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Online peer reviews do sell things…up to a point

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Here’s an interesting report, from our very own University of California at Berkeley, as reported in the San Francisco Business Times: “[G]ood online reviews on Yelp do indeed bring in more customers.” Specifically, “a half star rating increase (1 to 5 scale) meant a 19 percent greater likelihood that a restaurant’s seats would fill up during peak hours.”

The researchers did not have an explanation for this phenomenon (which actually has some important limits, which I’ll get to in a minute), but I do. Now, I’m one of those people who likes and depends on restaurant reviews. We have a ton of restaurants here in the San Francisco-Oakland-Berkeley area, of all types, at all price levels, from just about every ethnicity in the world. So it can be confusing and intimidating to decide on a new place to eat. Under the circumstances, I’ll often turn to two sources for recommendations: Yelp, and the San Francisco Chronicle’s great restaurant reviewer, Michael Bauer. A bunch of great Yelp reviews is enough to persuade me to try someplace out, while a single Bauer “must eat there” does the same thing.

I think that’s the reason why Yelp reviews work: people, like me, believe in peer recommendations (such as Yelp’s) and also in expert reccos (such as Michael Bauer’s). Of course, just 1 or 2 glowing peer reccos for a particular place won’t work for me (or anyone else, I should think), because they could always be from the owner’s cousin and mother. And 1 or 2 glowing reviews won’t do it at all, if they’re negated by 6 or 7 “worst experience of my life,” “would never go back there,” “AVOID AT ALL COSTS!”

But one great Michael Bauer review will send me to the joint. I guess, to my way of thinking, there is an emerging parity between expert reviews, on the one hand, and peer reviews, on the other, but that parity only works if the peer reviews (such as Yelp’s) are overwhelmingly positive. So Michael Bauer isn’t going to have to look for a new job anytime soon. When it comes to food, people still depend on restaurant critics. (At least, in a foodie town like Ess Eff.)

I mentioned above that the U.C. Berkeley study had important limits:

(1) “For restaurants with Michelin stars, for example, the Yelp reviews were irrelevant.”

(2) “Restaurants that were rated in popular guidebooks or newspaper rankings got less of a Yelp bump. They ‘did not see a statistically significant effect from the Yelp rankings,’ the economists said.”

Let’s take (2) first. This just confirms my own reasoning: I’ll take Michael Bauer over Yelp 95% of the time. Even if there were positive Yelp reviews, one critical Bauer review canceled them out. Call me old-fashioned, but I still believe experience counts over simple enthusiasm (such as the type you see on Yelp and, for that matter, on “Check, Please!).

As for (1), my hunch is that the kind of people who review restaurants on Yelp probably don’t frequent Michelin restaurants. Why not? They’re too expensive; the people who eat at French Laundry, Coi and Benu are not likely to post their experiences on Yelp, and the people who are considering eating at French Laundry, Coi and Benu are not turning to Yelp for advice.

You just knew I was going to make a connection to wine reviewing, didn’t you? Well, I am, and here it is: Inexpensive wines are more likely to see spikes in sales from online social media sources, such as blogs and Twitter. Expensive wines are not, because the kind of people who can afford them don’t blog or tweet, and if someone has enough money to buy, say, Shafer Hillside Select ($230 for the just released 2008), they couldn’t care less what some blogger has to say.

However, that well-heeled person considering buying the Shafer does care what  the Michael Bauer-equivalent of the wine critic has to say about it. I’m not saying who that equivalent is (wouldn’t be prudent, not opening that can of worms), but I’m reviewing the ‘08 Hillside Select tomorrow, and if I give it a good score, I wouldn’t be surprised if it has an impact on demand.


As social media migrates towards images and away from words, what are the implications for wineries?

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We’ve all seen how the rise of photo sharing sites such as Instagram and Pinterest are the breakouts for 2012. I first noticed it earlier this year, when some of my young hip friends here in Oaktown, who really hadn’t been into social media very much (in fact, they took a disdainful attitude toward it, because everyone was doing it), fell hard and fast for photo sharing.

You always could put pictures up on Facebook and then of course YouTube’s been around for a while. But the visual aspect of Facebook seemed secondary to the written content, at least at first. People seemed to use it more for comments. But Facebook seems like it’s trending more toward images. Maybe it’s because, as time passes and Facebook users get more and more “friends,” it’s harder to keep up with a constantly shifting feed, so that we’re more likely, when scrolling through, to stop at an interesting photo than to actually read everybody’s posts (not to mention everyone else’s comments on the posts!).

And now we have Instagram and Pinterest. They seem to represent social media’s next frontier, which means, of course, that businesses (and the consultants who advise them) are eager to exploit the phenomenon. What does this shift toward the visual mean for companies, including wineries?

