The thin end of the wedge? Google and tobacco and alcohol advertising

By: Chris Madden   •   email: info@trunblocked.com

The thin end of the wedge? Is Google’s latest assault on tobacco and alcohol advertising a trial or opportunity for travel retail?

Internet behemoth Google recently announced it will ”simplify and streamline” policies for its publishers. It includes restriction of advertising opportunities for tobacco and alcohol products and represents a continued assault on these embattled sectors. But, with the potential for further restraints, can travel retail find a creative solution?

Google advertising is big business. The internet giant dominates the online advertising market in much of the Western world and is a key gateway into making the most of the increasingly vital digital market.

As travel retail moves faster and faster into the digital realm, the support and optimisation of platforms like Google and its sprawling online network are increasingly important. Research from global marketing company Ipsos showed that incremental store visits rose 80% when coupled with an omni-channel approach incorporating the digital world.

The numbers behind Google Ads, which allows advertisers to promote goods, services and content within the Google network, are simple. Google holds a 36.8% share of the digital ad spend in the US alone and users see on average a $2 return in revenue for every $1 invested in adverts. On top of that, the average click-through rate across all industries is 3.17% on Google’s search network – compared to an average of 2% in the wider market.

All this makes Google’s latest announcements about its advertising platform all the more frustrating for travel retail. In a message to Google ad publishers last month, Google declared it will ”simplify” its policies and clarify the content which won’t be monetised at all, and those which will receive restricted sources of advertising.

In the latter case – which defines content where Google Ads will not appear and whose content will receive reduced or no advertising –
are those featuring tobacco or alcohol.

Alcohol advertising will be targeted by Google as the internet giant tightens its policies

Alcohol advertising will be targeted by Google as the internet giant tightens its policies

The potential problem for the duty free industry and its move into the digital sphere is clear. Tobacco and alcohol are key sectors and, despite mounting problems, both are performing well. The world’s largest travel retailer, Dufry, announced in its 2019 corporate report, The Global Travel Retailer, that tobacco and wines and spirits accounted for 12% and 16% of its sales by category in 2018. Each of those figures represents a 1 percentage point increase on their market share for Dufry in 2016.

The growth of tobacco, in particular, is impressive – considering the challenges the sector faces in today’s market. The latest restrictions from Google, which are a continuation and solidification of its existing policy, come just as the tobacco market has faced down – and temporarily delayed – the WHO Illicit Trade Protocol, as well as facing increasing branding and packaging restrictions.

With the very real fear that Google’s latest announcement could be the precursor to more restrictions, travel retail needs to look at ways of guaranteeing it can maximise the potential of the digital market for these key categories in the future.

Facing a challenge

The GTR industry talks a lot about how unique it is and, arguably, its approach to digital has often been too general. Now, many are coming around to the view that a far more tailored approach is needed.

Tobacco advertising, such as this from Davidoff, looks to tell the brand's story

Tobacco advertising, such as this from Davidoff, looks to tell the brand’s story. It is an idea some feel needs more developing

Stéphanie Metz-Thévenod, Lagardère’s EVP Marketing and Digital for Duty Free, says: ”As in any other channel, advertising is effective only if it targets potential shoppers of travel retail, travellers, and if it presents the uniqueness of the offer in travel retail.”

Indeed, she believes the potential of online advertising ”isn’t currently optimised” by the travel retail sector. ”It’s difficult to have a great return on advertising with paid advertising, unless the website has a huge traffic.”

With the challenge of picking up sufficient numbers to make digital advertising viable, what does Metz-Thévenod think of the restrictions to online advertising?

”It is a problem,” she admits. However, the solution is to take a different approach, she says, and get creative with the opportunities that are out there. ” We can imagine alcohol brands doing beautiful videos on how the product is made, the terroir, without ever showing the label nor the brand.”

Such an approach is good news for retailers and can build the power of a sector, but it may not easily appeal to individual brands who are asked to invest in digital advertising without any guarantee of a return for them.

”This would be good for the image of the category,” Metz-Thévenod concedes, but there is no guarantee on brand attribution and conversion”.

According to Tallink Grupp Management Board Member Piret Mürk-Dubout, the restrictions on digital advertising are a development which the industry must find ways to adapt to.

”The regulation and privacy issues are a huge challenge,” she says. ”But on the other hand, it is an opportunity.”

She echoes Metz-Thévenod’s assertion that brands must build trust from customers from outside the digital realm so that they can use whatever opportunities are available in it.

”You need to work with human trust points and that gives you the question of are you a premium brand and a reliable brand,” she explains. ”How do you create this trust with the customers? That is the prerequisite to be successful in this digital engagement”.

The latest developments from Google are a stark reminder to the industry that digital is not an easy fix which can be relied on to create a plush future for the market. While it provides huge outreach and engagement opportunities, it also carries its own pitfalls and challenges. And, as those challenges mount, creativity in the digital sphere will be as important as it is in the physical.