The Luxury Letter Blog

February 2009: Publisher’s Note
February 3, 2009, 6:40 pm
Filed under: Uncategorized

It’s time to face the facts. Many of you will notice I have taken down the “half empty vs half full” segment because, well, things had tipped so significantly to the “half empty” side that it was time to let go. I still hold that just because luxury is down does not mean it is out, but it has come time to face the facts and assess the situation at hand. Adcision Luxury Media, the publishers of this newsletter, found this sobering yet informative article by Unity Marketing on Marketwire. Their latest survey of over 1,000 affluent customers found, not surprisingly, that the nations richest shoppers are continuing to cut back on luxury indulgences and plan to put money that would normally have been put toward lavish items, vacations, and services will be put into savings in 2009.

What does all of this mean for luxury marketers’ prospects for 2009? Thomas Bodenberg, Unity Marketing’s chief consumer economist, says, “If we look at the LCI (Luxury Consumption Index) results in a positive light, the downward spiral in the past several quarters has leveled out. At the same time there are a number of key factors behind the index that continue to moderate the affluent consumers’ outlook. For example, the collapse of the credit markets and the inaccessibility of easy credit has hindered the financing of major discretionary purchases.” He then goes on to explain that, “consumers, even high-income consumers, are allocating spending to ‘essentials’ like housing, food and healthcare, while cutting discretionary spending.”

A related article by GLG News titled “The Future of Luxury,” explains that, “There will be companies who will struggle in all segments (accessible luxury, independent brands and global luxury brands), while others will thrive. This is a good thing. Joseph Schumpeter called it creative destruction; the process whereby sleeping giants are replaced by innovative upstarts over the longer-term.” The article theorizes which luxury brands will make it through the recession and which ones will disappear altogether and whether or not this is a “cyclical downturn” or “a more permanent ‘structural correction’.” The article on a whole brings to the table some interesting questions but offers hope that many brands will be able to cope with the situation.

We encourage our readers to continue to weather the storm and find new and inventive ways to market your product or service to be fitting with the current economic times. Check out the article below on what Neiman Marcus is doing to appeal to their most loyal customers for an example of how they are thinking with the times. Sit tight, look toward the future, and use the resources you do have to your advantage.

Click here to view the full study by Unity Marketing.

Click here to view the full article by GLG News.


Luxury Hotel Marketing and Price Warfare: 2 Schools of Thought
February 3, 2009, 2:42 pm
Filed under: Uncategorized

By Monique Smith, Senior Adviser, Criterion Global

In this global downturn, even consumers richer than Midas are taking a deeper look, and more carefully weighing purchase decisions – much to the discomfort of marketers worldwide.
Every luxury brand fears the critical eye of the newly frugal consumer, but the tests of time have shown advertising is an indispensible necessity in recession. The famous formal test by McGraw-Hill in the 80’s, oft-remembered by marketing professors at UPenn’s Wharton School of Business, showed that brands that continued or increased advertising during the 1981-1982 recession experienced an avg. increase of 256% in post-recession sales, over those who didn’t.
But how much should the tenor of the time temper the tone – and message – of advertising? And how effective are price promotions? So often, two schools of marketing emerge in rough waters: that of the “Drop It Like It’s Hot,” and the “Quid Pro Quo” philosophy of added-value.
The “Drop It Like It’s Hot” approach means cutting room prices– this is the knee-jerk response to weakening demand. The “Drop It Like It’s Hot” price cut is tempting, particularly in times when headlines everywhere seem to broadcast the sinking prices of milk, cars, homes – you name it. But do price cuts motivate luxury travellers?
Low-balling your comp set a) signals emergency, b) slims down profit margins and RevPAR, c) gives guests a sense of “real” or “bottom” prices – prices which they will inevitably expect, even if subconsciously, when times are good again. To quote Terry Jicinsky, senior vice president of marketing at the Las Vegas Visitors Authority, “You don’t want to build a brand in today’s market based solely on a price that backs you into a corner.”
Finally, slashing prices doesn’t necessarily bring about a surge in demand.
Consider a “Quid-Pro-Quo” value-add strategy, which presents the consumer with greater value for their dollar. For example, a value-add promotion might offer a year of concierge service with the purchase of a condo; or free theatre tickets with hotel booking. Value propositions are:
•    Consistent with luxury brands: price cuts aren’t. Luxury is based on the premise that quality, not price, is the primary motivator.
•    Value-add packages flaunt offerings, and increase the total dollars spent on-site.
•    Value-add packages can also be more profitable than price cuts, particularly when partners (such as spa, theatres, etc.) can absorb some, if not most, of the cost of the freebies.
•    Motivates buyers more than price cuts alone, as it adds more “meat” to consumers’ choice. What is more appealing; a room with a free spa service, and free appetizer at the restaurant; or a 20% off coupon?
Added value marketing presents travellers with a greater sense of choices. Jitendra Jain, thought leader E-Commerce Manager at Starwood Hotels & Resorts in Dubai, is gaining a following for this groundbreaking choice-based theory of hotel marketing. Jain’s concept of the “Experience Engine,” allows guests to “build” individualized experiences by bundling “experience units” (meals, spa service, sports diversions, etc.). Personalizations, and freedom of choice, will become the new luxury, replacing the Amenities Races of years past. Until Experience Engines are status quo, intelligent e-marketing of value-add incentives can offer guest personalization and generate ROI.
For instance, incorporating dynamic content delivery into your booking site will customize your conversion process for each visitor, increasing conversions. Smart online media buying can target specific promotional ads based on behavioural cues, catalysing your prospecting, increasing conversions, while accurately measuring response and returns on your marketing investment.
Before jumping to make rash price cuts, incorporate value-oriented marketing strategies to outmanoeuvre your comp set while maintaining your hard-earned luxury brand stature.