Well, if your company is selling something with visual appeal (designer fashions, handbags, wallpaper, hotels), it means you can advertise on a potentially huge scale for virtually no cost. That’s the point this article, from Fast Company, makes. “[A] picture really is worth a thousand words,” it says, pointing out that, “as humans became more pressed for time and content became more infinite…we are even skipping words altogether and moving towards more visual communication.”

I suppose that’s true, but we have to define the difference between humans casually interfacing through social media (including photo sharing sites), and the much more complex relationship between buyers and sellers. In the former, two people (who may or may not actually know each other) “share” an experience momentarily. For example, I may put up a cute photo of Gus. That’s usually bound to generate a bunch of “likes” and even a couple “Awww” comments. Nobody is going to take more than 5 seconds on a picture of Gus, though; they’re onto the next thing, and they don’t expect me to reply to their “like” or their comment. That’s the casual side of photo sharing.

But the buyer-seller relationship is vastly different. The seller isn’t simply putting something online casually, on the spur of the moment, because he thinks it’s interesting or cute or noteworthy. The seller is advertising, and his motive is to interest the buyer to reply, either by making a purchase at that time, or by remembering the brand, in the hope that the buyer will make a purchase at a later date.

In this, images can be powerful. If I’m looking for shoes, a hotel to stay at for my vacation, locally made bluejeans–anything at all that has a visual aspect to it–a picture really is worth 1,000 words. In fact I wouldn’t dream of making a hotel reservation without first checking pictures of the rooms, the restaurant, the beach. If they don’t have good pictures, they’re not getting my business.

Wineries, on the other hand, are not selling things with a visual component. Yes, the appearance of the bottle and label are important, and wineries are well advised to pay attention to them (most, in fact, do). But I don’t believe consumers are going to buy a bottle of wine based on the bottle’s appearance. So if we’re now “skipping words altogether,” then how can a winery possibly communicate its message? Consumers want information that can’t be provided in a photo: the cost, some knowledge of the wine’s back-story, its ownership, where the grapes are from, what kinds of foods does it go with, what does it taste like? In this, wine is data-driven, not image-driven. Consumers need information beyond what a photo, no matter how beautiful, can provide.

What they need, in order to close the deal, is assurance.

-  that particular wine will improve their lives
- that particular wine will please and delight them and the people with whom they share it
- that particular wine has been approved by trustworthy people who have already had it and loved it

Without these forms of assurance, consumers are far less likely to buy things, especially something discretionary like a bottle of wine.

The end result is that, while it can’t hurt for wineries to jump on the photo sharing train, I don’t think this new shift to the visual is any more of a game changer for wineries than blogs, Twitter or Facebook have been. If the objective is sharing that leads to viral marketing, we have to face the fact that social media so far has been a disappointment for the wine industry. While there have been exceptions (Rodney Strong’s Rockaway project, A Really Goode Job), they’ve been transient in their effects. The wine industry has yet to find the killer app for social media. Let the search continue. And, please don’t call me a social media hater just because I point out the obvious!


Can expensive California wines sell themselves to a new generation of wine lovers?

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That was the issue raised in the North Bay Business Journal, which interviewed Jayson Pahlmeyer, from the eponymous winery, and his company president, Brian Hilliard.

Brian cut to the heart of the issue with this statement: “A long-standing stalwart for Napa wineries have [sic] been baby boomers, and now we’re trying to jump on the Millennial bandwagon. It’s not easy.”

He can say that again. To be frank, there are many top Napa wineries (and a few elsewhere) who have done a lousy job marketing themselves to the future, which starts now. For most of them, the story is the same: they made it bigtime in the 70s, 80s or 90s, found themselves on allocation and in high demand, and thought that things would always be that way.

How wrong they were. Things are never “always that way.” Nothing stays the same; all, as Heraclitus observed, is flux, especially in a fashion market like the wine industry where, to quote Heidi Klum, “One day you’re in, and the next day you’re out.” And given the Great Recession, it couldn’t be more wrong-headed to assume that these expensive wines would just “sell themselves” the way they always did.

Whether this is an example of poor marketing, hubris or both, it’s hard to tell. Probably both. Pahlmeyer hit it big after their 1991 Chardonnay played a starring role in Disclosure, the 1994 blockbuster movie with Michael Douglas and Demi Moore. I’m not saying Pahlmeyer wasn’t making wines worthy of their fame; they were. But so were a lot of other people, at that time and now. That doesn’t mean they’ll still be around in 20 years.

I think these wineries made and still are making the fundamental mistake of looking at Bordeaux and figuring that, Hey, Chateau “X” has been around for 250 years and they’re doing just fine, so why can’t we do the same? The reason why not is simple: When Chateau “X” got famous and captured its audience (probably in Britain, the Low Countries and Scandinavia, as well as in France), there was no competition. Nobody else was making the kinds of wines Bordeaux was, and that’s what everyone was drinking.

