NEW YORK — Luxury brands must take their marketing models to another level by using technology to reach across the Internet to engage their customers wherever they are.
This story first appeared in the December 23, 2009 issue of WWD. Subscribe Today.
That was the consensus among an eclectic group of luxury executives, critics and artists who gathered at The Times Center here last month to talk about luxury and innovation.
“The idea that luxury will go away or be reinvented in a different form — this is absolute rubbish,” said Scott Galloway, New York University professor of marketing and RedEnvelope founder, whose LuxuryLab think tank organized the conference, called Innovation Forum. “People feel closer to God around beautiful things. We had a recession and sales are down.”
The luxury consumer goes to the Web to find things to buy at twice the rate of regular consumers, said Booz & Co. consultant Bart Sayer. Yet the typical luxury firm spends less online than on traditional advertising.
The world is moving from a broadcast model to a many-to-many conversation, speakers agreed. Brands should think about how to join in the global conversation. Mobile devices will be key.
“A lot of the challenge of the last 10 years has been, ‘How do I get people to come to my Web site?” said Peter Horan, chief executive officer of e-mail company Goodmail Systems Inc. “It’s a horseless carriage problem. The question is, ‘How can I go to the consumer?’”
Half of people age 18 to 25 own smart phones with unlimited data plans, he continued. Forty percent of those do not have a land line. Movie-ticket seller Fandango embeds movie trailers in e-mail, and now seven times more people view the trailers, he said. Target Corp. also sends out video in e-mail. “They’re putting the message out where the customers are. Stop thinking your real business is offline,” said Horan.
New York Times senior vice president of digital operations Martin Nisenholtz and Henry Blodget, founder and ceo of online publication The Business Insider, agreed online brand advertising will come back.
“Don’t worry if nobody clicks,” said Blodget, a former technology stock analyst who was barred from the securities industry after disclosures that his private e-mail messages disparaged companies he was publicly touting to investors. He also paid a $4 million fine to the Securities and Exchange Commission. “They’re still seeing your ad.”
Polyvore founder Pasha Sadri agreed brand advertising will come back but suggested it will take a different form, such as brands paying to stand out from the many personalized messages users will receive. On Polyvore, a Web site where members create collages of fashion merchandise, a handful of brands sponsor contests each week. Images of the brands’ merchandise are incorporated in collages and sent out around the Web.
“Do they sell you media or enable distributed engagement?” asked Halogen Network founder Greg Shove. Media should be doing the latter, as is the case with the Lucky iPhone shopping app, he said. The app lets users purchase an item online or reserve it at a nearby store.
John Demsey, group president of the Estée Lauder Cos. Inc., recounted how the company spent thousands of dollars to produce a YouTube video that did not get nearly as many hits as one created by a MAC makeup artist called “Chantel’s Smoky Eye.”
“That is the essence of the new paradigm,” he said. “Fortunately, she happens to work for us.”
Photographer Todd Selby said he started Theselby.com to show the habitats of creative people that are left out of the portraits he shoots for magazines. He has recently worked on Selby-style multichannel ad campaigns for Nike, Habitat and Cole Haan, and has a book coming out this spring.
Audemars Piguet president and ceo Francois-Henry Bennahmias provided a counterpoint, explaining why the brand’s marketing strategy is different. Like other luxury watch companies, it does not sell online, although half of sales are now transacted over the phone, a change that has come in the last three years. There is no media buying category for its customers, who earn more than $250,000 a year. The company’s $30 million in annual revenues comes from selling only 600 watches. Audemars Piguet has found it most productive to focus on philanthropy and holding small parties with about 15 people, he said.