In the beginning there was a fax machine. The fax machine sent promotions from a wine shop in Hastings. It wasn’t a shop so much as a shed, next to a motorbike shop, selling wine to restaurants and bottle stores. Email was gaining in popularity and a few of the fax recipients asked to get an email instead of a fax, so they tried sending a group email with wine deals in it. The response was huge from the start.
Mac Macpherson, the owner of the fax machine, immediately knew that email marketing was the way of the future and found it impossible not to see the potential of the new business. At the time, email was very cool and it was a novelty. People loved receiving a regular email with wine deals and happily shared it with their friends. Advintage’s wine deals were viral long before Facebook and YouTube entered the vocabulary, and Mac’s email list grew quickly.
He decided that B2C (business to consumer) market was a much bigger opportunity than B2B (business to business), and in the space of a week his business model changed completely. Advintage would target discerning customers who didn’t want to drink quaffing wine from the bargain bin, couldn’t always justify spending big on luxury brands, and who needed a trusted advisor who could give them really nice wine at reasonable prices.
Since those early days, Advintage have pioneered retail e-commerce in New Zealand. In 2000, they became the first customer of Jericho, a leading New Zealand digital marketing company who specialise in email marketing, and in 2001 introduced online credit card processing so their customers could pay for their orders more conveniently.
Mac admits that Advintage would not be possible without the Internet. 80% of the business’ sales are made online. The biggest market is Auckland, followed by Wellington. Hawke’s Bay is only the fifth-biggest market. The Internet is even more important for Advintage when it comes to promoting the business. 90% of the company’s marketing spend is in digital.
They use email marketing, search engine optimisation, paid search ads, social media, and affiliate sales (where they pay third-party websites a commission on the sales – or leads – that they generate).
Mac takes marketing extremely seriously and has developed metrics to gauge each channel’s effectiveness. He tells me that, across all online channels, Advintage regularly reaches 85,000 people on a weekly basis and he has worked out that the average cost to acquire a new customer is $35.
They also use traditional offline promotion methods such as print marketing with Farmlands, radio ad placements, and event sponsorship. Mac is active in the Havelock North Business Association, which promotes the village as a retail destination.
But just like back in 1999, email marketing is the cornerstone of Advintage’s marketing activities and Mac’s great strength is his copywriting. Copywriting is especially important for online business and the humour of Mac’s email newsletters undoubtedly played a big part in building the early enthusiasm among his customers. Mac claims that copywriting is not a skill he has learned – or even one that he needs to work at. He has a university degree in English, but he scoffs at any suggestion that this was a useful education. The ideas for his newsletters and wine descriptions come naturally and for him it’s the most enjoyable part of the job.
He sends two email newsletters each week, on Wednesdays and Fridays. Sometimes he has been tempted to send more often, but he knows that the dreaded ‘Unsubscribe’ rate goes up if he pushes it too far. The content of the newsletters is unashamedly sales-y and Mac makes no apology for this:
“I’m a bullshitter! I would send an email every week saying this week’s deal was the best deal ever. Someone once had me on about it: ‘You always say it’s the best deal ever. How can you keep saying every week that it’s the best deal ever?’ I said to him, ‘Well, if I told everybody that this week’s deal was mediocre we wouldn’t sell anything, would we?’”
Advintage was an early adopter of Twitter and their Twitter account now has more than 3,000 followers. In social media, Mac’s goal has always been to increase brand awareness and build a fan base rather than to make sales directly. When Twitter was in its infancy, Mac ran ‘Advintage Freebie Friday’ promotions. Twitter users were exhorted to re-tweet the Advintage promotional tweets to go into the draw to win prizes. “When we started on Twitter, there were only 60,000 Twitter accounts in New Zealand. It had a cool factor.” But interestingly, as it’s got more popular, it’s become less effective for marketing.
In contrast, Advintage came to Facebook much later than many other brands. Nevertheless, the Advintage Facebook page is extremely popular; it has 11,000 page likes (giant US e-commerce site Wine.com has 31,000 likes).
Advintage spends a small amount on promotions on social media, but one-day discount sites have never appealed to Mac: “Those one-day sites don’t work for us because too much of what those sites sell is crap. Your reputation suffers.”
Mac is a very hands-on business owner. Not only does he write all his own copy, he uses Photoshop to design for print and web. He admits that he’s probably been a bit too involved in the day-to-day stuff, but this is changing now that Advintage is involved in a joint venture with APD, the Australian digital marketing company that bought Jericho. The APD venture is a fiveyear project and it promises to transform Advintage significantly. There are “big goals” in place.
It hasn’t always been easy for Advintage. Wine “lost its mojo” in the mid-to-late 2000s as the global financial crisis made wine drinkers less enthusiastic about spending, and the “Savalanche” happened – an oversupply of Marlborough sauvignon blanc depressed prices significantly: “There was a lot of cheap crappy wine around and no one wanted to spend money on good wine.”
In this environment, a lot of online shops popped up selling inferior wine at cheap prices and some of Mac’s friends told him to do the same: drop your prices and hit your database. In the face of these challenges, Mac stuck to his guns and Advintage did not change its business model. It proved to be the right decision. Mac’s original target market, the discerning wine buyer looking for a bargain, kept buying wine from Advintage and many of the shonky places folded.
Mac doesn’t plan to retire. He enjoys his work too much, he is still fascinated by the wine business, and he leaves me with this advice to anyone starting up an online retail business:
• Know who you are and who you are selling to. Mac saw an opportunity – no one was servicing the $15 bottle of wine category and providing good, downto-earth advice to these discerning bargain-hunters.
• Customer satisfaction always comes first.
• Your reputation is everything.
• Aim big from the start. Mac set out with the objective of becoming a major New Zealand wine retail business.
• Work hard. Mac routinely worked 60-70 hour weeks to get Advintage going. He has eased off now, but is still fully committed to the business and works normal hours.
Above all, give it a go: “Jump in the deep end and swim like hell”.
Matt Miller co-owns web company Mogul Limited, based in Havelock North, but serving clients around the world, including BayBuzz. His beat for BayBuzz is online trends and best practice.