The Splendor of Luxury Collides with Ordinariness Online

Luxury adtech uses low rent concepts

The brick-and-mortar world of luxury is a truly delightful place – gorgeous stores and showrooms, discreet and informed sales people, and highly attentive service. Retail locations and their front windows are the best possible advertisements for these brands.

Fashion and lifestyle magazines are also brilliant showcases for luxury brands. Their ads are part of the editorial for publications like Vogue, Elle and Town & Country, and readers actually look forward to seeing them because they’re so compelling.

And then there’s online luxury advertising, which is decidedly low rent in its appearance, despite the impeccable quality and allure of the products being featured.

We can’t fully blame the leading luxury brands for this – they’ve been behind the curve, but there also just aren’t enough options available, even now, to deliver a luxury advertising experience online. Why haven’t we seen a fit-for-purpose equivalent of a print luxury environment on the web? Hey, tech world, a little help, please!

Our research at Dandelion Chandelier shows that right now, in addition to traditional banner and display ads, luxury brands are making do with some combination of the following:

–Native advertising and content marketing: on their own sites, most luxury brands are leveraging content marketing (creating relevant and valued original content to attract and engage consumers for both brand-building and driving e-commerce). Their content offerings include proprietary research, infographics, podcasts, blogs, and informational videos. Relatively few are using content marketing in publishing environments with native placements of branded content.

–Video ads: to date, the majority of marketing spending on digital video has been driven by cross-platform television and online campaigns; this is a limiting factor for many luxury brands, as they do no TV advertising. While some players – such as luxury automotive, beauty and hotel brands – have leveraged their TV ads online, those without TV campaigns have been slow to dedicate the resources to creating digital-only video ads. The confluence of targeting, digital video and social platforms may accelerate the adoption of video for even the more reluctant luxury brands, as it will increasingly become a competitive necessity to reach wealthy millennials who don’t watch much TV.

–Social media: luxury brands are primarily using Instagram, You Tube and Facebook, but more recently brands like Burberry have been experimenting with SnapChat. Last week Pinterest announced that it is joining the fray, selling video ads for the first time. On the various social media sites, you’ll find photos, fashion shows and some “behind the scenes” videos from luxury brands. They’re mostly ad-supported versus organic sharing from users, and the audience reach is quite high: Chanel has over 14 million followers on Instagram, and Dior has 11 million (in contrast, Rolex has a mere 1.5 million). Interestingly, Facebook brand sites generally have a high number of followers, but luxury brands appear to be using it less than they do Facebook-owned Instagram. Instagram’s recently-launched Stories – identical to SnapChat Stories – could be an intriguing format for luxury brands. I’m wondering if the ephemeral nature of this particular app – postings disappear after 24 hours – will make it less appealing for brands meant to stand the test of time. An interesting recent piece in the New York Times asserted that user-generated Stories tend to be much more raw and unedited than Instagram photos, because they disappear without a trace. Perhaps luxury brands will take a cue from that, and roll the dice on content that is more provocative (or more playful) in this format.

–Programmatic and re-targeting: By far the most visible form of digital advertising, anyone who visits luxury brand sites has had the experience of being stalked by targeted ads in the following days. Luxury brands seem to do this mostly with trusted partners, like the New York Times and the Washington Post, who can deliver the brand-right and upscale environments they seek. The ad units themselves are not “rich media” like videos – they’re just banner ads to get you to go back to their sites and buy something (something marketers call “bottom of the funnel.”) Yes, luxury consumers, you are definitely being followed around the web, whether you like it or not. Our research on the top 120 luxury brands in fashion, beauty, watches and fine jewelry indicates that brands including Bottega Veneta, Brunello Cucinelli, Aquatalia, Alexander McQueen, Chopard, La Roche-Posay and Charlotte Tilbury are re-targeting. The persistence of preference for sites like the New York Times, despite the use of programmatic capabilities, suggests that most luxury brands are either using restricted site lists for programmatic buys, or that they have found a way to retarget through a direct relationship with the publisher, rather than through an intermediary (the CMO crowd calls this “programmatic direct”).

In sum, while there are some interesting developments underway, it seems to me that there’s a huge market opportunity here still waiting to be capitalized upon. The websites of the leading luxury print publishers would be the natural place to find a vibrant online advertising environment; so far their success in this realm has been limited. Instagram and SnapChat are clearly making a play for these ad dollars as well. It will be fascinating to see who gets to “own” this space the way the big print publications once did.

In the meantime, what does this mean for luxury consumers? Probably a gradual increase in engaging online videos, hopefully some fun interactive features, and perhaps more user-generated organic content creation and sharing around favorite luxury brands.

For sure it means the same loss of privacy that everyone faces browsing around online. I don’t love being followed around the web, it actually creeps me out, but I know that sometimes it benefits me. Yesterday I got a targeted email from Bergdorf Goodman promoting stylish flat shoes right after I bought boots (not flats) at the store. They were super-cute, and I am highly likely to buy them (they’re new from Miu Miu, in case you’re wondering).

Despite the complexity and expense of everything we just reviewed, it seems fitting to end with this note of healthy skepticism and proof of an eternal verity (to the dismay of ad-people everywhere): the fact that I’m now planning to purchase these shoes demonstrates that if the product is spot-on, and we know where to buy it, as consumers, who really cares about the ad? Or how it found us?

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