Fashion brands are adapting their marketing strategies for a digital reality that goes far deeper than online sales.
On the opening night of the Frieze Art Fair, Chanel’s Mademoiselle Privé, a museum-like exhibition promising “an enchanted journey through the house’s creativity,” touched down, quite fittingly, at the Chelsea gallery owned by British-Iraqi advertising legend Charles Saatchi.
The latest in a string of public marketing spectacles staged by major luxury brands, the exhibition — designed by the same team that creates Chanel’s blockbuster runway shows — attracted a star-studded opening night crowd, including Stella Tennant, Julianne Moore and Lily-Rose Depp, along with a cadre of industry insiders and top Chanel clients. But the brand’s real target was the much wider audience following the action on their social media feeds. “I think what is fantastic with this exhibition is that, from scratch, everything has been thought of digitally,” says Bruno Pavlovsky, Chanel’s president for fashion.
A DIGITAL TIPPING POINT
The focus on digital is linked to shifting buying behaviour. In the five-year period from 2009 to 2014, online sales of luxury goods grew four times faster than offline sales. In fact, in 2014, nearly all luxury market growth came from e-commerce, with online sales registering the sharpest spike on record, reaching €14 billion, up 50 percent from 2013, according to a report by McKinsey & Company, a global consulting firm which predicts a “tipping point” in luxury e-commerce. The firm expects the share of luxury sales occurring online to triple in the next 10 years, from roughly 6 percent today to 18 percent in 2025, making e-commerce the world’s third largest luxury market after China and the US.
But e-commerce is just the tip of the digital iceberg. What lurks below the surface of shifting buying behaviour is a change that’s harder to track, but even more colossal. According to recent data presented by Michael J. Wolf, founder and chief executive of technology and strategy consulting firm Activate, the average American spends more time on digital media and technology than work or sleep. And, already, nearly three quarters of all luxury goods purchases, even if they take place in physical stores, are influenced by what consumers do online, according to McKinsey. “My assumption in the long term would be 99 percent,” says Nathalie Remy, who leads the firm’s fashion and luxury goods practice for Europe, the Middle East and Africa. “Ninety-nine percent of purchases will be influenced by digital in one way or other.”
A NEW MARKETING MODEL
In response, fashion brands have been rethinking where they advertise, shifting media buys from offline to online. “The spend in digital nowadays, even for the conservative brands, is over 15 or 20 percent. And for some brands that embrace digital in a higher way, it is more than 50 percent,” says Mario Ortelli, a senior luxury goods analyst at Sanford C. Berstein. But simply buying more digital ad space is what Remy calls “the easy part.” Changing not just where but how brands communicate and connect with consumers is more challenging.
The Internet has rewired media, upending the traditional relationship between companies and consumers, and forcing brands to rewrite their marketing strategies. In the pre-Internet era, when media was a monologue to a passive, captive audience paging through a print magazine, for instance, the dominant marketing model was built on interruption, paid reach and repetition. Fashion brands mostly built their marketing strategies around seasonal print campaigns. “Before, you made one campaign per season. You had the same campaign that you put in Vogue or the Financial Times for three months,” says Ortelli.
But media today is fundamentally different. Rather than a monologue, it’s a ‘multilogue’ unfolding in real time across a network of media-technology platforms where consumers are voluntary, active participants, meaning brands can no longer monopolise the conversation and, instead, must forge symbiotic, reciprocal relationships with others. “Online, you don’t completely own your way of communicating, because people can copy and paste, they can comment and share and so really it becomes an ecosystem,” continues Ortelli.
The ascendance of digital has also contributed to a rise in the number of touchpoints between consumers and brands, who now come into continuous contact with each other across a much wider range of platforms, from Instagram to e-commerce sites, resulting in more complex, non-linear paths to purchase. But according to McKinsey, which conducted a recent study on “the luxury consumer decision journey” across 21 touchpoints, ranging from Internet search to social media to store visits, luxury shoppers overwhelmingly tend to purchase from brands with which they are already familiar. Indeed, unlike in other sectors, like consumer electronics, for example, where active product evaluation plays a much bigger role in shaping customer preference, more than three quarters of luxury goods purchases come from the handful of brands that were already being considered by shoppers at the very beginning of their purchase journeys.
“The implication here is that luxury brands need to continue building their pre-eminence over time in order to be at the top of a consumer’s mind whenever a purchase occasion occurs,” reports McKinsey. “This process is more of a marathon than a sprint, requiring long-term building of brand awareness, reputation and category relevancy in a powerful and consistent manner.”
In this new reality, where media is networked and constant brand-building is more critical than ever, marketing success is less about simply reallocating ad spend and more about earning attention and distribution by nurturing the platforms where consumers spend time with emotional content experiences they will voluntarily seek out and share. “In terms of mindset, it's a major shift from simply buying the best advertising space to creating content,” says McKinsey’s Remy.
