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The State of Luxury Digital Marketing
 

The State of Luxury Digital Marketing

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The goal of the survey was to establish an industry benchmark for digital marketers ...

The goal of the survey was to establish an industry benchmark for digital marketers
at luxury companies. Results to this study, revealed in this report, determine
spending trends and marketing successes, as well as areas in need of further
development and investigation in the luxury market.

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    The State of Luxury Digital Marketing The State of Luxury Digital Marketing Presentation Transcript

    • The State of LuxuryDigital MarketingA 2013 ReportLuxury Interactive
    • 22013 State of Luxury Digital MarketingThe goal of the 2013 LuxuryInteractive/ShopIgniterreport is to establish anindustry benchmark for digitalmarketers at luxury companies.About this Report ..................................................................2State of Luxury Consumer Spending Today ..............3Consumer Trends and the Marketing Puzzle ..........5Benchmarking Study Results............................................6About Luxury Interactive ................................................29About ShopIgniter ..............................................................29About Worldwide Business Research ......................30This year, the research team behind Worldwide Business Research’s LuxuryInteractive conference, worked with ShopIgniter, the company helping many leadingbrands reach and convert their social and mobile customers, to craft a questionnairecovering topics like social media spend, product promotion, mobile commerceand customer retention.The survey was distributed before the October, 2012 LuxuryInteractive conference and also onsite at the conference in NewYork City. More than130 marketing executives from luxury brands completed the survey, which askedquestions about what digital areas they were spending on, which aspects of socialmedia were working for them, what their spend plans for 2013 were, and more.The goal of the survey was to establish an industry benchmark for digital marketersat luxury companies. Results to this study, revealed in this report, determinespending trends and marketing successes, as well as areas in need of furtherdevelopment and investigation in the luxury market.The roles of those answering the questionnaire ranged from Chief MarketingOfficer to President to SVP of Direct Marketing, Manager of Social MediaMarketing and CRM Director. Respondents represented companies likeChopard, Louis Vuitton, Barneys NewYork, Mercedes Benz, Mandarin OrientalHotels and more. Executives across verticals shared valuable insight into theirdigital marketing efforts to create an effective benchmark for the industry.See how your firm compares to your peers andcompetitors by viewing the results and analysisthroughout this report. Results begin on page six.About This Report
    • 3The luxury consumer’spurchasing habits have beenbooming, and reservationss/he may have had aboutbuying pricey goods duringand post-recession, seemto have faded in the last12 to 18 months.When the prestigious and increasingly-popular luxury brand, Hermes, decidedto increase price points on its products by nine percent, it was not the luxuryconsumer who was batting an eye. For this sector, such an increase (which, forexample, amounts to an additional $2,700 on a $30,000 Birkin handbag) provednominal as Hermes’ profits continued to soar.The luxury consumer’s purchasinghabits have been booming, and reservations s/he may have had about buying priceygoods during and post-recession, seem to have faded in the last 12 to 18 months.According to research from The Luxury Institute, an independent global researchand strategy firm that studies behaviors of wealthy consumers and formulatesbusiness solutions for luxury brands, wealthy shoppers do not plan to slow theirspending.The firm’s 2012 State OfThe Luxury Industry GlobalTrends surveyrevealed that 43 percent of wealthy Chinese consumers, 10 percent of wealthyJapanese consumers and 9 percent of wealthy American consumers plan to spendmore on luxury products in the coming year. Respondents in the survey were amongthe top 10 percent of earners in the U.S., United Kingdom, France, Germany, Italy,China and Japan, with a minimum income of $150,000 in the U.S. Compared to lastThe State of LuxurySpending Today2013 State of Luxury Digital Marketing
    • 42013 State of Luxury Digital MarketingQuality is still the mostimportant element in a luxuryacquisition, followed by priceand trailed by brand name.year, the survey indicates that wealthy Americans plan to increase spending in allsurveyed luxury categories such as ready-to-wear (fashion), jewelry, private jettravel and yachting.Another survey conducted by consulting company, Accenture, found that in thenext six months from November, 2012, half of American consumers said they’llbuy luxury goods. Out of more than 2,000 adult consumers, 53 percent said theywill likely pick up specialty food or drinks while 48 percent indicated futuresplurging on fancy clothing and 48 percent predicted spending on high-endpersonal care items.The study points to quality as the most important element in a luxury acquisition,followed by price and trailed by brand name. Accenture’s study also says that theupswing in luxury spending is more a Millennial phenomenon than it is a Boomermentality, with 35 percent of young consumers planning to buy indulgent goodswhile 46 percent of their older counterparts said they wouldn’t.Another independent research firm that studies the luxury segment, UnityMarketing, also released a survey, which reveals that the luxury consumer hasfelt a strong upturn in positive feelings about financial status and prospects forthe future.This led to an increase in shopping regularity,with luxury spending up 26 percent in the third quarterof 2012, said the survey.
