Diamond advertising strategies and market impact

Diamond Advertising

Diamonds may be a girl's best friend, according to a concept popular in the 1950s. Alternatively, diamonds might also be forever, a concept popularized in advertising for several decades. Diamonds are a symbol of love, but they have hardly been the source of much loving interaction between various populations of humans. In fact, diamonds have been at the root of intense and deadly strife in Sierra Leone, most notably, for most of the past two to three decades. The fact that advertising for diamonds is so memorable suggests that advertising messages have some causative responsibility for the devastating civil wars in Sierra Leone, and the human suffering that resulted.

Indeed, in 2000, the World Bank released a report noting that "Greed for Diamonds and other 'Lootable' Commodities Fuels Civil Wars." (World Bank Web site) The report did not mention advertising as a direct contributor. Conceivably, that conclusion could be extrapolated because the World Bank research suggested that "civil wars are more often fuelled by rebel groups competing with national governments for control of diamonds, coffee, and other valuable primary commodities, rather than by political, ethnic, or religious differences" (World Bank Web site). There is little doubt that consumer demand for such commodities as coffee and diamonds -- neither of which is necessary to support life as are water and food -- is influenced by advertising and other forms of promotion. It might easily be argued that the fact that advertising for diamonds is so monolithic -- it would be difficult to find any adult in America who does not know the tagline "A diamond is forever" -- is one reason demand is high.

And, indeed, demand was ramped up during the 1930s. Until then, the engagement ring, an enormously popular use for diamonds today, was often an opal, ruby, sapphire or turquoise ring, according to Twenty Ads that Shook the World by James B. Twitchell. (Quoted on Howstuffworks.com) Twitchell contends that De Beers diamond company changed the world diamond market beginning with the "A diamond is forever" ad campaign that began in 1947. "In 2000, Advertising Age magazine named the ad campaign the slogan of the 20th century"(Howstuffworks.com).

When De Beers flooded the Japanese market with the same concept in the 1960s, it increased diamonds' popularity there, too.

Although De Beers had one major aim -- convincing consumers that diamonds were the very best gemstone to own -- they diversified their advertising after that to encourage consumers to hold onto their family's already-owned diamonds as heirlooms. That may seem, at first glance, to be a counterproductive advertising strategy, but it worked. It eliminated the 'aftermarket' in diamonds, the gems that once would have shown up at auctions, perhaps, so that most people who wanted a diamond would have to buy a new one. "Without people selling their diamonds back to jewelers or to other people, the demand for new diamonds increased" (Howstuffworks.com).

Research problem

De Beers has been very successful in advertising its diamonds, arguably increasing demand and sales, and keeping prices high. There have also been well-documented and extremely bloody civil wars fought over diamonds. Does diamond advertising lead to civil strife that damages international relations and causes vast amounts of human suffering?

Literature review

Smillie, Ian et al. "Getting to the Heart of the Matter: Sierra Leone, Diamonds, And Human Security." Social Justice, 27.4, 2000, p. 24.

A meeting of the Partnership Africa Canada (PAC) group produced a report noting hat diamonds were central to the conflict in the small West African nation of Sierra Leone, and also noted that no peace would be sustainable there until problems related to mining and selling diamonds had been addressed, both in that nation and in the diamond-buying nations.

As has been well reported, and is mentioned in this article, diamonds "have been the cause of widespread death, destruction, and misery for almost a decade in Sierra Leone. In the 1960s and 1970s..." (Smillie 2000 p. 24). Worse still, the point of the war was not to win it, but rather to engage in profitable criminal activity disguised as warfare, what this article calls "disorganized crime." (Smillie 2000 p. 24)

It was noted in the introduction that De Beers conducted an advertising campaign to decrease the number of those 'forever' gemstones available for resale from family treasures, as well as using advertising worldwide to increase demand. This article contends that De Beers, which had been directly involved in Sierra Leone until the 1980s, did much more to control the prices paid for diamonds, which would in turn control the lengths people would go to in order to obtain them. After the beginning of the Sierra Leone civil wars, De Beers "its attempts to mop up supplies everywhere in the world, De Beers not only sustained the artificially high price of diamonds, it also undoubtedly bought diamonds from war zones" (Smillie 2000 p. 24). Not long after the Sierra Leone devastation began in 1991, other war zones included Angola and the Democratic Republic of Congo as well. The Sierra Leone strife was masterminded by the Revolutionary United Front (RUF) (Smillie 2000 p. 24).

