Last Wednesday’s public meeting of the Napa County Planning Commission, as reported by the Napa Valley Register, sounds like a typical exercise in broad-based bureaucratic eye-glazing bureaucracy.
Everyone got to say his two cents, and the rest of the audience had to sit through it and listen, no matter how rambling or opaque the remarks were. That is the essence, and the curse, of participatory democracy.
The main topic, so far as I could discern it, was the impact of growing winery infrastructure on traffic. This is a perennial concern in Napa Valley and a legitimate one. If you’ve driven Highway 29 lately, you know how awful it can be. Gridlock, sometimes stretching from north of St. Helena all the way through American Canyon down to the 101 Freeway, is the norm. It’s why I advise visiting tourists to avoid Napa and stick to Sonoma County. No fun sitting in your car inhaling gas fumes.
I don’t know what the answer to the traffic is, but I don’t think it involves social media. And yet, there at the meeting was the ubiquitous Paul Mabray, singing the social media halleleujah chorus to a roomful of voters and county officials who must have wondered just who he was, and why he was there, lecturing them about “digital human beings” and the mean number of times per day the average winery posts on Twitter (2.2 times a day, in case you’re wondering), when what they were there to talk about was traffic.
I mean, social media is very glorious and wonderful, and we all are grateful it exists and can hardly remember what life was like before it did. But social media has not yet turned into a deus ex machina–a miraculous intervention that solves all problems, like those quack nostrum peddlers used to claim when they sold horse linament to naïve uneducated people looking for a cure for their cancers, arthritis and venereal diseases.
I cannot, by any stretch of the imagination, see the relevance of “engag[ing] potential customers on social media networks” to local traffic conditions, unless Paul was trying to make the point that the more people who are buying wine online, the fewer people will be actually visiting Napa Valley. But I don’t think that was his point. And even if it was, it was effectively rebutted by vintner Michael Honig, who stated the obvious truth that “People…come and see our valley. They…see our barrels. They…kick the dirt.” That’s how you get a lifetime customer, not through tweeting 80 times a day.
Once Paul had his say, it seems that things got back to the topic at hand. The problem of traffic is insoluble, short of draconian steps that wineries would oppose, tourists would hate and would probably be doomed to fail at any rate. (Back during the gas shortages of the 1970s, you could only fill up on certain days of the week, depending on the numbers on your license plate. Maybe they could drop a similar dictat on touring Napa.)
My own feeling for traffic in Napa is to widen Highway 29. Make it four lanes instead of two–and put a detour around St. Helena, or perhaps a bridge over it, so you don’t have to drive through it. If four lanes is too much, make it three lanes, and have the directions change the way they used to at the Caldecott Tunnel before there were four bores: Two westbound lanes, one eastbound for morning commute, then switch it for the evening rush.
Of course, an elevated freeway over Highway 29, with on- and off-ramps for the townships, is the ideal solution. But it’s probably too expensive, and I’m sure the enviros would object. They’re against everything that makes our lives more efficient.
The traditional firewall between editorial and advertising–a staple ethical and practical tenet of publishing for at least a century–is being breached, and Ground Zero for this incursion is online.
This leakage never, or only extremely rarely, would have happened in traditional print media, where the guardians of the firewall, including editorial staff but also ombudsmen and even publishers with a sense of moral rectitude, would not have permitted it.
However, online, the traditional rules are being dissolved. Experiments are taking place: website owners and online publications are seeing how much they can get away with (in breaching the firewall) before critical blowback goes nuclear.
But the question is, will it? Do the people accessing the digital world and getting the majority of their information from their smart phones and tablets–mainly younger people–know, or care, who writes the content they read? As long as they’re getting [free] information they find useful and/or entertaining, are they fussy whom it comes from?
All indications are that the answer is no.
Will this integration of editoriai and advertising become the new reality? Have we reached that point on the slippery slope where the only way forward is down?
These questions need to be asked.
Experts in the field–usually consultants selling their services–suggest a win-win: content that helps readers and viewers, but that also fulfills advertisers’ needs. Sounds good, but can this win-win actually be achieved? If it can, then why did generations of publishers and journalists labor so long and hard to create the firewall to begin with? Was their concern simply an unjustified fear that “truth” (that elusive quality) would be compromised by the profit motive of advertisers? Did they simply suffer from a phobia, like fear of flying, that had no basis in reality? Or did they know something that we’re in danger of forgetting?
