Hindsight is a wonderful thing but most luxury executives now admit that their brands were slow to embrace the digital revolution and to seize an opportunity to demonstrate their commitment to leadership and innovation.
But have luxury brands truly embraced digital? If so, how? And are there still pockets where luxury brands are lagging behind? The recently released report from the Luxury Society, The Digital Agenda, aims to answer these questions.
The imperative behind the adoption of digital for most of the 500 respondents was improving brand awareness and communicating product information – 92% used digital techniques for the former objective and 90% for the latter.
But luxury brands are also adopting digital, and social media in particular, to connect and engage with new and existing customers. 85% of the sample noted this as a business objective, with 71% having created a Facebook Page and 54% having a Twitter profile. Fewer had realised the customer service benefits of these media though – 69% mentioned using digital to improve their customer service as an objective.
Ecommerce had also been adopted by many – 75% used digital to sell products and services – although for most, online sales only accounted for less than 10% of sales. The expectation was for this to grow over the next 3 years, with 56% of the respondents expecting ecommerce sales to represent between 10 and 25 % of their business by 2013, and 37% expecting between 25 to 50% of their sales to be generated by this channel. However, the report noted that many brands had not yet extended their ecommerce offerings beyond the US and Europe, and were missing opportunities in key emerging markets such as Russia and China.
In terms of the allocation of digital media spend, at present only 23% of respondents spent more than 25% of their budget on digital. However, by 2013, this figure was expected to double. The luxury executives surveyed clearly preferred known, premium and controllable environments for their online promotional efforts. Online luxury and lifestyle magazines and exclusive community sites were popular. Advertising networks weren’t, entirely due to the lack of visibility of the environments in which their advertising would be appearing.
So far so good. The majority of luxury brands seem to be up to speed with digital even if they’re not at the forefront of innovation. But there are a few key areas where the report found that digital opportunities were not being grasped.
For example, branded digital content such as online videos and magazines – an excellent way to engage and inform prospects about the brand’s story and the craftsmanship behind its products, and to drive relevant prospects to their sites virally – had only been embraced by 58% of respondents.
And considering most luxury consumers researched new products via search engines, it was surprising to see only 58% had invested in search engine optimisation.
Digital PR also saw relatively low levels of take up, suggesting that luxury brands were still lagging behind their consumers in their adoption of digital media and were often failing to connect with key influencers such as bloggers.
Finally, just 35% had implemented mobile solutions such as a mobile apps, tablet apps and mobile sites. This relatively low percentage was offset by the 37% of respondents who were planning moves into this channel soon.
The survey reveals an industry growing increasingly confident with digital media and showing a desire to innovate in a measured and controlled way. This seems to be an entirely sensible way to proceed from an industry that has more to lose by getting it wrong. However, there are pockets of obvious opportunity where some brands are missing out, such as the creation of branded content and the implementation of online PR.
Research proves that luxury consumers are sophisticated and more likely to be engaged with digital technology than the rest of the market. Luxury brands need to proceed in a carefully thought through and measured manner but perhaps ‘up the pace’ to ensure they meet the high expectations of their customers rather than risking disappointment.