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by Pierre Costa, Damien Wilson and Liz Thach, Sonoma State University & SommDigital

Expert Editorial

Ecommerce is booming in most consumer retail industries, with nearly 80% of US consumers now shopping online, according to Pew Research. This has caused the world of digital marketing to explode as major retailers rush to find ways to engage with consumers online. The wine industry is no different, with many US wineries enhancing their websites and adopting digital marketing tactics to attract consumers. So how much progress has been made?

In order to answer this question, the Wine Business Institute at Sonoma State University teamed up with SommDigital, a wine digital marketing firm located in Napa Valley, to begin crafting a scorecard to measure current digital marketing practices in the US wine industry. They conducted a national survey with winery marketing executives in the Spring of 2019, in which 257 wineries reported on their digital marketing practices. The results are illustrated in the 2019 Wine Digital Marketing Scorecard below, and show positive activity in certain areas, but less attention in others.

2019 WINE DIGITAL MARKETING SCORECARD

Digital Marketing infographic

Defining Digital Marketing

 It is useful to review the definition of digital marketing, which is much broader than most people realize. According to the Financial Times, digital marketing is the marketing of products or services using digital channels to reach consumers. These include social media marketing, search engine marketing, online advertising, and other digital tools that can take place on a variety of platforms such as mobile phone, tablet, computer, or other digital displays. It is not just another marketing channel, but a whole new way of interacting with consumers.

Social Media Most Common Tool Used by US Wineries

As illustrated on the scorecard, social media usage is the most common method that US wineries use to engage on a digital platform. Unsurprisingly, Facebook is used by almost every responding wine business. More interestingly was that Instagram (88% of respondents) was more popular than Twitter (67%) as a social media platform, despite Instagram being launched almost five years later than Twitter. Wineries also invest more heavily in advertisements on Instagram (62%) when compared to Facebook (54%) and YouTube (37%). Generating social media engagement is regarded as a very time-consuming exercise, yet wineries typically only spend 1-2 hours weekly posting and analyzing. Given that 47% of respondents have tasting rooms, even focusing just on social review sites such as Yelp and/or TripAdvisor could be a more effective investment of time.

Wineries Need to Enhance SEO

The scorecard illustrates that only 2/3 of the sample use SEO – search engine optimization, which is a crucial more structured approach to implementing digital marketing. SEO allows wineries to help their website rank higher in search results, and can be combined with SEM – search engine marketing – to drive more traffic to the site and increase sales. Of the wineries surveyed, half of these respondents have an in-house SEO manager, with 18% outsourcing the work. The fact that a third of responders do not do any SEO at all is concerning.

More Online Advertising Desirable

Online advertising also appears to be another category in which US wineries could improve. The results show that 36% of wineries do not advertise at all. Even more concerning is that those who do, spend very little, with 75% of respondents indicating they spend less than $100 per month.

Opportunity to Increase Online Video Content

Business Insider Intelligence has reported that video content will represent 82% of all web traffic by the end of 2020. Therefore, this is a great opportunity for wineries to produce more online videos, and to create their own YouTube channel. Currently only 35% of respondents have a YouTube channel.

Online Wine Sales Slowly Growing

US wineries reported that online wine sales accounted for around 5% of total sales, which is consistent with other wine industry research reports, such as the e-Performance Barometer from Kedge Business School in France. Part of the reason for the slow growth has to do with shipping regulations in the US, but this is changing and more progress is taking place each year in increased wine sales. Indeed, according to Sovos, volume increased by 9% to 6 million cases shipped in 2018 with a value of $3 billion. Also, online wine retailers such as Wine.com, Drizly, Safeway, and Raleys, report increased online wine sales in the past several years.

Next Steps – More Investment in Staff and Training

In summary, US wineries seem to be aware of the potential of digital marketing, but conservative in their transformation to it. Certain areas of the 2019 Wine Digital Marketing Scorecard show positive trends, such as social media usage, however SEO, advertising, and video content deserve more attention. It will be interesting to track changes in how US wineries adopt and use digital marketing practices over the next few years.

One key insight derived from the survey was that US wineries reported the biggest challenge in implementing digital marketing was not technology, but a lack of knowledge at 46% of the sample. This was followed by a lack of qualified staff at 42%. This suggests that in order to capitalize on the growing online opportunities to build brand equity and sales, wineries need to invest in more resources by either hiring knowledgeable staff or external sources to organize and implement an effective digital marketing strategy.

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References

Pierre CostaDamien Wilson Liz Thach

Expert Editorial

by by Pierre Costa, Damien Wilson and Liz Thach, Sonoma State University & SommDigital

 

 

Pierre Lincoln Costa ([email protected]) is the Founder of SommDigital, a firm that focuses on offering digital marketing solutions to global wineries (http://SommDigital.com). Dr. Liz Thach, MW ([email protected]) and Dr. Damien Wilson ([email protected]) are both professors at Sonoma State University’s Wine Business Institute.

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