Luxury brands look to digital to attract generation AAA

Luxury brands, especially those with significant exposure to China have had a tough 2015. Swatch group annouced a 20% drop in 1H2015 profit whilst Prada saw a 25% drop in its 1st half profits, citing a slump in demand from China and Hong Kong. Jaguar Land Rover sales in China have fallen 20% in 2015 and Maserati closed its Beijing financial street showroom.

Growth in Asia was essentially driven by opening more stores, filling them with a lot of stock and mass advertising. On the whole, luxury brands ignored or at best paid lip service to digital.

This was a huge mistake as Asia’s e-commerce market is now worth US$525bn in online sales and is growing at 25% per annum. This article in CMO magazine that I contributed to, explores what went wrong and what luxury brands need to do to engage Asian consumers online.


It’s getting easier to advertise luxury brands

Newsweek’s announcement that it will transition to an all digital format in 2013 is hardly a surprise. Such global magazines are increasingly expensive to produce and in a niche world, less relevant.

Newsweek – almost 80 years in print

But the bigger impact will come in the way advertisers communicate with consumers.

According to research carried out by comScore, more tablet users are reading magazines and newspapers on their tablets.

comScore talked to 6,000 tablet users over a 3 month period (I’m not sure of the geographic locations of the participants) and overall, 11.5% of tablet owners read a newspaper on their tablets ‘almost every day’ or ‘at least once a week.’

Tablets are not cheap and this is reflected in the income levels of the participants as half of tablet owners who read a newspaper on their device have household incomes of US$75,000 or more.

Readers of tablets and newspapers online are also more likely to be younger, with adults aged 25-34 accounting for 27% of newspaper readers and 28% of magazine readers on tablets.

Other research from GfK MRI found impressive engagement rates for digital advertising across tablets. They surveyed 30,000 ads across 1,000 magazine issues earlier this year and found 55% noted or read a digital ad on a tablet or e-reader.

And of those, 52% interacted with the ad as a result.

So does Newsweek’s decision and the changing way in which we source our news and current affairs information mean that this mean the end of the newspaper and magazine?

Absolutely not, especially in developing countries where many of the population are still not online or prefer to source their information from traditional sources.

But it does mean that many brands, especially luxury brands aimed at more affluent users, don’t need to waste resources on pointless ads on page 3 of daily newspapers.

New data means Gucci can target ads more effectively

After all, if affluent readers are sourcing their news from tablets, why advertise a luxury product in a traditional newspaper or magazine, especially when the engagement rates are so high?