Late to the Party

Beer companies begin to embrace online advertising

The Australian beer company Foster's may have forsaken advertising on American TV in favor of the Web, but don't expect big U.S. beer distributors like Anheuser-Busch or Coors to follow suit. When it comes to selling young men on the virtues of a cold brew, beer companies are decidedly old media.

Foster's, which disclosed this month that it will no longer advertise on U.S. television and instead will put its American ad dollars exclusively online, appears to be the exception in an industry that has been surprisingly slow to embrace new media as a means of reaching young, wired beer drinkers. But after dramatically shrinking their online ad spending in recent years—while boosting their outlay for advertising on cable TV—beer makers are making new forays onto the Web, with online contests and other interactive features.

Commercials for established brands like Budweiser and Miller Lite have long been a staple on television, arguably raising the bar for creativity and sophomoric wit in advertising. But after early, rudimentary efforts in online advertising—largely aimed at driving visitors to their Websites to watch the same ads that appeared on TV—beer companies essentially opted out.

Since 2003, when it peaked at $23 million, online-ad spending for beer has dropped by half, to $11.3 million last year, according to the Adams Beverage Group, a trade organization for the alcoholic-beverage industry.

Meanwhile, beer companies reaffirmed their faith in TV advertising, increasing their cable-ad spending by 15% last year—to $295 million, roughly a third of total TV spending—in an effort to reach the 18- to 34-year-old male audience of networks like Spike and FX.

While beer companies may be satisfied with the returns on TV advertising, Tom Pirko, president of Santa Barbara, Calif.-based consultancy BevMark LLC, says their “conservative” outlook has hindered their ability to reach a young audience online.

“These are very traditional companies who are facing a new world and who have done things in the same way for such a long time,” Pirko says. “You can see some modest disbelief setting in about the effectiveness of the means they've used for such a long time and a realization of the fact they need to adapt.”

Miller recently launched a “Brew Blog” with industry news, while Heineken's U.S. outpost has sponsored musical podcasts.

“Instead of just advertising, which is static, they're trying to engage fans by having them participate,” says Jackie Huba, an online-marketing consultant and author of the forthcoming book Citizen Marketers. “This is a fundamental shift for them. When you have so much money, you rely on the more conservative place, and a lot of people think they'll never get fired for putting ads on TV. But today their audience has left and moved to the Web.”

Anheuser-Busch has ventured into “viral” distribution and the user-generated–content phenomenon. For this year's Super Bowl, the company offered its ads for download and viewing on others' Websites, as well as its own. And its Bud Light brand is sponsoring a “jokebox” feature on popular online humor site JibJab and inviting users to post photographs of themselves with the beer for an online contest.

“It's been a slow migration, but in the last two years, we've picked up the pace and placed an emphasis on the Internet,” says Mark Wright, Anheuser-Busch VP of corporate media, adding that the company has increased its online-advertising expenditures by 100% since last year. “Clearly, our consumer is spending time there … we need to be there in a bigger way than we have in the past.”

a “massively social game”

Foster's only began advertising online last year, spending just $8,000, according to Adams. For its recently announced deal with the male-targeted video outpost (males 18-34 make up 88% of its audience), the company will launch what it calls a “massively social game”: an online and mobile dating show in which users can watch video of four temptresses and answer questions via text message to win a date with them.

According to the site's co-founder and co-CEO, Simon Assaad, Heavy is now in “deep conversations with a number of beer makers” in search of “places on the Internet where there are large groups of guys.”