Well, lots of countries are making Cabernet Sauvignon now, as well as a hundred other varieties. Hilliard hit the nail on the head when he said, “Millennials are the future for us, and we need to figure opportunities to penetrate that.” The question is, How? Hilliard played his cards close to his vest. “There are a number ways addressing Millennials [but] we can’t divulge information this point.” I can’t imagine why not. There are no proprietary secrets on getting through to Millennials or anyone else. Everybody knows, in principle, what to do. Hilliard mentioned “the blogosphere” as one path–not exactly breaking news–without elaborating. Jayson mentioned his daughter who is now communications director; she is “moving up through ranks and appeals to the newer generation.” Fine, but exactly how does that ensure that Millennials will buy Pahlmeyer wine?

Not to pick on Pahlmeyer; at least, Jayson and Hilliard are asking the right questions. Unfortunately, I don’t see a lot of “cult” Napa wineries even asking the right questions! They believe they’re on generational missions, but they just might find that this current Millennial generation (not to mention the one that comes after it) doesn’t give a hoot about their wines.


Can YouTube commercials be credible?

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Mr. Deep (as I call him, because he calls me Mr. Steve), the young (21) guy who works at my local UPS Store, is a YouTube junky. Everytime I go in there, he’s grinning about some video he found, or that one of his friends sent him. Most recently, it was of an Indian (subcontinent) guy standing on top of a train who grasped an overhead electrical wire and then went up in a flash and a puff of smoke, falling onto the platform below, quite dead. It was shocking, but illustrates the fact that Deep and his friends’ favorite pastime is surfing YouTube, then sharing the things they find cool with each other.

YouTube’s popularity with Deep’s generation surprised me. So it wasn’t all that shocking to hear, over the weekend, that “YouTube, the Google-owned video sharing website, has become a major platform around the world for news,” as an online publication reports on a Pew Research Centre study. Of course, we all knew that breaking events can go viral on YouTube, especially when they have a dramatic visual component: the Japan tsunami, the uprising in Tahrir Square. But there apparently are tens, maybe hundreds of millions of Deeps around the world who don’t read newspapers or watch news on T.V. or listen to news on the radio or get news in any of the traditional ways. (I asked Deep if he and his friends have any news sources, and he said no, “because it’s all made up.”) Instead, they surf YouTube. Did you know that according to Pew, YouTube “is now the third most visited destination online, behind only Google, which owns YouTube, and Facebook.”

That fact hasn’t evaded the attention of people interested in knowing what eyeballs are looking at these days. When eyeballs (or, rather, ear drums) started listening to radio, advertising dollars flowed there. When eyeballs looked at magazines and newspapers, ad dollars flowed there. When eyeballs turned to T.V., ad dollars poured in, in unprecedented amounts. Now, eyeballs are looking online. We know (those of us who follow this stuff) that the challenge for online content providers has been to figure out how to lure those ad dollars to their sites. In this, they’ve been less than successful.

However, the existence of people like Deep proves that there’s value on Youtube beyond generating revenue–namely, branding. Kerrin Sheldon, founder of a site called Humanity.TV, has written an interesting article for fastcompany.com, in which his two salient points are, (1) “online video will soon dominate your time spent on the web,” and (2) “the next 5-10 years will be huge for video marketing online.” He argues that marketers should help their clients master the art of posting videos (which is not terribly difficult, as the technology gets easier to use), instead of relying on the written aspects of twitter, Facebook and blogs. (One picture, as always, is worth a thousand words.) The hope of marketers, of course, is that a video will go viral, launching the product or service to overnight stardom.

But will it? Mr. Deep and his friends enjoy finding videos that were not “produced”, but those where the “videographers” just randomly stumbled across cool stuff on their iPhones or whatever. Can Deep, who doesn’t trust anything corporate, be persuaded to like a produced advertisement? That would entail him overcoming his resistance to being manipulated. (Of course, he would have to know that the video was produced.) It may never be possible for a produced video ever to attain the level of surprise, amazement and delight achieved by a truly accidental great video, which calls this whole issue of YouTube marketing into question.


What goes around, comes around

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It used to be, following the Repeal of Prohibition, that Americans favored inexpensive sweet wine by a large margin (further proof that Prohibition had an aberrational effect on the county’s wine drinking habits). In my Wines & Vines 1943-1944 Yearbook of the Wine Industry are endless ads for stuff like Roma California Sauternes, Petri California Sauterne [without the “s”], Guasti Pale Dry Sherry (I bet it wasn’t dry), Gianni’s California Port and an array of Vermouths and brandies.

