory again but I believe these are the most likely people who use Social Media in the wine market.
    We have been taking samples for hundreds of winery and wine sales websites for over a year. The samples are taken weekly and analyzed. We have developed a good database of wine industry statistics. When we identify any deviation we examine the website to identify the reason. This information is used in several industries to identify opportunities and trends.

  6. We opened May 2008. We’re getting 2000 on-site visitors a week. (Not at our website, but here at the winery). Gonna have $1.75M in 2010 sales, 100% at the winery.

    No wine scores. Lots of social media. It’s about intimacy. Sharing the dream with our customers. Reminding them when they are not here of all the reasons why they should want to come back. Like anything worth writing, it’s about the story – and working to make sure that it is well written. Compelling. Interetsting. Fun. SM can do all that. And it can help you to build an amazing following at your winery. We have. http://www.barreloak.com.

  7. Oh…and google analytics shows 79,011 vivits to our website in the past 12 months with 407,363 page views. That’s 217 hits a day average. 65.15% are new visitors. Our peak day was 719 visits. Tie the message to the winery to the media to the message to the media to the winery. All of it reinforcing back to what you are that counts to your customers. Our story is of a dream that we created to share with others and that this is a great place to come and enjoy great wine and an afternoon.

    Oh yeah, we’re located in Virginia.

  8. Greg Brumley says:

    I fear Social Media is the new dot-com.

    It’s always being sold “on the come”. Its value is ephemeral. When you ask a proponent how much wine it really sells, he/she lays down nice impressive numbers and adjectives….which never quite get around to answering the question.

    Take Joe’s posts here, for instance.

    Steve opined that Hardy Wallace’s 6-month social media stint didn’t sell much wine for Murphy-Goode. (We all agree Hardy is a talented guy who was very effective doing what social media folks do. But, as Steve points out, marketing expenditures are about selling wine.)

    In his first post, Joe agrees that the Hardy Wallace experience did nothing for the Murphy-Goode brand. In the second post, he says Murphy-Goode “indeed sold more wine with Hardy on board.”

    Indeed, huh? Joe says that his research shows M-G’s website had up to 500 visits a day with a “conversion of 3%”. I asked if that conversion meant 3% of visitors bought wine, maybe 600 cases. Joe didn’t disagree – because he didn’t answer the question. Please remember we’re talking about the value of Hardy’s social media effort to a 150,000-case winery.

    Joe’s next post says he was wrong. Actually, he says, the “capture rate” was “in the 4 to 5% range depending what week I sampled the same goes for the traffic.”

    Joe, 4-5% of what? Your first numbers were a conversion. Your new numbers are a capture rate. By “capture rate”, do you mean the common e-mail definition, which is the rate of opt-ins? Or, do you mean the retail definition: the statistical difference in sales caused by the campaign? “Capture rate” is also used in commercial real estate, nuclear physics and infectious disease control with varying meanings. I would defy you to find 20 winery owners who have a common understanding of what the phrase, “capture rate”, means – let alone, means to wine sales.

    And what does “same goes for the traffic” mean?

    This is the problem with the dot-com nature of social media. It extrapolates that clicks equal sales. It wants us to believe it has value, but even it can’t define what that is. As the folks in a western town said when their neighbor rode into a meatpackers’ convention wearing his new $500 Stetson: “All hat. No cattle.”

    Joe says “I might not spend the money for Hardy for the sale of 600 cases of wine online, but I would for the overall PR that was generated”. Really? I’ve seen claims there were millions of online clicks, and much buzz. But the PR ended the day Hardy was hired. From that day forward, the interest evaporated. Hardy did a fine job, but none of it drew the attention of the “contest” which ended with his selection. Joe says Murphy Goode’s “15 minutes of fame” sold a lot of wine. How does he know that? And how many wine sales were necessary to justify a Goode Wine Job budget around 6 figures?

    Joe tells us Hardy’s value is with the 25-35 age group because they all follow him like he was the Pied Piper. Well, it appears his blog gets about 8,000 hits a month. Some rankings have him among the top 30 wine blogs and others don’t rank him in the top 200. I am NOT disparaging the guy’s work. He’s bright and good with a word, and he has guts. I AM disparaging the ability of the blog — yet another Social Media outlet — to generate wine sales.

    Of the 25-35 year olds, Joe first tells us, “If you can tune your social media effort toward this demographic your wine will sell.”

    This is what worries me about social media evangelists: they make claims which are simply unsupportable. The evidence is that this age group buys half as much wine as either of the two (maybe 3) age groups above it. There is NO EMPIRICAL DATA which indicates a winery can prosper by relying on social media outreach to this demographic. None. You want to sell wine, Joe? Reach the people who buy, not the people who sip and skip.

