MYTH-BUSTING SOCIAL MEDIA AMEX Luxury Summit April 2011
INTRODUCTIONDizzying HYPE surrounds social mediaOur discussion today intends to demystify social media for luxury brandsBy popping well-read mythsIncluding the relationship between T R A F F I C and social media
THERE IS MORE COMPETITION FOR YOUR CUSTOMERS• Attention is a commodity, the most valuable for luxury marketers.• While the supply is ﬁxed, demand is escalating faster than ever before.• Attention is increasingly spent online.• As a result of this change, all media now self- organizes by afﬁnity, sensibility, and sharing (left and right).• This is how consumption of luxury goods is changing.TAKEAWAY: In the Attention Economy whatworked before may not work now. Embrace change.
WORD-OF-MOUTH IS #1 FACTOR IN LUXURY IN PURCHASING• My apologies to your creative director.• The number one factor in a luxury purchase is word-of-mouth.• Word-of-mouth in today’s media environment is a [link].• And trafﬁc arrives through a [link].• So trafﬁc is word-of-mouth, right!• Social media is now the plumbing for how [word-of- mouth] spreads.• All of your grand creative is reduced to a [link].TAKEAWAY: You cannot produce great creative ifyou do not understand link-based distribution.
THEY EMPHATICALLY DO. DIFFERENTLY.• Luxury consumers are overwhelmingly more active: - 80% of high-net worth customers use the Internet daily and more regularly buy products online.1• Buyers are voyeurs, not publishers. - Afﬂuents are more likely to use social media to look at brands rather than commit to a relationship with them (25% friends).2• Older customers are among the most active comparative shoppers through social. - 70 percent of afﬂuent consumers over age 40 have at least one social media proﬁle. 3 • By adding product recommendations and “shop the WetPaint and The Altimeter Group, 2009 5 look” features to JuicyCouture.com, the brand saw a 160%+ increase in conversion rates. 4- Social media strikes at the heart of what luxury brandsTAKEAWAY: The marketing mix for luxury brands offer: passion.must evolve to a minimum of 60-30-10, if you arepaying attention to marketing attribution. 1. Time, 2009 2. Luxury Marketers and Retailers: To Be a Friend, You Have to Listen, 2010 3. Morpace, Omnibus Report, June 2010 4. FashionablyMarketing.Me, February 2010 5. http://www.altimetergroup.com/2009/07/engagementdb.html 6. Forbes.com,, October 2009
LUXURY NEEDS SOCIAL MORE THAN EVERSearch:• Google’s algorithm looks primarily for three attributes: • Naming convention • Inbound (social) links • Depth of recent conversation• 60% of brand links are from social media; 25% of search results for the world’s 20 largest brands are links to user-generated content.1Referral• Facebook accounts for 21% of referral trafﬁc, and 38% of page referrals online. 2• Post < Link < Multimedia < Like < CommentSocial Commerce• 61% of people rely on user reviews for product information before making a purchase.3• 67% of shoppers spend more online after recommendations from online community of friends. 4TAKEAWAY: How many people work on your 1. Socialnomics, 2009 2. Marketing Sherpa 2010website versus your social channels? 3. Razorﬁsh 2008 4. Internet Retailer, September 2009
YES BUT...• The average consumer mentions brands 90 times a week in social media.1• Luxury consumers increasingly do not visit websites directly.• Websites visit THEM through social networks, RSS, email.• Consumers increasingly access media through distributed (social) rather than centralized (web) channels.• Trafﬁc is not a zero sum game anymore.TAKEAWAY: Luxury brands must now createbranded experiences across the customer journey inthe context of each channel, rather than adaptcreative across social networks. 1.Keller Fay, WOMMA, 2010
IT CAN. IT DOES. IT IS NOT YET PREDICTABLE• We know the future of retail.• Think of retail like a museum.• At a museum, you have an audio tour, placards, guides.• Now imagine you can do all that socially through QR, Geo-Mobile, and Links in-store.• You can enrich the entire shopping experience in- store.• And all the interactions get published virally through social media (mobile is social).TAKEAWAY: Do not think of in-store and on-lineas separate channels, but part of the same customerjourney.
TRADITIONAL MEDIA IS MORE IMPORTANT THAN SOCIAL
DEPENDS ON THE OBJECTIVE• When a reader participates in social media, the brand and reader share: • Afﬁnity • Sensibility • Link• This relationship yields more trafﬁc per reader, because it acts as peer-to-peer word-of-mouth rather than passive editorial or advertising.• This word-of-mouth stems: • Inﬂuencers across channels • Inclusion of social at onset of planning • Curation and sensibilityTAKEAWAY: Partner with inﬂuencers whointroduce you to new customers rather than solelyspeaking to your own.
NOT TOTALLY...• Start with a good offense, distinct voice, and curation.• You can also make luxury work for your brand by understanding inﬂuence.• Some people are more equal, because they are simply more inﬂuential.• Inﬂuence is more than popularity; popularity is actually only a third of what constitutes inﬂuence.• Inﬂuence = Trafﬁc + Virality + Links• Inﬂuence, not awareness, drives the right kind of trafﬁc. “We believe that inﬂuence is the ability to drive people to action -- ‘action’ might be deﬁned as a reply, a retweet, a comment, or a click.”1TAKEAWAY: Create campaigns to drive inﬂuence,not awareness, in luxury. 1.Klout, 2010
SHOPPING IS SOCIAL. ONLINE AND OFFLINE• Shopping in the real world is social: why not online? • 53% of people on Twitter recommend companies and/or products in their Tweets, with 48% of them delivering on their intention to buy the product. 1 • Consumer reviews are signiﬁcantly more trusted -- nearly 12 times more -- than descriptions that come from manufacturers. 2 • 90% of consumers online trust recommendations from people they know; 70% trust opinions of unknown users. 3 • Online user reviews have the biggest inﬂuence on consumer electronics purchases, with 43.7% of purchases affected by word-of- mouth. 4TAKEAWAY: Invest in social shopping and openauthentication as soon as possible. 1. ROI Research for Performance, June 2010) 2. eMarketer, February 2010) 3. Econsultancy, July 2009 4. BIGresearch, December 2009
UH-OH• Sadly, yes.• 65% of consumers no longer have a favorite news source.1• Social media is ultimately dilutive of brand: • Links are word-of-mouth • Brand of sharer is more valuable than brand of publisher • Fractured distribution results in increasingly shared brand equity Terri Mugler versus Tom Ford in WWD • Search rinses off brand in the great archive, because of keyword • Demand for personality, authenticity, accessTAKEAWAY: Lean in or Lean away. 1.Pew Research, 2010
SOCIAL MEDIA IS A BUBBLE• Bubbles are characterized by: Inﬂation in the cost of talent High ﬁnancial valuations Volume of new entrants Inversion of buzz to word-of-mouth• However, real value is being built, and consumer attention is quickening. “During the subprime bubble, banks and• Similar to the dot-com bubble in 1999, media will brokers sold one another bad debt — debt sort itself within 12-18 months; growth of social that couldnt be made good on. Today, ‘social’ media is plateauing domestically. media is trading in low-quality connections.”1• This sorting will mark the end of the beginning of the socialization of all media.TAKEAWAY: The clock is ticking to socialize yoursites, move beyond the web, and outside of the U.S. 1. Harvard Business Review, Umair Haque, 2010