States take fizz out of Miller promo

At issue is a city guide the beer and marketing giant launched last year to highlight local bars and events. Regulators in California, Texas and four other states have recently ordered Miller to block or restrict the site, Millertimenetwork.com, saying it violates rules restricting the value of promotions that brewers can provide to retailers.

"Each state has their own alcohol board, and for any promotion we do, that board will look at how it adheres to their guidelines," said Scott Bussen, director of marketing communications at Miller. "If the program gets watered down, we will evaluate it."

Battles over alcohol marketing aren't new, or limited to the Web. Miller's Bussen said the company regularly vets new marketing initiatives against federal, state and local regulations.

Still, the Miller brouhaha could complicate experiments in Web advertising by one of the world's biggest marketers. In 2001, Miller spent about $224 million on U.S. brand marketing, ranking No. 35 among the top 200 megabrands in the United States, according to research from industry publication AdAge.

Internet publishers long to capture a bigger slice of large, traditional marketing budgets like Miller's for themselves. And while research shows that more spending is going to the Web, it's still only a fraction of that going to mainstream media.

The regulatory scrutiny over Millertimenetwork.com comes as alcohol manufacturers such as Miller and Anheuser-Busch are mixing more of their marketing efforts with the Internet to create a direct relationship with beer drinkers. In the past couple of years, alcohol manufacturers have quadrupled their online advertising, according to market research.

Miller's parent company, South African Breweries, is the largest alcohol advertiser online, with 67 percent of the share of ads in its category, according to market researcher Nielsen/NetRatings. The research firm also reported that the Miller brand was the 12th most-recognized brand among Web advertisers in January, higher than Microsoft's heavily promoted MSN brand.

In addition to online advertising, Miller has focused on developing interactive games and tools for Web audiences, such as the Millertimenetwork, in order to make a deep connection with customers.

In past years, it developed the Miller Lite Beer Pager--a software application that lets people plan pub crawls--and an online auction called "Get the Goods." But Miller had to alter the auction offer in Texas because it could not provide anything of value greater than 25 cents to people living in that state. It has also built a Miller Lite virtual car-racing league, which is a digital combination of a fantasy sports site and video game.

The states aren't the only ones keeping a close eye on Miller's Web marketing efforts. Miller rival Anheuser-Busch's competitive interests may have sparked the censorship in the first place.

"As we often do when studying new approaches that may involve our business, we contacted some state alcohol beverage control agencies to seek their clarification of the unique alcohol beverage laws regarding this promotional effort," said Steve Lambright, group vice president and general counsel for Anheuser-Busch.

"We understand that these states are still analyzing the concept, as is Anheuser-Busch," he added.

Miller's Bussen said the company was attracted to building an events city guide because it helps curry favor with its target market--hipsters in their 20s. The company chose the topics of nightclubs and sporting events over listings for museums, for example, because they play to a younger crowd and provide potentially more value than, say, an online city guide such as CitySearch.

Miller does not produce the content itself--rather, it draws on several different sources of information to present the guide. In the next two months, it plans to update the site with even more detailed information. Bussen declined to specify how the site will be enhanced, however. He did say the current site is popular with audiences, with hundreds of thousands of people logging on.

"The Internet allows you to be able to make a direct connection to consumers that is meaningful to them," Bussen said. "It allows you to engage them in a way you can't do in other kinds of mediums."

Still, marketing initiatives for drug-related products--either online or offline--are often scrutinized by federal and state regulators, as well as by corporate watchdogs. Now many of those groups are trying to grasp the implications of new, inventive Internet promotions from heavily regulated industries such as alcohol and tobacco.

In one example, No. 2 U.S. cigarette maker R.J. Reynolds launched a marketing initiative with PeoplePC in 2001 that drew some criticism because of the company's ability to track customers' habits. The Web site, called Smokerswelcome.com, allowed Doral smokers to buy a subsidized PC with free Internet access for a year. Antitobacco advocates said the company could use the service to monitor people's Internet habits and, if they were trying to quit smoking, for example, send e-mail to deter them.

Carl DeWing, information officer for the Alcoholic Beverage Control department in California, said the alcohol control boards' (ABC) rules are there to prevent large companies from influencing retailers toward their particular products. He said the rules were created when prohibition ended and were intended to keep manufacturers, retailers and wholesalers strictly separate, thereby preventing vertical control of the industry.

In California, brewers are allowed to list the names, phone numbers and Web site addresses of two or more retailers, as long as they do not include additional information of value to the consumer, such as bar reviews. In the case of the Millertimenetwork, the site offers reviews on bars, restaurants and nightclubs as a benefit to visitors--but the state of California views that as going too far and has ordered the site to block that information.

So far, Texas has been strictest about the Millertimenetwork site, putting it entirely "on hold," Bussen said. The state has ordered it not to list information on any Texas establishment. Maryland and Washington have also asked for changes: The site can list events or bars in the area, but it cannot provide further details such as location, reviews or recommendations. Miller is looking into allowing people in those states to click to go directly to the source of information, which is Ticketmaster-owned CitySearch in many cases.

"That specific information provided too much value to retailers in the state of Maryland," he said.

Arizona and Ohio are also states that don't allow full text or details about bars and events on the Millertimenetwork, but the company is hopeful that the state ABCs will eventually agree to allow the information.

California's DeWing speculated that federal and state oversight of online alcohol promotions might get stiffer in coming years.

"I'm sure the (California) state legislature will continue to look at this issue, especially as the availability for the Internet expands and as the issue of taxes from Net sales continues to be discussed," he said.