    • 5Why Consumer Trends areonly One Piece of the LuxuryMarketing PuzzleStill, just because several recent surveys point to increased spending in theluxury sector does not mean that luxury brand marketers can rest on their laurels.Quite the opposite.As luxury spending steadily increases, so do consumer expectations, whichare often shaped by efforts from marketing and customer service teams thatsometimes sit under the same corporate umbrella. Luxury brands need to startthinking about how to prepare for the customer of the future – because althoughit appears spending is on an upward trend, that could quickly turn without properattention to strategic digital marketing that caters to a new generation ofconsumers who buy differently.For every study released about consumers’ luxury spending trends, how manystudies do we see that show how those luxury brands are reacting to thesespending patterns, and how they are working to acquire customers, increaseloyalty and gain better market share over these highly-valuable segments? Wehave seen very few, which is why Luxury Interactive and ShopIgniter workedtogether to create an industry benchmark for luxury brand marketers.As luxury spending steadilyincreases, so do consumerexpectations, which areoften shaped by efforts frommarketing and customerservice teams thatsometimes sit under thesame corporate umbrella.2013 State of Luxury Digital Marketing
    • 6An overwhelming majority (80%) of luxurymarketers surveyed said their80% 2012 spend was higherthan 201114% 2011/2012 spends werecomparatively flat6% 2012 spend was lower than 20112012 digital marketingspend was greater in 2012than it was in 2011.1Did your digitalmarketing spendincrease ordecrease in 2012,from 2011?2013 State of Luxury Digital Marketing
    • 7An even larger majority (85%) of respondents said85% Yes13% Not sure yet2% Nothey plan to increase theirdigital marketing spendin 2013.2Do you plan toincrease yourdigital marketingspend in 2013?2013 State of Luxury Digital Marketing
    • 870% of respondents saidthat between 0 and 40% oftheir overall media spend isreserved for digital.36%... reserve 0-20 percent ofoverall media spendfor digital34%... reserve 21-40 percent ofoverall media spendfor digital17%... reserve 41-60 percent ofoverall media spendfor digital11%... reserve 61-80 percent ofoverall media spendfor digital3%... reserve 81-100 percentof overall media spendfor digital36%34%17%11%3%Digital is a priority for mostmarketers at luxury brands, but stillnot the biggest priority. However,this may change gradually as newdigital methods prove themselves.3What percentageof your overallmedia spend isreserved fordigital?2013 State of Luxury Digital Marketing
    • 9“Over time, as digital, especially mobile, proves itself, more brandswill allocate their budgets to what works. Each brand has to useall the tools at its disposal objectively and eliminate the hobbies.Just measure what works and test and learn your way through thecorrect mix of media allocation.”Milton Pedraza, CEO, The Luxury Institute2013 State of Luxury Digital Marketing
    • 1076% saying that if they couldonly manage one social mediaaccount, they would chooseFacebook.4If your businesscould manage onlyone social mediaaccount, on whichplatform wouldit be?Social media is also becoming moreand more prevalent within luxurybrand marketing. Virtually nomarketers surveyed said they are notinvolved in social media.Facebook is still the biggest force for social mediamarketing with2013 State of Luxury Digital Marketing76% sayFacebook13% say Pinterest9% sayTwitter2% say Google+0% say Foursquare
    • 1195%85%59%60%29%33%10%52%5On which ofthe followingplatforms are youactively engagingyour customers?Only 10% of respondents are actively engaging theircustomers on Foursquare, 29% on Instagram, 60% onPinterest, 59% onYouTube, 85% onTwitter, and a whoppingAlmost all luxury marketers areengaging customers on social media,but there are obvious preferences inplatforms.95% on95% Facebook85% Twitter60% Pinterest59% YouTube52% Traditional eCommerce site33% Seasonal and brand microsites29% Instagram10% Foursquare2013 State of Luxury Digital Marketing
