Online Marketing for Luxury Brands – Simplifying a Complicated Relationship: Part One

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					Online Marketing for Luxury Brands - Simplifying a
Complicated Relationship: Part One
Luxury brands, until recently, were hesitant to explore the online marketing space. One of the main reasons for shying
away from online, especially social media advertising was the prospect of losing the „exclusive‟ tag. However, despite
arriving a little late to the social media party, prestige brands have more than made-up for the lost time. What gives
these ‟select few‟ the edge over other brands is the one-on-one relationship they share with their consumers.
According to a recent study by ThreatMetrix in partnership with the Ponemon Institute, it is this close relationship
that establishes the trust between luxury brands and their customers and allows them to succeed in areas where other
brands have failed. Further supporting these findings are some interesting examples of prestige brands that have aced
online marketing:

        The first luxury brand to launch an F-commerce initiative entirely on the social medium was Oscar de la
        Bulgari, which thrives on its „niche‟ status, recently launched a Facebook storefront with jewelry retailing for
        $12,000 and up.
        The greater part of Burberry‟s traffic comes from Facebook, when compared to Google.
        Footwear and handbag brand Jimmy Choo‟s creative director and founder Tamara Mellon, decided to draw
        attention to the label‟s first fragrance by launching a new blog, A Day, A Thrill.

PM Digital Research‟s analysis on the luxury retail market shows that social media accounts for nearly 10% of traffic to
the luxury category, Facebook being the most significant player, with its share ranging from 4% to 10%. Although this
may not be much when compared to other channels like „Search‟ and „Shopping‟ sites, this figure is nevertheless on
its way up.

With a large percentage of high-income shoppers using online media to purchase products currently, it has become a
norm for most luxury brands to have a Facebook or Twitter presence. However, simply being present on a horde of
networking sites does little to increase traffic or sales. In the first of a two part series, team Position² looks at how
engaged these brands really are what influences the affluent customer to buy that expensive something via social

© Position2, Inc.                                                                                                           1
        What Makes Social Media the Information Goldmine?
For 90% of affluent internet users who regularly shop online, digital media is their number one source of information
(Digital Strategies for Luxury Brands for Publicis NY). With most of their prospective customers thronging social media
sites for everything from product recommendations to posting reviews, it is not surprising to see previously social
media-shy brands making the transition to e-commerce.

            o   The Impact of Third Party Information Sources: Converting prospective customers to regular
                shoppers and influencing their online purchasing behavior is largely dictated by third party
                information sources like customer reviews, discussions and price comparisons. Despite brands‟
                websites and social media pages featuring all the necessary information, nothing works as well as
                word-of-mouth recommendations. For luxury brands looking to increase their customer base, it is
                important to allow customers and visitors to have access to this information.

            o   How Bare Escentuals Nailed It: Previously,
                prestige brands were not comfortable about
                posting user reviews and allowing the general
                population to view and share this information via
                social media. However, one company that can
                serve as an example of how user reviews and
                information exchange can positively impact their
                brand‟s image online and send the sales charts
                soaring is Bare Escentuals. The luxury brand
                invites users to review their products and post
                their thoughts on their Facebook page. By creating
                a feeling of being a „close-knit family‟, Bare
                Escentuals encouraged users to share photos,
                stories, even going as far as allowing them to
                comment on sales via the “Global Family”
                Facebook tab. Still wondering about letting people
                in and losing the „exclusive tag? Bare Escentuals, boasting+484,000 „likes‟, should be inspiration

        Engaging with the Niche Customer Online
Despite having a social media presence, many brands, until recently, did not allow fans to post on their page(s),
restricting communication and leaving no room for engagement. According to L2 Prestige 100 study, 20% of prestige
Facebook pages did not allow fans to post on the brand wall. This, however, changed after 15th August 2011 when
Facebook made two-way interaction mandatory. In what we can call „a leap of faith‟, luxury brands today are not only
encouraging interaction in the form of user reviews, but are also going that extra mile to strengthen engagement with

            o   Why Are Luxury Brands Hesitant to Engage Online? The L2 Prestige 100 study ranked L‟Occitane #1,
                followed by Kiehl‟s and Korbel in its list of most responsive Facebook brands. While the study certainly
                shows that prestige brands are better engaged than before, there are some other brands such as
                Prada, Marc Jacobs and Hugo Boss that have only recently opened up and, in some cases, are still only
                selling limited items such as accessories. Keeping up with the competition is one of the main reasons
                why these brands have joined social media sites. Studies show that this hesitancy stems from their
                worry of losing the coveted „exclusive‟ statuses, considering the uncontrolled environment of social

© Position2, Inc.                                                                                                     2
            o   Engaging with the Younger Luxury Demographic: Where some brands are testing the waters when it
                comes to online engagement, there are others who have done their homework and know where their
                most important customers are. Although fairly new to the social media marketing space, today‟s
                luxury brands understand the importance of reaching out to and engaging with the next generation of
                luxury customers i.e. the younger demographic. Financially empowered, more open to the idea of
                online shopping, and willing to connect with brands via social media, it would be unwise to ignore
                their potential as luxury customers. What we suggest? Listen to what they have to say and understand
                their needs before attempting to engage with them online.

            o   Beyond Geographical
                Boundaries: One of the great
                things about social media
                marketing is the power to reach
                across geographical boundaries
                and connect with customers from
                any part of the world. When
                French skincare line L‟Occitane
                en Provence decided to take
                brand engagement to the next
                level by talking to potential
                customers from different parts of
                the world, the company decided
                to launch a social media-driven
                photo project in July 2011. By

© Position2, Inc.                                                                                                  3
                asking customers to snap photos of the brand‟s Shea Butter Hand Cream against the backdrop of a
                landmark specific to their town or country, L‟Occitane saw social media interaction from consumers in
                New Jersey, China and Amsterdam, to name a few. Allowing users to upload these photos on
                L‟Occitane regional social media sites such as the U.S. Facebook and Twitter, the Korea Twitter and
                the Israel Facebook, the skin care company successfully engaged with global consumers and increased
                the brand‟s visibility in the process.

How can luxury brands approach social media content? Will offering discounts and
deals tarnish the ‘exclusive’ tag?
Having to choose between holding on to their „exclusive status‟ and venturing into the unfettered world of social
media marketing, luxury brands today are trying to find the middle ground; this they are doing by having a social
media presence, but not completely letting go. Our first part of the series covered why prestige brands are hesitant to
engage with customers online and how they can make their social media page a rich source of information. In the
second and final installment, we will feature tips on how luxury brands can improve their online content and if
offering deals and featuring contests is a wise move.

© Position2, Inc.                                                                                                     4

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Description: Luxury brands, until recently, were hesitant to explore the online marketing space. One of the main reasons for shying away from online, especially social media advertising was the prospect of losing the exclusive tag. However, despite arriving late to the social media party, prestige brands have more than made-up for the lost time.