The RUF initially contended that it sought free elections, as well as social and economic justice; it was then at the bottom of the United Nations Human Development index (Smillie 2000 p. 24). They did not wage war on the government, however, but on the people. In order to finance their rebellion, they had to wrest control of the diamond fields from the corrupt government (Smillie 2000 p. 24). When an elected government returned in 1996, the war did not stop but actually increased in intensity (Smillie 2000 p. 24).

In addition, Sierra Leone was joined in diamond-related criminal activity by Liberia, whose president, Charles Taylor, acted as banker, trainer and mentor to RUF and made Liberia a major center for diamond-related criminal activity.

The article points out that it would be wrong to assume Sierra Leone and Liberia, Angola and the Republic of Congo were alone in the criminal activity (Smillie 2000 p. 24). In fact, there were Lebanese diamond traders and in the early 1990s, an interlude with a number of Israeli investors in Sierra Leone's diamonds "many of them as dubious and as corrupt as their predecessors" (Smillie 2000 p. 24).

The article does not address any harm the diamond wars may have done to international relations, but it does call upon the international community to put a stop to the carnage.

The PAC report, as noted in this article, recommended specific steps to prevent further social disintegration in Sierra Leone in particular, including:

U.N. Peacekeeping Force to facilitate disarmament and demobilization of insurgents and deployment of U.N. security forces long-term in all diamond areas.

External assistance in dealing with government corruption.

Developing a system for fair prices to small diamond mining companies; the banking system must be able to provide financing that is adequate and timely.

Encouraging the government to raise its standards for foreign investment in large-scale mining operations; international help must be sought. (Smillie 2000 p. 24)

All this interest in Sierra Leone was re-ignited in May 2000, after RUF attacked and captured more than 500 U.N. peacekeeping troops, killing several. That, and the civil disturbance that followed, put Sierra Leone, and the diamond problem, back in the headlines.

The article concludes that diamonds did not cause the conflict, but are, rather, its currency, proving the RUF and its patrons with strong economic motivation and opportunity.

Milward, H. Brinton and Raab, Jorg. "Dark Networks as Problems." Journal of Public Administration Research and Theory, 13.4, 2003, 413+.

This article views diamonds not as the creature of advertising, but rather as mere 'money' in the trade for guns. The authors note:

There are shipping and air transport services willing and able to transport the weapons to warlords who are destabilizing much of West Africa. The warlords trade diamonds for guns, and the arms brokers and transporters in turn launder the diamonds with brokers in Antwerp and deposit the money in Swiss banks. (Milward & Raab 2003, p. 413+)

This article is more concerned with the nature of interconnected networks of legal and illegal organizations than with diamonds per se. However, diamonds are central to its findings, and seem, as in the Smillie article, to be not the operative factor in harming international relations and causing wars, but rather are their currency. In fact, these authors make reference to Smillie's work.

The authors contend there are three levels of international relations. The first is the world of military power and might, in which the United States is primary. The second is economic power and influence, in which the United States shares power with Europe and the developed countries of Asia. The third level "involves the multifarious and proliferating nongovernmental activities shaping our world: currency flows, migration, transnational corporations, NGOs, international agencies, cultural exchanges, the electronic media, the Internet, and terrorism" (Milward & Raab 2003, p. 413+). It is this network, they contend, in which diamonds function as currency (Milward & Raab 2003, p. 413+). Far from linking the problems that revolve around diamonds to advertising them and creating greater popularity for the gems, the article rather wanted to determine whether the terrorist group Al Qaeda, for instance, engaged in smuggling arms and diamonds into and out of a failed nation (like Sierra Leone) "anticipate, react to, and adapt to the actions of their foes to disrupt and destroy them" (Milward & Raab 2003, p. 413+). For their study, the authors investigated the parameters of three 'network' operations: heroin trafficking, the Al Qaeda terrorist group, and the smuggling of 'blood diamonds' as currency to buy illegal firearms in failed states of West Africa.

This article makes it quite clear that consumer demand for diamonds, fostered by advertising, is probably not the cause of the atrocities surrounding diamonds in West Africa, and not the cause of international strife. They cite "increasing evidence of a close connection between Al Qaeda and the failed states of Liberia, Sierra Leone, and Burkina Faso in West Africa" and note that "The connection appears based on Al Qaeda's need to exchange cash for diamonds" (Milward & Raab 2003, p. 413+). Al Qaeda has been forced to use diamonds to buy arms and other terrorist 'necessities' because the United States and Western Europe have clamped down on Al Qaeda's use of legitimate banks for international monetary transactions. In addition to providing ready currency for Al Qaeda, the same failed states are surmised by the authors to also provide haven for many Al Qaeda operatives because local warlords are willing to offer that in exchange for diamonds, or whatever else diamonds may be traded for by the network (Milward & Raab 2003, p. 413+).

