Why are diamonds so expensive?
Because it’s rare?
Well not really. Actually, its worth 50% less the moment you leave the store after purchase. (WHAAT!!!). But still we have the urge to buy diamonds for our loved ones. Don’t we? ( Oh not me! I’m still searching for a job!!)
Anyway, Diamonds are always associated with wealth, power, and romance. Or rather people were manipulated to believe so. Why? Who? How?
So many questions. Well yes! these made me curious. So, I researched further.
I know you are in doubt! But I guarantee you it’s informative and not that long
Diamonds were actually rare till 1870s when British financiers discovered so many mines in South Africa.
They started De Beers Consolidated Mines Ltd and created a distribution network to monopolize the diamond trade.
Sudden abundance in the supply started depleting the diamond value and the company realized they have to figure out a way to control both the supply and demand side for diamond market.
Yes! They created what’s called false scarcity to control supply side to make people believe diamonds are actually rare.
Now, to increase demand they decided to onboard an ad agency and start a campaign.
They chose US market to launch the campaign though the diamond sale had reduced to 50% because of the great depression. (UK and rest were busy with War)
So, in 1938 they hired N. W. Ayer as their Ad agency.
YES. The Campaign is Interesting. Stay Put
And what did N W Ayer do? They conducted an exhaustive research.
N W Ayer in their report referred to the condition of diamond market in US as “depressed”. The masses never even considered buying diamonds. Diamond were reserved for elite others had other luxuries like cars and stuffs. (Ford had already made it cheap for them)
Now, traditionally the concept of engagement rings existed from medieval times, but it was never adopted widely. Only rich used this and richest of riches used diamond rings. Only 10% of engagement rings had diamond.
So N W Ayer decided to strengthen this tradition through a well-orchestrated advertising and public relations campaign.
Its slogan was ranked #1 slogan of the century in 1999 by Adage above Nike’s “Just Do It”.(I’m not kidding)
WHOOOOHOO!!!! Best of the century man!! Still doubting?
Since young men buy over 90% of all engagement rings” it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship.
Diamond ads were everywhere, motion picture, radio, newspapers, magazines…..
Movie idols were given diamonds to use as symbol of indestructible love. Stories stressed the size of diamonds that celebrities gifted their love. Fashion designers talk in radios about the trend towards diamonds.
The ads also stressed diamond engagement ring should cost one month’s salary, effectively putting a price on sincerity, while taking off the pressure of carat size.
All De Beers’ ads featured an educational tip called, “How to Buy a Diamond.” It instructed the buyer to check the color, clarity and cutting.
They were told these determine the diamond’s quality. ( helped in building trust )
One of the challenges De beers had was that they have to discourage people from reselling the diamonds.
Inherently diamonds didn’t have much value so a mass reselling would make the market unstable and fluctuate the prices and reveal the low intrinsic value of the gem.
So, whoever buys the gem have to keep it for eternity. In 1947, N W Ayer copywriter came up with slogan that magically captures the whole idea they wanted to convey to the masses. “A Diamond is Forever”.
The standard of one-month salary to be spend on a diamond ring was upsized later in 1980s to two-month salary. This still remains a norm in US.
OK! Last few lines
Within 3 years since the start of the campaign , it became hugely successful, the market which was on a downward trend had reversed its path and the sale of diamonds increased by 55% by 1941.
While you can question the ethicality of the campaign, the strategy used by De Beer and N W Ayer will just blow anyone.
In one of the reports, N. W. Ayer noted that its campaign had required “the conception of 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.”
Though De beers had lost its monopoly in diamond trade after the 20th century, this beautifully crafted campaign will stay as a perfect case study for anyone interested in marketing.
What do you think? Did you know this before? I was definitely amazed when I came across this for the first time. I hope you are too. I’m curious to know!