I can’t answer these questions. But what concerns me–and should concern all writers who wish to make a living through journalism–is that the very nature and substance of journalism, as the West has understood it for 400 years, is under dire threat. It may be that what is in the best interests of consumers and providers of digital content is actually a death sentence for writers, who may be the gas lamp lighters and ice delivery truck drivers of the 21st century–anachronized out of existence. In fact, we already see this occurring now, with “customized content” delivered to your inbox by software whose creators or users have proprietary, for-profit relationships with advertisers whose “articles” are thinly disguised pitches that don’t even bear the warning “advertorial” label. (If Facebook knows that you’re into fly fishing, you may find yourself getting articles that look interesting but whose purpose is not only to inform, but to lure you to sponsoring resorts or fishing equipment.)
This revolution is happening faster than any layperson can possibly suspect. I mention all this not to point fingers, or to put things into blunt black-and-white terms when, in reality, things are more complicated. But we are entering a world in which discerning consumers of information must ask themselves a few questions:
1. Where is this information coming from?
2. Who wrote it?
3. Why is it being sent to me?
4. What was the motive of the person or organization who is sending it to me?
5. Has there been an attempt to influence my behavior?
6. Has this attempt been camouflaged in such a way as to suggest that the sender is not being transparent?
Informed consumers will demand these answers. There’s some evidence that this demand for greater transparency already is occurring (e.g. the fears of government intrusion into our phone and online conversations; the resistence to Facebook ads popping up in our feeds). However there may be considerably more evidence that, in the end, consumers, and especially young ones, don’t give a damn.
What this means for the world of wine writing is clear and ominous. Readers need to understand whether they’re getting untrammeled information and opinion from reputable, reliable sources they know and trust. Or, they need to understand if those sources are picking and choosing the information they offer based on payment. It’s that simple.
My social media friends who think I hate the stuff will only receive confirmation of that misconception from today’s post. But really, this is something they have to think about.
Yesterday’s San Francisco Chronicle reported that there’s been a sharp falloff in venture capital funding for social media companies, which received “only 2 percent of the venture capital headed to Internet enterprises last quarter.”
That was down sharply from the 6 percent (at least) of all venture funding social media companies received in each of the quarters in 2010-2012, with the peak occurring in the third quarter of 2011, when Twitter launched.
Here’s the interpretation from a tech investment guy quoted in the article: “We are certainly in another bubble.” In fact, the article’s reporter, who writes for Bloomberg, compares this slowdown with “the deflating of the Internet bubble of the late 1990s” which led to the dot-com collapse.
No one is saying this defunding of social “bleedia” is going to result in a stock market crash. But it does seem to me that it represents a turning point in the evolution of social media: the moment when the investment community realized that social media–big and important as it is–isn’t as big, and won’t be as big, as some people had hoped.
Where the smart money now is going is to business intelligence, analytics and performance management, advertising, sales and marketing, and anything to do with the cloud.
Having said all this, it’s important to point out that the drop-off in social media funding applies only to new startup companies. It may simply be that the social media field is now mature, stocked with existing companies, leaving no room for new ones. But if use of social media was continuing to skyrocket as it did in 2008-2012, you’d think there would be continuing opportunities for savvy young entrepreneurs to enter the field. But apparently, that’s not what investors think.
It’s true that use of Twitter and of Facebook continues to rise. But both of these companies face revenue and earnings issues, and it’s not clear that they’ll be able to increase income without resorting to some kind of premium service that will turn off millions of current users (as YouTube is experiencing right now), or without getting deeper into advertising, which also is not without problems: Facebook, at the very least, is seriously annoying people with these new popup ads that appear in our feeds, and it’s not clear to me how much more users will take before they revolt.
You would think that these existing problems and challenges confronting Facebook, Twitter and YouTube would encourage young entrepreneurs to come up with alternatives. But I think the venture capitalists have realized that these revenue and earnings problems are endemic to the Internet, and not specific weaknesses of individual companies. Any social media startup will face the same problems.
Which gets us back to where I started: the problems inherent in the social media model seem unsolvable, at least by any means that are now apparent, even to Silicon Valley’s top angel investors. Social media companies can’t figure out reliable ways to earn profits because end users can’t figure out reliable ways to use social media to make money. The great investment bleedia is a clear sign that social media has hit its first significant speed bump, forcing it to slow down.
What’s the killer social media app for a winery?
I can remember back in the early 1990s when the Internet, or the World Wide Web as most of us called it, was so new that nobody knew precisely what it could be used for. The search was on for “the killer app,” the thing that everybody would want to do, which would therefore earn its users a great deal of money.
As it turned out, some young guys, like Sergei Brim and Larry Page, realized that a search function–the ability to find anything amidst the vast (and growing vaster) hoard of information–was the classic example of a killer app: they created Google and got rich. A little while later, Mark Zuckerberg realized that social networking was the most natural thing in the world for a World Wide Web to do. He created Facebook and also got rich.