    He then says of the 25-35 demographic, “If you choose to attract this sector, you will build brand and have a good future in sales.” I’d be the first to agree that this demographic has exciting potential. The most sophisticated wine tastes in history. Independent minded. Just fun. But, Joe, they have little reputation for brand loyalty. You actually think you can build a brand on them today? You’re kidding, right?

    As for this demographic assuring “a good future in sales”…. Small to medium wineries are in no position to invest their few marketing dollars in futures speculation.

    If Joe or others feel I’ve been hard on him, let me point out that he has held himself and his firm out to have the numbers, and to have their fingers on the pulse of online wine sales.

    The more I hear social media evangelists, the more convinced I am that, somewhere, W.C. Fields is hiding behind his poker hand and snickering ‘til he almost chokes.

  9. What I shared with you was our data findings on the M-G website traffic during the Hardy campaign. I used the term conversion and capture to mean the same thing. The actual numbers vary depending on when sampled. If M-G received a million hits on their website we did not see it. The point I was trying to make was it was not sustained and the winner was Hardy not M-G.

    If I am considered a Social Media advocate Social Media is in trouble. I know about Social Media because it is part of my business. If you would read the statements I have made “This is not a stable platform to save your business, however it could be used as a parallel effort to slowly grow your brand.” . This is a tool, it should not be the only tool in your shed.

    As far as the demographic mentioned. You can use the information if you wish. If you don’t like it don’t use it, it is still a fact. You can attack the straw dogs you put up here with witty comments but it does not change the facts. I don’t consider your comments as being hard on me, I enjoy a little jousting now and then.

    We do not have our finger on the pulse of the wine industry. We have gathered numbers that show where some industry online businesses have been historically. Based on what we have seen online we analyze what has worked and why. Every Friday we post on our site traffic information on sampled winery websites and sampled online wine sales websites. It free to view.
    http://www.sierraseo.com/wine_info.html

  10. Greg Brumley says:

    “If you can tune your social media effort toward this demographic [25-35 age] your wine will sell.”

    That’s what you wrote, Joe.

    “If you choose to attract this sector [25-35 age], you will build brand and have a good future in sales.”

    That’s what you wrote, Joe.

    Please share hard data which shows social media campaigns targeted to 25-35s significantly increases actual wine sales.

    If you have data which shows attracting 25-35s significantly builds brand now — not 5-10 years from now — share that with us as well.

    The fact is neither of those assertions can be proven, and the weight of research & analysis says neither is so. Facts vs. assumptions, Joe.

    And you STILL haven’t explained: What do you mean by “capture rate” and “conversion”. Would you please define the terms?

    I’m glad you don’t take this personally. I don’t mean it personally. But the issue is important, and should be vigorously examined.

    If someone is not a fan of mine, as you say you aren’t an advocate of social media, but then makes claims about my effectiveness similar to those you’ve made about social media here, I’m a lucky guy.

    Hope to hear from you soon

    Greg Brumley
    mail@brumleygroup.com

  11. Steve
    The lesser of the Hall Halls becomes a Muslim meat market to supply the Islamic students who recently relocated from Manhattan. Because they will never drink it, the bottle of Hall is acclaimed to be the single greatest bottle of wine ever, assumes the special mantle of awed worship due the unattainable, and is duly blessed, becoming the Halal Hall Hall Hall Hall Hall Hall Hall Hall. Does “halal” count as two Halls? bunt

  12. Bunt marker: Hall-aleujah!

  13. Joe-

    My 1-2 hrs a day deceiving because of my devout following that follows me to whatever product I hawk? WTF are you talking about?

    90% of my original, pre-MG following did not follow me to MG- At ALL. They wanted no part of it. At MG I had to build a new community- and work hard at it. Did this do anything for the MG brand? Besides helping reach more than 14million people (post hire date) and help increase sales 100% + overall, and 70% direct to consumer? No, I guess it did nothing.

    I’ve had to work extremely hard again with my new employer– The MG audience is not my new audience, it is a lot closer to my pre-MG audience.

    I’ve never claimed expertise in anything- just that I work my butt off to build relationships, create content, and to interact. Do I have years of experience doing that? Yep. Does that make somethings easier? Sure- I’m an active member of a dynamic community. This is something that can only come from activity, time, and trust- All the SEO in the world won’t help anyone here, and wineries will not have a shortcut around this.

    As said above- We have zero budget for marketing, optimization, or even a decent website- but we are using social media to successfully grow our business. We have to.

  14. Hardy – Joe, and whoever else: EVERYBODY has to work their tail off, including me. Nothing is handed to anyone on a silver platter.

  15. Steve- exactly. But w/ Soc. Med people expect it to lighten their load, to silver bullet, and to bring miracles. It can build your business, but you’ll work harder than ever.

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