U Not Gonna Like This

Orginally posted at ZachEverson.com:

December 2, 2003
Diamonds are for suckers: How De Beers transformed diamonds into a symbol of love
By Rita Beauregard
Guest columnist

“I’m continually amazed at the high price of diamonds, essentially rocks. So I looked into it…. Basically, ever since the late 1930s, people have been beautifully fucked by De Beers into thinking marriage = diamond.”
— David Ray Carson, a graphic designer from Minnesota

In 1938 the De Beers mining cartel signed an exclusive agreement with N.W. Ayer, an American advertising firm — and one of the most brilliant advertising and public relations campaigns was born. De Beers, N.W. Ayer, and J. Walter Thompson (an advertising and public relations firm that joined the team in the 1960s) transformed diamonds from marketable gems into symbols of love, glamour, and success — while forever linking them to courtship and married life.

The truth about diamonds

Contrary to popular opinion, diamonds can shatter, crack, discolor, and lose value. And they are not rare. In fact, diamonds have been plentiful since 1870, when huge deposits were discovered near the Orange River, in South Africa. 3 Diamonds are now mined in several African countries, as well as in Russia, Australia, and Canada. At first, De Beers controlled 90 percent of the diamond market and, by controlling supply, was able to maintain the illusion of scarcity — and keep prices high. Now De Beers controls about 66 percent of the market. The newer players have not challenged De Beers’s artificially inflated prices, however, as they benefit from them too.

The initial strategy

How did De Beers create the diamond brand? And, more importantly, how did it sustain it? De Beers controlled supply and used research-based behavior-change strategies to build demand. And it sustained demand by monitoring its business goals and objectives, as well as market trends, and adjusting its strategies accordingly.

Ayer’s initial strategy was to strengthen the association between diamonds and romance. For young men, they set out to instill the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women were encouraged to view diamonds as an integral element of courtship.

Tactics under this strategy included:

writing (or re-writing) scenes for Hollywood movies that injected diamonds into romantic relationships between men and women

giving diamonds to movie stars to use as symbols of indestructible love

placing celebrity stories and photographs in magazines and newspapers to reinforce the link between diamonds and romance

using fashion designers to talk on radio programs about the “trend towards diamonds”

asking the British royal family to foster the romantic allure of diamonds (Britain had a large interest in the diamond industry)

commissioning artists like Picasso, Dali, and Dufy to paint pictures for advertisements, conveying the idea that diamonds were unique works of art.

Within three years of the launch of the first De Beers campaign, diamond sales in the United States increased by 55 percent and an estimated 80 percent of wedding engagements in the country were consecrated with diamond rings. Looking back, Ayer noted that the campaign marked “a new form of advertising which has been widely imitated ever since. There was no direct sale to be made. There was no brand name to be impressed on the public mind. There was simply an idea — the eternal emotional value surrounding the diamond.”


Maintaining demand

Each year, De Beers and Ayer refined their approach, conducting research to explore consumer attitudes and identify psychological determinants and barriers to diamond sales. In 1947, Frances Gerety, a copywriter at Ayer, came up with “A diamond is forever” — a message that is still fresh 56 years later. “Forever” also implied that diamonds should never be sold, but rather handed down to a female descendant. This perception prevents large portions of the public from selling its diamonds, which maintains De Beers’s hold over pricing. In subsequent years, campaign tactics expanded to include:

arranging for lecturers to visit high schools across the country, reaching thousands of girls in assemblies, classes, and informal meetings with messages about diamond engagement rings

developing “Hollywood Personalities,” a weekly service that provided key newspapers with descriptions of the diamonds worn by movie stars

commissioning a series of portraits of “engaged socialites” to create prestigious role models for middle- and lower-class women.

Advertising and PR turn problems into profit

De Beers consistently used advertising and public relations to transform challenges into opportunities. For example, in the 1960s the company was overwhelmed with a huge supply of small Russian diamonds. The problem: all of its advertisements pushed rings with large solitary stones. So De Beers came up with the “eternity ring” — an equally expensive ring made up of many small diamonds — and launched a campaign based on the theme of recaptured love, targeting older, married women. The campaign was a great success.

Or take the example of “conflict diamonds,” smuggled from war-torn countries like Sierra Leone and Liberia. De Beers dealt with this issue by positioning itself as a clearinghouse for “conflict-free” diamonds. And even a “60 Minutes” report on conflict diamonds in February 2001, did not dampen consumer enthusiasm. The day after the episode aired, J. Walter Thompson conducted a survey to assess its impact on consumer attitudes toward De Beers and the diamond industry as a whole. The study revealed that the report negatively affected consumer attitudes toward De Beers, but not its diamonds: Among those surveyed, only about one-third agreed with the statement “De Beers is a reputable company.” But 70 percent agreed with the statement “De Beers is a company whose products I wouldn’t hesitate to buy.” In fact, De Beers fared better than the diamond industry as a whole — only 63 percent of respondents agreed with the statement “the diamond industry has products I wouldn’t hesitate to buy.” Joan Parker, director of the Diamond Information Center, concluded that the negative effects of the report would diminish over time.

De Beers still dominates a changing market

The diamond market is changing rapidly, but De Beers still dominates. In 2001, its ADiamondIsForever.com website got 200,000 visitors a month. Visitors spent about 20 minutes browsing the site, and most were from the target market: women, 18 to 34 years old. And although the U.S. Department of Justice has challenged De Beers’s business practices — there is an outstanding indictment against the company from a 1994 price-fixing case — it is difficult to challenge its approach to communications.