(A lot of porn site entrepreneurs also got rich. Enough said about that.)
So those were at least three things the Internet could do (aside from obvious B2B functions that are boring but crucial to companies, not to mention email). The question of the last 5 or 6 years has been, what is the killer app on the Internet for small businesses, and particularly for small wineries–the thing that will help them make money?
I’m not prepared to say, because I don’t know; but yesterday I asked my Facebook friends how they use social media at their wineries, and the overwhelming response was typified by this: “As a tool, FB, Twitter, Pintrest, WEM , are all wonderful ways to connect to your clientele” and this: “I rarely use FB/Twitter for promo and sales. Mostly just to reinforce the simple ‘voice’ of [the winery] and stay in front of my ‘likers’.”
In other words, communication. Several people warned that, as soon as the winery is perceived as trying to sell stuff, it turns friends and followers off. This remains the irony and contradiction within social media.
Central Coast Wrap-up
The Central Coast wine industry seems to be booming, according to this report from the Pacific Coast Business Times. Indeed, you can feel this buzz everywhere you go in wine country. Such a contrast to a few years ago, when a gloomy atmosphere pervaded. I’ll be heading down to Santa Barbara next week for the Chardonnay Symposium, and am stoked by the thought of seeing all the winemakers and tasting their wines.
Blind tasting the cults
Interesting article by my old editor and colleague, Jim Gordon, in Wines & Vines, where he writes of an event at the Culinary Institute of America in which winemakers tasted each other’s wines blind, something they “rarely” get to do.
Winemakers really should do it more often. In fact, they should do it all the time. I know certain cult winemakers who’ve never tasted their own wines blind, much less tasted them against competitors. They might be surprised to find less expensive wines out-performing their own–according to their own palates! But then, that potential danger in blind tasting is probably why more winemakers don’t do it. And anyhow, when it comes to sales, it’s about image as much as it’s about quality. Along these lines, yesterday my sister emailed to ask why some bottles of wine are so heavy. She wanted to know if they cost more than lighter bottles, and, if so, how do the wineries make up for the difference? I explained to her, of course, that some wineries package their wines in heavy bottles in order to make the consumer think the wines are more important. This works very well, and the consumer is willing to pay more for a heavy bottle than for a light one. My sister was surprised, but she needn’t have been. P.T. Barnum spelled this out more than a century ago in his famous dictum about suckers.
(This post was inspired by a “Viticulture Brief” that appeared in the Santa Rosa Press Democrat yesterday.)
My blog is just over five years old now, and what a crazy five years it’s been. In 2008 the wineries-and-social media arena was like the Wild West, filled with danger, opportunity, chaos, confusion, rattlesnakes and gunslingers. It was a bold proprietor who dared to jump in. Most held back, unsure of what to do, not wanting to make blunders. Like good businessmen, they preferred to let others blaze a path into terra incognita they could then follow.
Now it’s 2013. It would be sweet to say that the formula’s been figured out, but unfortunately, it hasn’t. There still is no template for wineries to trek the social media landscape–although social media consultants claim otherwise!
So what do we know now that we didn’t know in 2008?
In a way, nothing. The only difference is that what we knew then was obscure. Today, the outlines are clearer. We know for sure that direct-to-consumer (DTC) is just as important as we thought it was, and even more so for small wineries who find it hard to get distributed post-Recession. Whether it’s through a tasting room or a wine club, DTC remains the lifeline by which the family winery avoids being cast adrift and drowning.
We know, however, that DTC doesn’t happen all by itself but must be developed. There are several elements to this. One is for the consumer who’s Googling her way through the world wide web to come across your winery’s website. And not just come across it as, for instance, being #37 on a search result, but being one of the first hits, and having a provocative headline that will prompt the searcher to click on it.
For example, I just Googled “best Napa Valley Cabernet” and two of the first three hits are from me. (Yes, I was surprised, but not entirely.) Number one is an article I wrote for Wine Enthusiast, number two is Schrader’s website, and number three is a post from my blog.
Finding myself with such high visibility on such an important search topic is gratifying, of course; but the question for wineries is how they can do it. Schrader did; so did Robert Mondavi and Napa Cellars, albeit on page 2, and by the time we come to page 3, nobody’s reading anymore. This tells me that Napa Valley wineries are not doing a good job at search engine optimization.
Let’s suppose they were, through the usual tricks: Google+, key word use, extensive hyperlinks as well as linking all of your online presences to each other, and so on. But a key to landing in a top search result is frequency of online publishing. You can’t update your blog or website once a month and expect anyone to find it. It’s got to be everyday. That’s why people come back to steveheimoff.com Monday through Friday. They know they’ll always find something new (and not just some rehashed reviews).
