Friday, April 4, 2008

Marketing 101

Of all the classes I took in business school, I think I did the worst in Marketing. Still, my first reaction when I saw the above ad was, "Wow! That is really stupid!" Absolut vodka is famous for their print ads, and this is part of their "In An Absolut World" campaign.

The ad was produced by a local advertising agency in Mexico. V&S is a large global company with almost US$1.7 billion in sales in 2007 so it's pretty amazing that such an ad was actually produced and published. I can't believe that no one--either in Sweden or in the U.S.--raised a red flag. Illegal immigration is a huge issue here, especially in states bordering Mexico. Fringe groups have pushed for the "return" of land that Mexico lost to the U.S. during the Mexican-American War. The ad shows the border of Mexico before the war.

Anyway, back to marketing. V&S sells a lot of vodka under the Absolut brand, about 11 million 9-liter cases in 2007 (from annual report) or ~US$1 billion. By far the largest market was the U.S. at ~50%. The second largest market is Canada at ~4% and Mexico accounts for ~3%. The whole point of advertising is to gain market share. How much additional revenue did V&S expect to get in Mexico versus potential losses from pissing off customers in the U.S.? Stupid.

V&S published a response on their blog. Judging from the ~500 comments, it's not helping. The government of Sweden just sold V&S to Pernod Ricard for ~$9B, pretty expensive at ~6x 2007 revenues (BRCM market cap is ~3x). It will be interesting to see if anyone (Ms. Eriksson?) loses their job over this fiasco.
In an ABSOLUT World according to Mexico
Posted Friday, April 04, 2008, 5:26:34 PM

The In An Absolut World advertising campaign invites consumers to visualize a world that appeals to them -- one they feel may be more idealized or one that may be a bit "fantastic." As such, the campaign will elicit varying opinions and points of view. We have a variety of executions running in countries worldwide, and each is germane to that country and that population.

This particular ad, which ran in Mexico, was based upon historical perspectives and was created with a Mexican sensibility. In no way was this meant to offend or disparage, nor does it advocate an altering of borders, nor does it lend support to any anti-American sentiment, nor does it reflect immigration issues. Instead, it hearkens to a time which the population of Mexico may feel was more ideal.

As a global company, we recognize that people in different parts of the world may lend different perspectives or interpret our ads in a different way than was intended in that market. Obviously, this ad was run in Mexico, and not the US -- that ad might have been very different.

By Paula Eriksson, VP Corporate Communications, V&S Absolut Spirits

Heh, the ad may have violated their own responsible marketing guidelines. They didn't think this ad was political?!
V&S marketing activities shall not:
• blah blah blah...
• be used in any political, religious or pornographic context.

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