On the opening night of the Frieze Art Fair, Chanel’s Mademoiselle Privé, a museum-like exhibition promising “an enchanted journey through the house’s creativity,” touched down, quite fittingly, at the Chelsea gallery owned by British-Iraqi advertising legend Charles Saatchi.
The latest in a string of public marketing spectacles staged by major luxury brands, the exhibition — designed by the same team that creates Chanel’s blockbuster runway shows — attracted a star-studded opening night crowd, including Stella Tennant, Julianne Moore and Lily-Rose Depp, along with a cadre of industry insiders and top Chanel clients. But the brand’s real target was the much wider audience following the action on their social media feeds. “I think what is fantastic with this exhibition is that, from scratch, everything has been thought of digitally,” says Bruno Pavlovsky, Chanel’s president for fashion.
A DIGITAL TIPPING POINT
The focus on digital is linked to shifting buying behaviour. In the five-year period from 2009 to 2014, online sales of luxury goods grew four times faster than offline sales. In fact, in 2014, nearly all luxury market growth came from e-commerce, with online sales registering the sharpest spike on record, reaching €14 billion, up 50 percent from 2013, according to a report by McKinsey & Company, a global consulting firm which predicts a “tipping point” in luxury e-commerce. The firm expects the share of luxury sales occurring online to triple in the next 10 years, from roughly 6 percent today to 18 percent in 2025, making e-commerce the world’s third largest luxury market after China and the US.But e-commerce is just the tip of the digital iceberg. What lurks below the surface of shifting buying behaviour is a change that’s harder to track, but even more colossal. According to recent data presented by Michael J. Wolf, founder and chief executive of technology and strategy consulting firm Activate, the average American spends more time on digital media and technology than work or sleep. And, already, nearly three quarters of all luxury goods purchases, even if they take place in physical stores, are influenced by what consumers do online, according to McKinsey. “My assumption in the long term would be 99 percent,” says Nathalie Remy, who leads the firm’s fashion and luxury goods practice for Europe, the Middle East and Africa. “Ninety-nine percent of purchases will be influenced by digital in one way or other.”
A NEW MARKETING MODEL
In response, fashion brands have been rethinking where they advertise, shifting media buys from offline to online. “The spend in digital nowadays, even for the conservative brands, is over 15 or 20 percent. And for some brands that embrace digital in a higher way, it is more than 50 percent,” says Mario Ortelli, a senior luxury goods analyst at Sanford C. Berstein. But simply buying more digital ad space is what Remy calls “the easy part.” Changing not just where but how brands communicate and connect with consumers is more challenging.
The Internet has rewired media, upending the traditional relationship between companies and consumers, and forcing brands to rewrite their marketing strategies. In the pre-Internet era, when media was a monologue to a passive, captive audience paging through a print magazine, for instance, the dominant marketing model was built on interruption, paid reach and repetition. Fashion brands mostly built their marketing strategies around seasonal print campaigns. “Before, you made one campaign per season. You had the same campaign that you put in Vogue or the Financial Times for three months,” says Ortelli.
But media today is fundamentally different. Rather than a monologue, it’s a ‘multilogue’ unfolding in real time across a network of media-technology platforms where consumers are voluntary, active participants, meaning brands can no longer monopolise the conversation and, instead, must forge symbiotic, reciprocal relationships with others. “Online, you don’t completely own your way of communicating, because people can copy and paste, they can comment and share and so really it becomes an ecosystem,” continues Ortelli.
The ascendance of digital has also contributed to a rise in the number of touchpoints between consumers and brands, who now come into continuous contact with each other across a much wider range of platforms, from Instagram to e-commerce sites, resulting in more complex, non-linear paths to purchase. But according to McKinsey, which conducted a recent study on “the luxury consumer decision journey” across 21 touchpoints, ranging from Internet search to social media to store visits, luxury shoppers overwhelmingly tend to purchase from brands with which they are already familiar. Indeed, unlike in other sectors, like consumer electronics, for example, where active product evaluation plays a much bigger role in shaping customer preference, more than three quarters of luxury goods purchases come from the handful of brands that were already being considered by shoppers at the very beginning of their purchase journeys.
“The implication here is that luxury brands need to continue building their pre-eminence over time in order to be at the top of a consumer’s mind whenever a purchase occasion occurs,” reports McKinsey. “This process is more of a marathon than a sprint, requiring long-term building of brand awareness, reputation and category relevancy in a powerful and consistent manner.”
In this new reality, where media is networked and constant brand-building is more critical than ever, marketing success is less about simply reallocating ad spend and more about earning attention and distribution by nurturing the platforms where consumers spend time with emotional content experiences they will voluntarily seek out and share. “In terms of mindset, it's a major shift from simply buying the best advertising space to creating content,” says McKinsey’s Remy.
by Vikram Alexei Kansara, Business of Fashion | Read more:
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