Luxury brands see their marketing efforts migrating to the digital world even faster than their sales.
A survey of marketing executives at 130 luxury companies, about a third of them from the fashion industry, found that three in five — 60 percent — expect digital marketing to be their most important marketing activity by 2015, more than twice advocacy and loyalty programs, which came in at 27 percent.
Traditional print and television advertising garnered 8 percent of the vote and events 5 percent, while product placement yielded less than a 1 percent response, according to the report, “The State of Luxury Digital Marketing,” by the Luxury Interactive unit of Worldwide Business Research and ShopIgniter.
Digital’s share of current marketing budgets was far more modest, with less than a third devoting more than 40 percent to it. Just 3 percent of respondents reported dedicating between 81 and 100 percent to digital marketing versus 11 percent at between 61 and 80 percent and 17 percent at 41 to 60 percent. More than a third — 34 percent — put themselves in the range of 21 to 40 percent and slightly more, 36 percent, said they were in the zero to 20 percent range.
The study didn’t break down responses by merchandise category.
Preliminary results of the study were released in October but additional data were collected at the Luxury Interactive conference in New York later in the month, more than doubling the size of the sample from its original 60 respondents.
Asked if they intended to increase their digital marketing spend in 2013, 85 percent answered in the affirmative versus 2 percent who said they wouldn’t and 13 percent who weren’t sure. In 2012, 80 percent increased their digital marketing expenditures versus 14 percent who said they were flat with those in 2011 and 6 percent who said they’d been reduced.
Uncertainty is greater, and support less solid, for social media spending. Seventy-two percent said it would increase this year while 7 percent said it wouldn’t and fully 22 percent weren’t sure. In 2012, social media expenditures rose for 77 percent of the sample, were flat for about 19 percent and fell for about 4 percent.
As was the case with the preliminary results of the study, Facebook remained the social media platform of choice among luxury marketers. Asked to designate the one social media account they would select if they could choose only one, Facebook received 76 percent of the votes, followed by 13 percent who said Pinterest, 9 percent Twitter and 2 percent Google+. Asked to designate all social media channels where they are actively engaging their customers now, 95 percent said Facebook, followed by Twitter at 85 percent, Pinterest at 60 percent and YouTube at 59 percent. “Traditional e-commerce site” was selected by 52 percent of respondents, “seasonal and brand microsites” by 33 percent, Instagram by 29 percent and Foursquare by 10 percent.
Yet social media represented a fairly small share of the overall digital spend undertaken by the brands. Exactly three-quarters of them said they allocate between zero and 20 percent of their digital marketing expenditures to social, with only 15 percent between 21 and 40 percent and only the remaining 10 percent at 41 percent or higher.
“Social commerce is still registering fairly low,” said Kelly Hushin, digital content manager for WBR and author of the study. “Marketers are still exploring it and putting their investments into brand building. They’re still viewing social media as a marketing channel.”
She noted that, while Facebook clearly held the dominant position as luxury marketers surveyed the digital landscape, Pinterest, “the newest of the options given,” had finished second, ahead of the longer-established Twitter. “For a lot of companies, Facebook is just the place where they decided to build their branded communities online.”
An indication of this vibrancy can be found in figures from Stylophane, the digital marketing company that monitors activity among fashion companies on Facebook. Led by Converse with 34.3 million “likes,” the number of fashion companies with at least 1 million likes was 71 as 2012 ended, just slightly more than twice the 35 brands that had reached that milestone at the end of 2011.
Luxury merchants continue to equate social media with building brand equity to a greater extent than sales. Asked to identify their primary goal for social media efforts, the top choice was “driving brand engagement and loyalty,” chosen by 48 percent of those surveyed, followed, at 30 percent, by “acquiring new customers.” Driving sales, driving product discovery and generating customer insight were the third, fourth and fifth most popular options.
Hushin estimated that about a third of the polling sample came from apparel, accessories and footwear firms, including brands and companies such as Neiman Marcus, Bloomingdale’s, Ralph Lauren Corp., Barneys New York, Cartier, Chopard, Louis Vuitton, Tory Burch, Tommy Bahama, David Yurman, Christian Louboutin, Marc Jacobs, Donna Karan and Tourneau. A number of firms outside the luxury realm — such as Gap Inc., J. Crew Group and L.L. Bean — also attended the conference.