So how much will this 30-second spot cost Yellow Tail? National ads for this year's Super Bowl cost about $5 million per 30-seconds. But Yellow Tail isn't getting a discount, having purchased air time in 70 regional markets and bring their total spend to nearly the same $5 million as a national ad. However, for that same $5 million, Yellow Tail is only reaching 80% of Super Bowl viewers (about 85 million people).
A bottle of Yellow Tail Shiraz retails for $9 at BevMo. If we use the approximate gross margins for each step in the value chain from the NVL case (65% producer/importer, 33% each for distributor and retailer), Yellow Tail is pocketing about $2.65 for each $9 bottle of wine that's sold. This means Yellow Tail breaks even on the ad if it can generate incremental sales of about 1.9 million bottles. Is this attainable? Take a look at the ad and you be the judge!
Wow, the economics of making the ad worthwhile to Yellow Tail are shocking. Also interesting that category exclusivity only applies to national ads when a company can virtually replicate the reach through regional buys (albeit slightly more expensively).
ReplyDeleteWhat I find interesting about Yellow Tail is that it is mainly (if not exclusively) target for export, maintaining its image as "easy-to-drink" wine for new wine customers - and rarely consumed within Australia. It has strongly established a brand elsewhere in the world - comparable to the Australian beer Fosters. Living in Australia I did not come across anyone who'd drink Yellow Tail or Fosters, but it is still an image created for the rest of the world. That really shows me how important branding and creating an image is - despite how far it is from actual reality.
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