This raises the issue of loyalty. Ask a brand manager what’s the best thing a brand can have and she’ll tell you customer loyalty. You can’t buy it (although it often money to establish). You can’t force the consumer to be loyal or do it with some gimmick. There’s magic how it happens. Jordan and Silver Oak have earned customer loyalty; their examples stand as inspirations to other wineries. This blog has earned reader loyalty. My readers never feel pandered to, or spoken down to (I would hope). They don’t get the feeling I slap-dashed some fast food together for them. Instead, they get something that appeals to their intelligence–they feel engaged. Engagement: that’s the soul of social media. Don’t talk at me, talk with me, and let me talk with you. Together, we’ll have a conversation.
Admittedly, it’s easier for me to have a conversation with readers than for a wine company. A company has too many levels of management. Everyone gets a veto; creativity is stifled in favor of white bread. But people don’t want mush; they want something substantial. Give them something real to chew on, and they’ll come back. Withhold it, and all the social media consultants in the world can’t help you.
It’s interesting, in the light of this new report on the status of direct-to-consumer wine shipments in the U.S., to project the trend into the future and imagine what the American distribution system might look like in 15 or 20 years.
The report’s most startling discovery is that DTC’s dollar value last year “was greater than the total value of U.S. wine exports.” Almost as noteworthy is the fact that “The direct shipping channel continues to grow at a faster rate than the overall wine market.” DTC is said to be more important to “small and medium sized wineries” than it is to large wine companies that dominate supermarket and big box sales, presumably because the Big Boys have a lock on a distribution system that’s been consolidating in their favor for decades.
Which brings me to the crystal ball part of this tale.
Let’s imagine that it’s 2030 and, all other things being equal (the U.S. still exists, there’s no internal civil unrest to discombobulate markets), consumers are still healthy and buying wine. At the present rate of expansion of DTC, one can easily see the day coming when small and mid-sized wineries sell pretty much everything they produce direct, either through tasting rooms or through some sort of postage.
The result would be a schizoid market: Giant companies (Constellation, The Wine Group, Diageo, etc.), with their scores of individual brands, still dominate the supermarket aisles where most Americans continue to shop. At the same time, more and more consumers are getting their wine direct from the winery.
The situation is roughly analogous to what happened to traditional bookstores with respect to Amazon.com and other online sources of books. The trad bookstores found themselves confronted with a huge challenge: how to stay relevant. It was much easier for busy shoppers to buy something online and wait a few days to get their hands on it, than it was for them to actually get into their cars and drive to a mall or downtown, find parking, wait in line at the register, etc.
As similar-sounding as the situations are, though, there are important differences. Consumers don’t have to go to bookstores, but they do still have to go to the supermarket to buy their groceries, so as long as they’re there, it’s no hassle at all to swing by the wine aisle. This is good news for the big wine companies, who should continue to enjoy robust sales for decades to come.
Still, there are lessons for everyone. The big wine companies are going to have to “act small.” This means creating new brands that seem eco-friendly and appeal to individual niches in the market: young people, urbans, ethnic and racial groupings, housewives, singles, older retirees, liberals, conservatives, hipsters, etc. Although these brands may be mass-produced in the tens, if not hundreds, of thousands of cases, the consumers don’t know that. All they can see is a bottle they can relate to, and that seems to relate to them. To a great extent, the big wine companies are already doing this. They’re going to have to keep doing it, and do it better, if they want long-term dominance.
The small and medium-sized wineries have this lesson: They have to “think big.” They have to put on their businessman’s hat and come up with real marketing plans. After all, direct-to-consumer doesn’t happen all by itself, like Athena springing fully-born from Zeus’s brow. DTC has to be planned, created, executed and followed through; and once you have a loyal customer base, you have to keep it and make sure the competition doesn’t poach it away.
This is where communicating with the customer comes in. If a small winery has a tasting room on, say, Highway 49, in Gold Country, and is selling 90% of their wines “through the screen door,” they’re very lucky. But most wineries aren’t in that position. They may sell 30% in the tasting room, but the rest has to be cultivated, through clubs and the like. This is where social media comes in. Consumers like to feel connected to the producers of goods and services they buy, especially when the product is something as mental as wine. (“Mental”? Yes. There’s nothing emotional about buying a screwdriver. But there is something emotional about buying clothes, a car, wine. Think about it.) I’ve long said that wineries can’t put all their eggs in the social media basket, but they should put at least one or two and, depending how it goes, maybe even three or four.