It wasn’t until sometime in the 1970s, I believe (maybe someone will fact check this for me) that a taste for dry wines overtook that for sweet ones among consumers. This was generally hailed as a turning point in the history of California wine: at last, producers could get serious about European-style table wines, since the market apparently would reward their efforts. That’s exactly what happened. We saw the explosion of the “boutique winery” movement in the Sixties and Seventies, the Judgment of Paris, and the glorious birth of our modern wine indsutry.

“Good riddance,” said most educated people to the inexpensive sweet wines, which by the 1980s were seen as an embarrassment–fit for Skid Row bums and, perhaps, for college rowdies who, it was hoped, would soon outgrow their fondness (one could hardly call it “love”) for sweet booze.

So what are we to make of this report, which suggests that two of the five fastest growing wine brands in the U.S. are sweet?

Those would be Apothic (which I haven’t had, but is described on the Internet by a reviewer as “jammy, sticky-luscious,” and Daily’s, which are alcoholized fruit wines.

(The other three hot brands are Cupcake, which offers good varietal wines at affordable prices, La Marca, a sparkling Prosecco, and William Hill, from right here in the Napa Valley.)

The article doesn’t say exactly who’s buying these sweet wines, but my guess would be younger people, women and those newly arrived to our shores–not necessarily in that order.

Incidentally, three of the five fastest selling brands belong to E&J Gallo, proving once again that, when it comes to marketing, this venerable wine company wrote the book. (I’m especially impressed by William Hill’s success. Those wines are not cheap, and face mountains of competition from other California brands.) The Gallos have forgotten more about selling wine than most everybody else put together knows. Other wine companies, even big ones, come and go, get bought and sold, see their stock prices rise and fall, report huge losses or modest profits, and face generally cloudy futures. Gallo goes on and on, a survivor, riding the waves of the economy like the man on the flying trapeze, seeming to do it all with the greatest of ease. If this sounds like a paeon of praise, it is.


Pandering or just marketing? Wines aimed at women tread a fine line

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The subject of wines whose marketing campaigns seek to target them to women has been much in the news lately. In this piece, nicely written by Bloomberg’s Elin McCoy, she hits the nail on the head with the requisite amount of barely concealed outrage appropriate for a 21st century woman with a healthy amount of self-respect and a keen eye to penetrating the cynicism that midwifed the birth of these brands.

In this column by the Wall Street Journal’s resident guru, Lettie Teague takes a more restrained approach, as to be expected given the constraint’s of her paper’s editorial style. She doesn’t exactly come out and say she finds the whole womanist thing contemptible, instead crafting her piece in terms of the comparative merits of mens’ and womens’ palates. But various phrases she uses, including calling such wines “a veritable ocean of plonk…produced with the sole purpose of appealing to the supposedly superior female palate,” gives us a glimpse into the answer to the question, What does Ms. Teague really think?

Ms. Teague and Ms. McCoy are, as mentioned, both women. But how does a male view the wine-to-women targeting? In The New York Times, correspondant Austin Considine, in this Grey Lady-esque piece of stylebook journalism (which means finding people on both sides of the fence to quote), calls the wines in question “cheap, cheery wines appealing to conventional notions of contemporary women, à la Carrie Bradshaw,” although he does concede that women’s wines are “enjoying something of a pop culture moment” given, especially, Cupcake’s success.

Six years ago or so, the venerable Wine Institute, headquartered in San Francisco, first took note of the phenomenon, noting that  “A greater marketing awareness toward women consumers is emerging as a trend in the 21st century.” However, this was before the onslaught of silly and often patronizing names that has hit store shelves lately. The Wine Institute welcomed the trend, calling it only rational given that women “purchase 57 percent of the wine consumed in the United States.” Wine Institute also pointed out that “women are less influenced by wine ratings…Although the wine quality is important to women, so are the label design, the bottle shape and the philosophy of the winery.” That put things on a lofty intellectual plane. I particularly like “the philosophy of the winery” as being an integral part of a woman’s decision to buy a bottle of wine. That assumes that the woman in question would be able to infer that philosophy (if indeed one existed) through visual cues picked up from the label. And perhaps many women did select wines that purported to donate a portion of their profits to charity, or were eco-friendly.

Well, what would be the philosophy of a wine called “Cupcake”? Or for that matter of wines called “Girl’s Night Out,” “Middle Sister,” “MommyJuice,” “Flirt,” “Skinnygirl” or the inimitable “Bitch”?

I think we have to realize that a lot has changed in the last six years. Wines that might have targeted women buyers as smart and progressive now seem to be appealing to what the marketers see as every woman’s inner Barbie Doll. Maybe I, as a man, simply can’t understand. But I suspect there are millions more women who wouldn’t touch these wines, under any circumstances, than who would. They know when they’re being pandered to, and they don’t like it.


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