To Sell Luxury, Brands Move to Online Interactive Formats

It used to be so easy. Luxury brands could purchase full page ads in glossy upscale magazines or roll out a TV ad campaign to reach their target market. These marketers have been slow to move to digital but their strategy is changing quickly now that their audience is online.

Both agencies and luxury marketers reported in a Digiday survey that they will be increasing their shift to digital at a faster rate than their mass market counterparts. Analysts say that mass marketers allocate 37% of spending to digital while luxury marketers only allocate 31%. But nearly half of luxury marketers plan a 10% increase in digital this year.

Luxury brand marketers are well aware of the digital formats out there and spread that portion of their budgets as follows:

  • Display 26%
  • Video 13%
  • Mobile 11%
  • Social 22%
  • Search 16%
  • Email 9%
  • Interactive TV 3%

The largest growth channels for luxury marketers this year will be video (69%), mobile (68%), and social media (48%). The increased spending on these formats, especially video, has to come from somewhere. For some, 14%, a material amount will be shifted from the TV ad budget. For another 43%, some of the money will come from the TV budget. This change is being made because 85% of these marketers believe that online video is more effective than TV for driving online sales. About 44% also say that online video can drive more traffic to traditional stores than TV.

The unique nature of the luxury market means that advertisers must find the right audience and engage with them in a non-​intrusive and sensitive manner. These marketers will pay more for CPMs and theycare less about click-​throughs and market share as they consider where to place their ad budgets.

[Source: Engaging The Affluent Online. MartiniMedia. Digiday. Summer 2012. Web. 5 Sept. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.