Ilya Marritz covers business for WNYC.
Downturn Means Fewer Free Drinks
Monday, November 24, 2008
New York, NY —
HOST: New York is a mecca for people who like to do things for free. There are free concerts, free food, even free cocktails. In fact there’s a whole promotions industry around free events. As WNYC’s Ilya Marritz reports, the people who work in the freebie biz is are feeling squeezed by the poor economy as much as everyone else.
REPORTER: Three years ago, underemployed musician Seva Granik became a marketing whiz, almost by accident. Granik liked to drink. He liked to drink for free, and he started visiting every open bar he could find, and listing it on a blog, myopenbar.com. Pretty soon, liquor companies were approaching him, asking him to plan promotional open bars for people in his scene.
GRANIK: Kids that try to do their best to keep finger on pulse of the latest things, some might call them hipsters, we refer to them as just urban influencers.
REPORTER: We’re at the Katra Lounge on Bowery. It’s a party for Drambuie, the super-sweet whiskey, and they’re serving it for free to people who signed up through myopenbar.com. Granik, who’s tall and lanky, is wearing a blue hoodie, and surveying the scene.
GRANIK: The place is packed, the booze is being given out for free, there’s food which is rare and awesome.
REPORTER: Granik believes this is the most effective kind of marketing a liquor company can do can do – insert the product directly in the hand of the hip New Yorker.
These days, more New Yorkers are interested having that kind of experience.
Myopenbar’s business developer, Jason Fried.
FRIED: We've definitely noticed increase traffic to web site.
REPORTER: Fried says the worse the stock market does, the more visitors flock to myopenbar.com, looking for a free drink.
FRIED: Over last three or four months we’ve seen a 25 percent increase in traffic. There’s been a tremendous spike since economy made it onto the front page.
REPORTER: So Myopenbar is getting a lot more page views, meaning they can charge more money to advertise on the site. In that sense, the downturn has been good for myopenbar.
But there’s a problem. Internet ads make up only about 15 percent of myopenbar’s revenue. The rest comes from the other business drummed up by this database of open-bar hoppers. Liquor companies pay Granik and Fried to plan parties like this one. And that side of the business is slowing down dramatically.
GRANIK: We've seen a couple of plans and requests for proposals get pulled by liquor companies.
REPORTER: Granik says Dewar’s Whisky recently cancelled plans for 40 separate events and Hendrick’s Gin pulled the plug on a project worth a $100,000.
That’s no surprise to David Ozgo, chief economist for the Distilled Spirits Council. He’s looked at the effects of every recession since 1970 on liquor sales.
OZGO: Anytime you go through a recession money is much tighter, margins tend to be slimmer. It only makes sense that with regards to promotions or advertising, people are going to cut back.
REPORTER: So after three years of steady growth, fuelled by whiskey, gin, and vodka, myopenbar faces a serious challenge: diversify the business or wither.
FRIED: We're going to 11th and A....
REPORTER: Next stop tonight.
FRIED: We're going to Angels and Kings it's a bar at 11th and A.
REPORTER: The crowd is rocking when we get to Angels and Kings, they’re drinking free Trump Vodka mixed with Venom Energy Drink.
But Jason Fried is holding a beer he paid for, and Seva Granik isn’t drinking tonight. They’re talking about the company’s future. And it does not look boozy.
GRANIK: Actually the majority of our 2009 plans don’t even have anything to do with booze.
REPORTER: Granik says myopenbar’s next big project is a series of events focused on sustainability and bicycles. Psych Out With Your Bike Out.
Again, business partner Jason Fried:
FRIED: You know the bike community is pretty interesting. There’s like the tall bikers in Brooklyn, there’s bike messengers that ride fixed-gears, there’s BMX kids, there's traditional biker who’s trying to get to work on a cruiser, and so it really is an event for all those people.
REPORTER: In other words, the myopenbar guys already have their eye on their next demographic target.
For WNYC, I’m Ilya Marritz.