    • 12Among luxury marketers surveyed, Pinterest has beaten out Twitterfor engagement, which is indicative of the platform’s inherentrelationship to luxury’s core products which so often are visual.However, the typically younger demographic of Pinterest users callsto question whether the platform is suited to encourage sales orsimply drive interest from those who aspire to be customers.Will those younger, aspirational followers eventuallybecome customers? Time will tell.vs.2013 State of Luxury Digital Marketing
    • 1377% 2012 social media spendwas higher than 201119% 2011/2012 social media spendswere comparatively flat4.6% 2012 social media spendwas lower than 201177% spent more on socialmedia marketing in 2012than in 2011.6Did your socialmedia marketingspend increase ordecrease in 2012from 2011?2013 State of Luxury Digital Marketing
    • 1472% plan to increase socialmedia spend for 2013.Do you plan toincrease yoursocial mediamarketing spendin 2013?772% Yes22% Not sure yet7% No2013 State of Luxury Digital Marketing
    • 158What percentageof your digitalmarketing budgetis dedicated tosocial?15% allocate 21to 40 percent ofdigital marketingspend to social7% allocate41 to 60 percentof digital marketingspend to social75% allocate0 to 20 percent ofdigital marketingspend to social1% allocate 81to 100 percent ofdigital marketingspend to social2% allocate 61 to 80 percent ofdigital marketing spend to social2013 State of Luxury Digital Marketing
    • 1650% of people rankedPeople and/or Agenciesas the number one area in which they are spending theirsocial media budget in 2012. After people and agencies,marketers rated advertising as priority number two.9On which of thefollowing are youspending the mostof your social mediabudget in 2012?Luxury marketers were askedto rank from 1 to 5;1 being the majority of spend,5 being where the least is allocated.1 PEOPLE AND/OR AGENCIES2 ADVERTISINGSOCIAL COMMERCE34SOCIAL MANAGEMENT SOFTWARE5EXPERIENCES AND/OR CONTENT PRODUCTION2013 State of Luxury Digital Marketing
    • 1730% of respondents ranked“Acquiring new customers”as their first goal of socialmedia efforts.48% respondents ranked “Driving Brand Engagement/Loyalty” as their first goal of social media efforts.10What are thegoals of your socialmedia efforts?Marketers ranked in priority from1 to 5; 1 being the highest priority,5 being the lowest priority.1 DRIVING BRAND ENGAGEMENT/LOYALTY2 ACQUIRING NEW CUSTOMERSDRIVING PRODUCT DISCOVERY34GENERATING CUSTOMER INSIGHT5DRIVING SALES2013 State of Luxury Digital Marketing
    • 18The findings from question 10 indicate that luxury brands areindeed looking to social to acquire new customers, which makessense as they look to build affinity with younger audiences early.However, given the results from question 9, we must pose thequestion: are luxury brands actively trying to convert social fans tocustomers?2013 State of Luxury Digital Marketing
    • 1119Whattypesofproductpromotion,contentandconversationtacticsareyoutrying?Inalistof10typesofproductpromotion,contentandconversationtactics,thetopthreeutilizedwerePostingProductImagery(81%),UsingVideotoEngageFansandFollowers(75%),andSeedingNewProductLaunches(60%).Theleasttriedtacticinthelistwasmobilecommerce,with26%ofrespondentstryingit;stillareputablenumber,thoughnotasfrequentlytriedasothermarketingtactics.ARE POSTINGPRODUCT IMAGERY81%USING VIDEOTO ENGAGEFANS AND FOLLOWERS75%SEEDING NEWPRODUCTLAUNCHES60%SOCIAL PRODUCTMICROSITES/APPS40%SOCIALCOMMERCE29%MOBILECOMMERCEREWARDS/LOYALTYPROGRAMS26%20%MOBILE APPS (SMARTPHONEAND/ORTABLET)35%• PROMOTING/LEVERAGING CELEBRITIES• GRANTING EXCLUSIVE ACCESS FOR FANS/FOLLOWERS38%2013 State of Luxury Digital Marketing
