Opinion
How do you market luxury these days?
02 February 2012
The economic downturn is continuing, so is there really a sustainable market for luxury goods?
It seems that stores are having one continuous sale these days. Spring Sale, Mid-season Sale, buy now pay nothing until 2013, the push to get us spending and get economies rolling again continues and its making very slow progress.
So, as we keep tightening that shrinking belt, what about the market for high end luxury goods? Surely that’s taking a hammering too? It's not.
In reality, the figures paint a very different picture. The demand for luxury goods has never been higher. Estimates vary, but some reports value the luxury market at between $60bn and $20trn, including consumers who are trading up. That’s a big market by any standards.
So where are these big spenders? And more importantly, how do you reach them?
The fact is that affluent shoppers have never stopped searching online for luxury products.
Luxury brands may not have been early adopters of e-commerce, but now that they’ve seen that it doesn’t damage brand value they’re embracing technology and everything it has to offer. Online, mobile search, apps, even video-on-demand are all being explored by the world’s biggest names.
The key to commercial success with any of these platforms is, as ever, is the targeting. Take search for example.
It is difficult to discriminate against lower-income consumers with search engine marketing as the keywords they use to search are usually very similar. Keyword searches don’t reveal incomes so you have no way of knowing if this person is looking buy a bag for $50 or $500.
So, how do you differentiate?
It certainly helps to split campaigns up to target different geographical areas – users in high-income regions tend to display a higher conversion rate than those in lower-income regions. By splitting the campaigns you can use different bidding strategies for each group.
In order to capture high-income users in developing countries, target specific regions in those countries where wealthier people tend to live (i.e. Almaty in Kazakhstan or Rio de Janeiro in Brazil).
In developing world cities such as Almaty, the centre of the Eurasian continent, we create campaigns that only target iPads. Why? Well iPads are a luxury product and they cost considerably more in developing cities than the UK. We use this as a way to segregate higher income users. Results have been significant, with iPads users converting at a much higher rate than PC users.
Consumers looking for luxury products take longer to convert, engaging in many more interactions before converting. You need to understand user conversion and develop growth strategies by building attribution models.
The path to conversion can be a long one with luxury brands so it’s important that you get this right. There are a number of conversion tagging providers out there who can help you do this.
The market for luxury brands is out there and ready to spend. With some creativity, combined with the best use of technology available, you can reach them, no matter where they are.
Farhad Koodruth, managing director, Blowfish Digital