One of the biggest assets in a married couple's relationship, the tradition of a typical marriage, the diamond engagement ring, might be an emotional asset and a symbol of love and commitment, but in the financial sense of the word, it isn't actually an asset at all, or anywhere near that.
In fact, the so-called emotional asset is worth at least 50% than you paid for it the moment you left the jewellery store. And yet, we feel compelled to buy them for our loved ones anyway. It's hard to imagine that it's only been three-quarters of a century since diamonds became the symbol of wealth, power, and romance they are in the world today. it was all because of a brilliant, multifaceted marketing strategy designed and executed by ad agency N.W. Ayer in the early 1900s for their client, De Beers. Over the course of a few decades, N.W. Ayer helped De Beers successfully turn a failing market into a psychological necessity, all during a period of war and economic turmoil.
De Beers' 80-year stronghold on the diamond industry was one of the most impressive and fascinating in history. Diamonds haven't been rare stones since 1870, when huge diamond mines were discovered in South Africa. Soon after the discovery, the British financiers behind the South African mining efforts realized the diamond market would be saturated if they didn't do something about it.
In 1888, the company set two high goals for themselves. First of all, De Beers decided to monopolised diamond prices. They succeeded by creating De Beers Consolidated Mines, Ltd. and taking full ownership and control of the world diamond trade. While they stockpiled diamonds and sold them strategically to control price, De Beers Chairman Sir Ernest Oppenheimer cultivated a network of wholesalers all over the world. Secondly, the company wanted to stabilise the diamond market. To achieve what they were aiming for, De Beers would have to figure out a way to control both supply and demand for diamonds worldwide. For this, they would need to find an advertising agency. When De Beers began looking for an ad agency, the global economy was suffering and Europe was under threat of war.
Their challenge was to figure out which country or countries had the most potential to support a growing diamond market, and then to hire an agency to implement a marketing campaign in those countries. Because of Europe's preoccupation with the oncoming war, the U.S. was chosen — even though the total number of diamonds in the U.S. had declined by nearly 50% since the end of World War I. De Beers hired Philadelphia ad agency N.W. Ayer in 1938.
De Beers chose N.W. Ayer because of their ideas on conducting extensive research on social attitudes about diamonds, and then strategically changing them to appeal to a wider audience. N.W. Ayer did exhaustive market research to figure out exactly what Americans thought about diamonds in the late 1930s. What they found was that diamonds were considered a luxury reserved only for the super wealthy, and that Americans were spending their money on other things like cars and appliances. To sell more and bigger diamonds, Ayer would have to market to consumers at varying income levels. And in the time where economy was very bad, they had to figure out a way to link diamonds with something emotional, and because diamonds weren’t worth as much inherently, they also had to keep people from ever reselling them, then there’s this thought that came to them when they were thinking of something emotional, socially valuable, and eternal, love and marriage.
The concept of an engagement ring had existed since medieval times, but it had never been widely adopted. And before World War II, only 10% of engagement rings contained diamonds. With a carefully executed marketing strategy, N.W. Ayer could strengthen the tradition of engagement rings and transform public opinion about diamonds — from precious stones to essential parts of courtship and marriage. Eventually, Ayer would convince young men that diamonds are the ultimate gift of love, and young women that they're an essential part of romantic relationships.
The agency wanted to make it look like diamonds were everywhere, and they started by using celebrities in the media. N.W. Ayer's publicists wrote newspaper columns and magazine stories about celebrity proposals with diamond rings and the type, size, and worth of their diamonds. Fashion designers talked about the new diamond trend on radio shows. N.W. Ayer used traditional marketing tools like newspapers and radio in the first half of the twentieth century. In addition to overt advertisements, they created entertaining and educational content, ideas, stories, fashion, and trends that supported their brand and product. There was no brand name to be impressed on the public mind. It’s only a simple idea of the eternal emotional value surrounding the diamond. The story was about the people who gave diamonds or were given diamonds, and how happy and loved those diamonds made them feel.
Even in every one of De Beers’ advertisement, it featured an educational tip like, “How to Buy a Diamond.” The advertisement stated instructions like “ask about the colour, clarity and cutting, for these that determine a diamond’s quality, contribute to its beauty and value. Choose a fine stone, and you’ll always be proud of it, no matter what its size.” The agency saw tremendous success from their early campaigns. In just four years between 1938 and 1941, they reported a 55% increase in U.S. diamond sales. Riding this success, N.W. Ayer began perfecting their marketing strategy in the 1940s. They wanted to convince Americans that marriages without diamonds were incomplete.
“A Diamond is Forever”. These four iconic words have appeared in every single De Beers advertisement since 1948, and even AdAge, an international magazine named it the #1 slogan of the century in 1999. According to a New York Times article, the woman behind the signature line is Frances Gerety, who wrote all of De Beers advertisements from 1943 to 1968. She came up with it right before bed one night after forgetting to brainstorm it earlier for the next morning's meeting. When she reviewed what she'd scribbled down the night before, she thought it was just okay, and after presenting the slogan at the morning meeting the next day, no one in the room was really enthusiastic about it. It was not clear that why the slogan was chosen anyway, but it was a choice that would greatly contribute to De Beers' tremendous advertising success. Even now, De Beers official URL is www.adiamondisforever.com. The slogan perfectly captured the sentiment De Beers was going for, that a diamond, like your relationship, is eternal, while also stopping people from ever reselling their diamonds, as mass re-selling would disrupt the market and reveal the extremely low value of the stones themselves. At the very beginning of N.W. Ayer's campaigns for De Beers in the late 1930s, the suggested spend on an engagement ring was one month's salary. In the 1980s, De Beers ran a campaign to reset the norm to two months' salary. The advertisement even had a saying like, "Isn't two months' salary a small price to pay for something that lasts forever?” The story from the campaign stayed, and De Beers' "two months' salary rule" is still widely accepted in the United States of America today.
Is it a move of a genius or a scam? From the start, De Beers and their agency created and manipulated demand for diamonds by monopolising the market, changing Americans' social attitudes, and convincing people that a marriage isn't complete without a diamond ring. So are diamonds the biggest scam in history, or is this a prime example of ingenious marketing? De Beers knew diamonds wasn't intrinsically valuable like gold or silver. So instead of marketing to their product, they mastered the art of marketing to values, in this case the values and ethnics surrounding love, romance and marriage. They created a value for themselves since no one was interested in buying diamonds. De Beers agency's market research showed a major decrease in demand for diamonds, so they executed marketing campaigns that would shift, rather than accommodate, those existing social attitudes. While brilliant and successful, it also opens up a ton of ethical concerns.
No matter whether its ethical or not, De Beers is a very interesting example for every company to learn from. It's fascinating how De Beers and N.W. Ayer created demand from nothing by coming up with a story and value proposition around their product until today. Since the turn of the century, De Beers has effectively lost its monopoly of the world diamond trade, although they still bring in billions of dollars every year. But by marketing an idea rather than a product, they built a strong foundation for the $72 billion-per-year diamond industry and dominated it for a good 80 years, and that's a story worth learning more about.