    • 2063% are still fairly satisfied withtheir social results but are stillworking to improve them.12Generally, howdo you feel yoursocial efforts areperforming?21% feel confident with their social efforts’ results so far.Only 8% say they are unhappy.63% We’re fairly satisfied with ourresults but are working to improve21% We’re happy with our results so far9% We’re not tracking the performanceof our social efforts yet8% We’re unhappy with our results so far2013 State of Luxury Digital Marketing
    • 2135% pull from an e-commercebudget for mobile efforts.31% pull from an overallmarketing budget.13Howdoesyourcompanypayforongoingmobiledevelopmentandoptimization(websites,apps,etc.)?Only 7% of respondents have a dedicated mobile marketing budget, whileWhile seemingly every year since2010 has been deemed, “The Year ofMobile,” actions suggest that formarketers, it’s still early for mobile.35% Pull from e-commerce budget31% Pull from marketing budget16% Combine various source budgetsbecause there’s no dedicated mobilebudget10% Other7% Pull from a dedicated mobile budget2013 State of Luxury Digital Marketing
    • 2214Did your mobilemarketing spendincrease ordecrease in 2012from 2011?48% reporting that 2012 mobilespend was higher, and 49%reporting that 2011/2012 mobilespending was relatively flat.When asked whether mobile marketing budgets increased from2011 to 2012, the answer was nearly split down the middle, with49% 2011/2012 mobile marketing spendswere comparatively flat48% 2012 mobile marketing spend washigher than 20114% 2012 mobile marketing spend waslower than 20112013 State of Luxury Digital Marketing
    • 23The majority of respondentsranked People and/or Agenciesas the top area they spentmobile budget on in 2012.1 PEOPLE AND/OR AGENCIES2 APP DEVELOPMENTMOBILE ADVERTISING AND/OR SEARCH34MOBILE COMMERCE5MOBILE WEB DEVELOPMENT15Luxury marketers ranked from 1 to 5;1 being where the majority of spend isallocated, 5 being where the least isallocated.On which of thefollowing are youspending the mostof your mobilebudget in 2012?When asked to prioritize which categorymarketers spent mobile budget on,“Mobile Commerce” came in last amongthe five options, which also includedPeople and/or Agencies, AppDevelopment, Mobile web development,Mobile Advertising and/or search.2013 State of Luxury Digital Marketing
    • 2416Generally, howdo you feel yourmobile efforts areperforming?46% are fairly satisfied withtheir mobile results, but areworking to improve them.Only 17% feel confident with their mobile effortresults so far, showing a great opportunity formobile companies to out-perform their competitors.These results show an obviousopportunity for mobile developers tocapitalize on unmet needs of luxurybrand marketers, particularly given theinfluence tablets can have on mobilesuccess when tablets are included inmobile analytics.46% We’re fairly satisfied with our resultsbut are working to improve21% We’re not tracking the performance ofour social efforts yet17% We’re happy with our results so far16% We’re unhappy with our results so far2013 State of Luxury Digital Marketing
    • 2517Which form ofmarketing do youthink will be themost important toyour luxury brandin 2015?63% of respondents predictthat in 2015, digital marketingwill be the most important formof marketing for their brands,coming in above Advocacy/Loyalty (28%), Events (9%),Traditional Print andTV (9%) and product placement (3%).59% Digital Marketing27% Advocacy/loyalty8% Traditional Print andTV5% Events1% Product Placement2013 State of Luxury Digital Marketing
    • 2618What do youforesee asthe greatestdiversity marketopportunity forluxury marketersin the next 5 years?57% foresee Asian-Americanaudiences as being the greatestdiversity marketing opportunityfor luxury marketers in the nextfive years.Is it a mistake to focus on any onedemographic within the luxury space?Some might say yes.57% Asian-Americanaudiences28% Hispanic-Americanaudiences19% Gay/ Lesbian/BiSexual/Transgenderaudiences5% African-American audiences2013 State of Luxury Digital Marketing
