How To Do Digital Luxury

Alex Charlton, director, Essential Research and Beth Uyenco, director of research, Microsoft Digital Advertising Solutions argue, in this exclusive blog article, that luxury consumers are ready for marketing 2.0 and explores how luxury brands can establish a credible presence online.

“For consumer brands the internet has become a given; a pillar of brand strategy. Brands have found a way to harness digital media and emerged leaner, more dynamic and with greater relevance to a vast new audience. Luxury brands however have been more reticent to meet the web head-on.

The inherent contradiction between the ubiquitous accessibility of brands in the online world and the fiercely protected exclusivity at the heart of luxury consumer goods has to date remained an unresolved mismatch. The sensory interactive experience of the Jaguar XF’s digital launch and Chanel’s recent video campaign featuring Keira Knightley as the iconic Coco Chanel are notable exceptions to widespread apprehension of digital by luxury marques, however our recent global research identifies significant risk-managed opportunity for luxury brand positioning and engagement in the digital world.

The internet and digital media continue to form a regular and growing element of consumer lives spanning a broad demographic stretching through to high-net worth individuals. To stay current and continue to attract younger affluent consumers, luxury brands must find a way to manage and retain brand equity in the expanding world of consumer 2.0. The good news is luxury brand consumers want digital communications. With careful strategy development and communications, luxe brand managers can successfully adopt digital media without compromising brand positioning.

The modern luxury brand consumer

To contextualise our research-based model for developing luxury brand strategy in the digital world, we should understand existing brand engagement behaviours, purchase drivers and media consumption habits of today’s luxury consumer.

They are not a homogeneous group. Luxury brand lovers display considerable differences in spending power, spending frequency, brand loyalty and purchase motivations. Consumer typologies range from fashion connoisseurs motivated by the idea of staying abreast of the latest luxury fashions to product connoisseurs driven to collecting luxury items within a specific product category, for example Breitling, Boucheron and Cartier watches. Whatever the typology characteristics for luxury consumers, purchase motivations fall into three distinct categories: Indulgence, Exclusivity and Status; these three elements are the building blocks for strategy.

Luxury brand consumers are considered purchasers. They enjoy the full sensory exploration of luxury products, the experience of the in-store environment and they actively engage with brands on many levels. High-involvement purchasing demands immersive brand marketing. This represents a huge opportunity aligned to the uniquely interactive qualities of digital media.

Luxury consumers expect digital brand communications

Luxe brand consumers already extend their brand experience digitally wherever they can. They actively use digital media and technology to engage with brands well before purchase and to share and talk about luxury goods.

Our media diary research reveals frequent ‘pre-shopping’ through luxury brand and high-end retailer web sites, visits to fashion blogs and celebrity sites, luxury retailer and brand newsletters, sharing product links and images via email, Instant Messenger, and sending SMS/MMS messages during the in-store shopping experience. A recent study by the Interactive Advertising Bureau and Wallpaper magazine in the UK adds further weight to the relevance of digital media to luxury consumers. The study identified a premium group of online luxury consumers that is price insensitive, loves shopping, consumes all kinds of media and is very receptive and responsive to advertising.

Internet usage by luxury consumers typically ranges from 30 minutes to 5 hours per day. This presents a huge customer engagement opportunity for luxury brands both online and through emerging digital platforms including mobile and social networking.

Most significantly, our research discovered an expectation for digital communications by luxury brand consumers. Qualifications and parameters for appropriateness and acceptability of these communications are of course required, but failing to fulfil customer expectations through new media channels potentially threatens brand beliefs, positioning and loyalty.

The Luxury Brand Engagement Model

Our global research findings highlight an overwhelming consumer appetite for more digital media activity that exists alongside an expectation that the luxury sector will ultimately set the benchmark for digital advertising, just as it is perceived as doing in print advertising.
However, the transfer of marketing expertise from offline media to the web requires careful management and a workable framework within which to identify and understand behaviours within specific customer segments and apply insight empathetically online.

Analysis of luxury brand engagement can be crystallised into six key phases, all of which present opportunities for digital brand strategy, as follows:

1. Awareness
In awareness advertising, context matters online just as it matters offline. Consumers expect online creative to take what they’ve seen offline to the next level; high quality production and execution are critical to delivering consistency and a deeper, more interactive brand experience. Digital advertising should captivate not irritate.

2. Admiration
Part of the DNA of luxury brands is their ability to inspire admiration. Luxury brands have consumer ‘permission’ to take digital media communications beyond rational brand communications. Luxury brand owners want to be thrilled and impressed; with the right execution digital media can do this to stunning effect. Deliver involvement, entertainment and interaction in a personalised context.

3. Exploration
With a highly involved, experiential purchase cycle, expanding the opportunity for individual exploration of luxury brands presents a huge strategic opportunity. Conveying the heritage, authenticity and quality of the brand, brings it to life and complements the in-store experience that the majority of consumers ultimately enjoy.

4. Consideration
Personalised care and attention are the experiences consumers value within a luxury retail environment. Translating and extending these to digital media replicates the superior service and personal attention received in-store. SAKS Fifth Avenue’s live chat facility enables real-time peer-to-peer consultation for online browsers – an excellent example of direct, contextual engagement with the online experience. Recognising online visitors, offering membership and remembering personal information enhance individual engagement.

5. Purchase
Integrating the web with retail drives positive brand reinforcement. Consumers enjoy the ambience of the retail environment – enabling them to enhance this experience, perhaps through pre-reserved items or directing consumers to their most convenient outlet further improves brand experience, loyalty and talkability.

6. Ownership
Part of the attraction for luxury brands is their exclusivity. Digital media, through its inherent opt-in and individual communication channels has the ability to enable one-on-one, personalized brand communications with every customer. Brand advocates desire ownership that goes further than an arms-length relationship and creating an online ‘club’ deepens engagement still further.

The tide is turning

Despite a degree of conservatism by luxe brands in adopting digital communications we can expect digital brand strategy to become more prevalent as luxury marques seek to realise the opportunity for improved loyalty, engagement and relevance that digital media offers their brand.
Exclusive communities and individual experiences enabled through mass media can be created and managed by luxury brands. With increasing use of digital media across a range of platforms by high-net worth luxury consumers, demand for digital brand communications will continue to grow. Luxury consumers want mobile, email and web interaction with their luxury brand and this is set to supplement their retail experience. Custom solutions such as microsites linked to key events can be particularly good at deepening these consumers’ love for luxury brands.

Positioning for luxury brands has a future tied to digital. New media permeates every aspect of life for younger audiences; without brand presence, affluent young consumers will not connect with luxury marques or exhibit the kind of loyal and exclusive behaviours of older generation consumers. Relevance, innovation and exclusivity are at the heart of luxury brand positioning strategy; the exact same values that are delivered through good digital communications. It’s time to bridge the divide.”

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