The reason for the attractiveness of diamonds to the terrorists and warlords is, however, much the same as the one that makes diamonds attractive to consumers. "Unlike gold or silver, which have fixed values, diamonds are a compact currency" (Milward & Raab 2003, p. 413+) with a fluctuating value, and, moreover, can be carried through airport security without alerting anyone. But their best virtue, and one that is probably not lost on consumers wanting some economic protection should the need arise, is that they are easily exchanged for cash.

In fact, because they are so portable and so many were transported, it is a wonder diamonds' value has not decreased. Sierra Leone's rebel leader Foday Sankoh smuggled out tens of millions of dollars worth of stones through Liberia among other nations (Milward & Raab 2003, p. 413+). Charles Taylor, mentioned in the Smillie article, was skilled at laundering RUF diamonds: Under Taylor, Liberia became the place to go to launder money for diamonds (Milward & Raab 2003, p. 413+). The authors cite Smillie, Gberie and Hazleton's 2000 work in which they showed that Taylor not only oversaw trade in weapons for diamonds with the RUF, but did the same for other countries as well.

Between 2000 and 2003, Al Qaeda bought diamonds from the Sierra Leone fields at below-market rates and resold them in Europe for millions of dollars in profit. In the summer of 2001, the price Al Qaeda was willing to pay, and the amount of diamonds sought, increased greatly, and also put much of Al Qaeda's wealth beyond the reach of legitimate governments (Milward & Raab 2003, p. 413+).

The authors do not make a connection between these diamonds and the consumer market, but clearly, if the diamonds were to be useful to finance terrorism, they had to be sold. Thus, they had to have buyers, and the buyers had to be eager enough to buy diamonds not to inquire too closely as to their provenance.

However, Foday Sankoh was captured, along with documents linking Taylor to RUF diamond sales. In addition, there are U.N. economic sanctions against the Liberian government, which the authors conclude has probably reduced the trade in diamonds considerably (Milward & Raab 2003, p. 413+).

Otnes, Cele & Linda M. Scott. "Something Old, Something New: Exploring the Interaction between Ritual and Advertising." Journal of Advertising, 25.1, 1996.

These researchers investigate areas of advertising specifically related to diamonds that makes it possible to link the demand for diamonds to the illegal trafficking investigated in the two articles above. They note that scholars have argued "that advertising probably influences the ritual behaviors that have recently been shown to order and direct consumption" (Otnes & Scott 1996, 33+).

They used the premise that "advertising is a through which meaning constantly pours from the culturally constituted world to consumer goods" (cited by Otnes & Scott 1996, 33+)

Moreover, they demonstrated the range of influence advertising can have on ritual, and they do it by investigating the modern American wedding. They note that wedding-related marketing is an example of persuasive and powerful behavioral change due to advertising, citing the De Beers late 1940s ad campaign noted above (Otnes & Scott 1996, 33+)

De Beers is the largest diamond cartel in the world, and is credited with reversing a drop in diamond sales after World War I and during the Depression, and making the engagement ring not only "an inseparable part of courtship" but "a psychological necessity capable of competing successfully at the retail level with utility goods and services" (Otnes & Scott 1996, 33+)

They also note that "De Beers' success at controlling the price of diamonds by limiting worldwide supply is widely recognized, but we suggest De Beers' ability to control supply was also due to its ability to manage demand" (Otnes & Scott 1996, 33+).

They did this by positioning the diamond ring as a ritual artifact, at the same time ensuring the many diamonds would be removed from the market as soon as they were purchased, only being returned to the market under extreme circumstances. By linking it firmly with romantic bonds, they also ensured that the only proper way to dispose of a diamond ring would be to bequeath it to a female descendant (Otnes & Scott 1996, 33+).

De Beers, the authors not, did not stop there but also instilled norms for the selection of any particular ring, by running advertising informing the consumer that it was necessary not only to consider price but also carat sizes, color, cutting and clarity. De Beers also issued a strategy statement noting that it wanted women to "bond" with others, even celebrity idols, through ownership of a diamond engagement ring (Otnes & Scott 1996, 33+). Perhaps most of all, and the thing that continues to make diamonds so desirable, is that De Beers was successful in helping women link their identity formation to diamonds, allowing only women who received such rings to avoid the alienation and anomie of not receiving one. They have continued in that vein with new advertising that is aimed at making the purchaser feel less worthy if he spends less for the ring than he 'should,' pegged at two-month's salary (Otnes & Scott 1996, 33+).