    • 2719Can you measureyour customerretention rate bycustomer segment?43% said yes, they canmeasure customer retentionrate by customer segment.“While 43% is a strong number, luxury brandsshould be able to measure customer retentionat 100% with no excuses,” said Milton Pedraza.“The technology exists; what is missing is thecustomer culture that focuses on not just productand channel metrics, but also on customerconversion, data collection, retention, recovery,referral and other elegant measurements ofcustomer relationship building.”43% Yes29% No28% Not sure2013 State of Luxury Digital Marketing
    • 2820Whatistheclosesttitleofthepersoninyourorganizationresponsibleforpromotingproductsinsocial?“Social Media Manager.” Thetitle, “Digital Marketing Manager,”came in as a close second.The majority of companies surveyed said the title that best representsthe person handling social promotion in their companies is,45% Social Media Manager33% Digital Marketing Manager20% Brand Marketing Manager3% Merchandiser2013 State of Luxury Digital Marketing
    • 29Luxury Interactive brings together luxury brand marketing andecommerce executives, innovators and thought leaders, who offerinsights and solutions for the most pressing issues facing theindustry.The conference provides unparalleled opportunities tonetwork with peers in luxury brand marketing. Attendees walkaway from the conference having identified strategies tosuccessfully drive and achieve brand objectives.About Luxury InteractiveShopIgniter enables digital marketing leaders to reach and converttheir social + mobile customers. Innovative brands and retailers useShopIgniter’s platform to create, manage, and measure highlyeffective rich media posts and experiences that drive productdiscovery, exploration, amplification and conversion acrossFacebook,Twitter and Pinterest and mobile devices. Founded in2009, ShopIgniter is proud to be headquartered in Portland, OR.www.shopigniter.comfacebook.com/shopigniter@shopigniterAboutShopIgniter“The vendors that are here…I’ve had several ‘a-ha’moments with them.Literally. One in particular,I just about jumped out ofthe chair and tackled theguy. It took me a beat...butthen all of a sudden, it waslike a light bulb went offand I said, ‘That. Will.Change. Our. Business.’It was incredible.”— Carol Mills, Owner, Malia Mills2013 State of Luxury Digital Marketing
    • 30WBR is the worlds biggest large-scale conference companyand part of the PLS group, one of the worlds leading providersof strategic business intelligence with 16 offices worldwide.Our conference divisions consistently out-perform their industrysector competitors on the quality of the events we produce andthe relationships we nurture with both delegates and sponsors.Every year over 10,000 senior executives from Fortune 1000companies attend over 100 annual conferences – a true "Who’sWho" of today’s corporate world. From Automotive events inBucharest to Logistics conferences in Arizona to Luxury conferencesin NewYork and Finance summits in Hong Kong,WBR is dedicatedto exceeding the needs of its customers around the world.In addition to our industry leading conferences, our professionalservices marketing division, WBR Digital, connects solutionproviders to their target audiences with year-round online brandingand engagement lead generation campaigns.AboutWorldwideBusinessResearch“Youdidagreatjobattractingtopqualityattendees.Itwasaterrificturnoutandanexcellentcross-sectionoftheluxuryandinteractivecommunities.”—WendeeLunt,VicePresident,GlobalMarketingandBusinessDevelopment,Tumi2013 State of Luxury Digital Marketing“As a first time attendee to Luxury Interactive the conference should be voted as thebest digital interactive/mobile/social media/omni-channel event the year. The venue,agenda, meals, intimate business lounges, partners and attendees were top notch.The speaker roster (from Tory Burch and Tourneau, Gucci, Louis Vuitton, BrooksBrothers, Saks, to Donna Karan and Tumi), were all the attendees’ peers, and theyillustrated, without hesitancy or secrecy, the risks they tookwiththeirbrand,theriskstheyarecontinuingtotest,and that the results they areachieving are paying off. Excellence all around.”— Maggie Athoe, VP, Catalog Spree