Mon, Nov 17, 2003 - Page 11 News List

Diageo moving on after ad blunder

Last December, the world's biggest spirits group, UK-based Diageo Plc, caused a furor in Taiwan when legislators here said a Smirnoff advertising campaign on the London Underground damaged the nation's image. The company apologized immediately after complaints were raised and ran a high-profile campaign in the UK praising Taiwan's achievements. Almost one year on, `Taipei Times' staff reporter Bill Heaney talked to Diageo Taiwan Inc managing director William Li about the damage the ads did to his company, how they have recovered their market position, and what new things they have to offer local consumers


William Li, managing director of Diageo Taiwan Inc.


Taipei Times: Diageo advertisements in UK subways last year showed a half-wrapped Christmas gift bearing a label that said: "Warning: This gift will break down on Christmas morning. Replacement parts available from service center. Box No. 260, Taiwan. Allow 365 working days for delivery." How much damage did this do to your company here in Taiwan and how have you recovered since?

William Li (李其英): This is the first time a reporter has asked me that question. It appears to me that the average person did not see that as an issue. It was for politicians. I have to tell you that of course business was impacted, but not in terms of profit. The impact was on morale and also on the time management spent on the crisis. In terms of volume the impact was only before Chinese New Year during the gifting season. What we found is that people still bought our products. It was no problem for them to use our products for their own consumption, but the gifting business was hurt. I guess they didn't want to buy the products and be questioned by their friends.

After Chinese New Year things went back to normal. The year's business actually grew against last year, although maybe the percentage was not as high as I would have liked, so I can't measure exactly what the impact was.

In terms of management time, you can imagine how much time the top team spent dealing with media requests, going to see the government, diverting our attention, and developing and making up a campaign in London.

TT: I believe you ran ads the same size as the original offending ad in the same places in the UK, is that right?

Li: That's right, and also ads in local papers here. Also at that point in time we had just launched Smirnoff Ice in Taiwan, so naturally we had to drop all the advertising and all the activities until things settled down. That hurts, right? But after we re-launched the product in April, it was fantastic. Our stock went like this [hand sweeps off table], so I think the impact was very short-term. Some of our employees were also questioned by their friends, by their family, why are you working for this company? So there was some kind of morale issue there.

TT: Have policies regarding advertising campaigns changed so that Diageo's head office now consults more with regional offices around the world?

Li: What happened was that immediately after the incident they were notified by us. It was actually over the Christmas period. Immediately the top communications guy, the director of external communications, formed a team with us to work together to resolve the issue. They were very active in dealing with Taiwan's government representatives in the UK.

They also established a study group at the same time to review the whole situation. What happened, what went wrong, what in the process went wrong working with the advertising agency? Of course we submitted our input, and the result of that was that our core marketing policy -- I guess there were loopholes there -- was totally re-written. I think starting from April, every [Diageo] country [representative] in the world had to go through workshops to understand the process and why. Now all advertising material has to go through the process.

TT: Often Taiwan does a poor job of promoting its successes in technology, and advertising executives in London may not be totally to blame for not having a strong impression of the nation's achievements. Do you think the government needs to do more to promote its image overseas, and how much help did you have in drawing up your damage-repair campaign?

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