Friday, September 14, 2012 | Edited by Daniel Moores
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Luxury Marketers Moving to Digital Advertising

According to a study by Martini Media and Digiday, "Engaging the Affluent Online," which polled marketers and ad agency personnel, agency executives say 37% of mass marketers' branding dollars are spent in digital marketing, whereas only 31% of luxury marketers' budgets are spent in digital.

However, 43% of the respondents feel that their luxury clients are moving into digital advertising more quickly than mass market brands, with another one-third feeling that they are moving into digital at the same pace.

Additionally, anticipated growth in digital is high among luxury advertisers. 77% anticipate at least some growth between 2011 and 2012, 48% anticipate growth of 10% or more, and 18% anticipate growth of 20% or more.

Anticipated Speed Of Luxury Clients Moving Into Digital Advertising
  • Moving more quickly 43%
  • Moving less quickly 33%
  • Moving at the same pace 34%
In general, agencies and brand marketers have similar estimates of how their digital ad budgets are allocated. Digital display advertising (online display, video, mobile) represents over half of luxury brands' digital budgets. The only area where brand marketers differed in their estimates of spending was for social media. Agencies estimate that their luxury clients spend 10% of their digital budgets on social, whereas brand marketers estimate 22% of their digital budgets are spent on social.

Going forward, agencies project the fastest increases in video, mobile and social media, while spending in standard display is expected to decrease the most of all categories cited.

Luxury advertisers anticipate spending more on video and rich media compared to mass-market brands this year as compared with last. In part, this could be because the sight, sound and motion of online media is beginning to wean luxury advertisers away from the presumption that only glossy print magazines or television can adequately portray their goods in the right light.

Eight in 10 respondents with luxury clients or advertisers who target high-income consumers agree it's worth paying premium CPMs to reach luxury consumers. But currently only 29% of luxury advertisers say they do spend more online to attract luxury consumers. 48% of respondents say they spend less and 23% say the cost of marketing to luxury consumers is the same online as in traditional media.

Fourteen percent of agency respondents said the amount of spending that will shift from TV to online video advertising in the coming year would be "material." Forty-three percent said "some" of luxury advertising spending would shift to online video advertising, and another 35% said their clients will be experimenting with online video.

Across the board, both advertisers and agencies said that, for luxury advertising, digital is as effective as TV for building brand favorability and sales, and much more effective in driving online sales.

From an agency perspective, luxury client demands include paying more attention to the editorial environment where their ads appear. The sensibilities of the target consumer require that advertisers "make sure digital is more highly focused and less intrusive." The business of agencies with luxury clients is all about "finding the outlets that truly target the audience." Perhaps it is for this reason that agency respondents say that context and the ability to target customers are the most important criteria for selecting media for luxury clients.

Brand lift and sales are the most important criteria for success, but the only things luxury brand marketers say they can adequately measure is CTR, time spent, sharing or reposting activity and interaction rate.

Concluding, the report says that as luxury marketers move to close the gap in digital spending with their mass-market peers, they'll bring a more sophisticated brand sensibility, and the metrics that accompanies this. Luxury brand marketers are more willing to find their customers on niche, passion-based sites, rather than in only the online adjunct of either a print or television product.
  • Although luxury marketers have been lagging behind their mass marketing counter parts in terms of digital spending, they are moving into digital at a faster pace than their mass marketing peers in 2012, according to the agencies that serve them
  • Rich media, social, mobile and video are the hottest areas for growth, while standard display banners lag. Marketers are more bullish on social media than their agency peers, but both agree that TV dollars will be shifting to online video for luxury marketers
  • Context and targeting are the most important criteria for online media selection for luxury brands. Luxury marketers agree that it is possible to build reach through niche, passion-based sites
  • Digital media is perceived to be more effective than offline marketing in driving both favorability online and in-store purchase, but Luxury marketers still need to improve the ability to measure key metrics
(Source: The Center for Media Research, 09/06/12)

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