Publisher Spotlight: Boston & Philadelphia Magazines
February 3, 2009, 2:37 pm
Filed under: Publisher Spotlight | Tags:

This month we are featuring Boston and Philadelphia Magazines.  The sites provide valuable and interesting information to visitors to the two cities from where to eat, shop and stay to what to do with your time.  Ian Zweig gave us some insight into the two sites.  Check out his answers to our questions here.

Ian Zweig is the Online Marketing Manager at Metro Corp, publishers of Boston Magazine and Philadelphia Magazine.  He has spent his entire working career in the online advertising field helping companies grow their web business.  Ian received his Bachelor’s and Master’s degrees from Boston University.

Adcision:  Please describe a typical visitor to your site — what he/she is like, what motivates them to visit, what engages them while they are there.

Ian: Since we own two City/Regional Magazine websites, a typical visitor comes to our site for lifestyle information.  They want advice on where to dine, the scoop on the fashion scene and the VIP insights on events.  In sum, these are the socialites of Boston and Philadelphia.  They come to our site with a certain mindset, which enables us to engage them in a personal manner.  They don’t come looking for general news, sports or weather, our readers come to plan their dinners, weekends, social activities, and shopping escapades.  Our highly qualified audience sees our site as a destination based on our expert advice and recommendations.

Adcision: Do your sites have any unique features that you’re proud of?

Ian: I’m proud of every part of our sites.  The largest asset to our site is the flexibility in programs offered and ability to work with our advertisers.  As with many sites, we offer the standard IAB ad displays or newsletters, but in addition we offer insightful customized programs for our users.

Adcision: What do you wish more people knew about your “publication”?

Ian: Our magazines provide a local perspective that is independent and authoritative.  We understand that our online audience wants information fast and easy.  As long as we continue to respect our readers, we provide a great advertising channel to reach consumer through a trusted environment.

Adcision: Have you heard of any interesting transactions that have occurred as a result of your site?
Ian: The most recent testimonial we received came from one of our Wedding advertisers.  Here’s the story: Our wedding section has a place where the newly-engaged can post their engagement on our site.  We have a company who sponsored this section of our site to reach brides and soon-to-be brides early in their wedding planning process.  By being contextually relevant in the wedding section, and connecting with the mindset of the users, our sponsor was able to land two deals in their first month.  Nice story, huh?  Here’s the moral: When we create customized campaigns we try and align content and mindset to connect our users and sponsor.  It’s easier to drive results that way.

Adcision: How do you get your content?

All of our content is created by our dedicated, hard-working, sagacious staff of writers and editors.  All of our magazine content is put online.  Additionally, online editors are the backing to our rich database of listings, our original blogs, and other online packaging.

Adcision: What’s the best article (or feature) that you have ever run on your site … and why do you think it was so popular (Please include a URL if possible)?

Looking back at 2008, our most popular feature article on was ‘Best Places to Live’ ( )and the most popular feature story on was ‘Single in Philly’ (  I think these two articles were particularly popular because they contain intuitive, fresh content that you can’t find anywhere else.  It shows that we know how to connect with our readers in a timely fashion with stimulating content.  Also, we allowed our readers to engage with the content not just by reading the text, but by creating interactive slideshows that organized all the information in a user-friendly, fun fashion.  Talk about alliteration…

Adcision: Please share some demographic information about your audience (i.e. average home value, average HHI, male/female ratio, etc.)

Male/Female – 45/55
Avg. HHI – $115,000
Avg. Age: 38
Top Hobbies: Dining, Traveling, Performing Arts, Shopping, Socializing

We did also ask our readers to provide their credit card limits, but you’ll have to take me out for lunch to find out that highly coveted information.

Adcision: What is the best source of traffic on your website?

Ian: The most popular section on both our websites is ‘Best Of’.  Every year our editors choose winners in hundreds of categories ranging from ‘Best Brunch’ to ‘Best Party Dress’ selection.  Our three other heavy hitters are the main lifestyles sections: Dining, A&E and Fashion/Style.

Adcision:  Is there anything else you would like to add?
Ian: Of course, thanks for asking.  I would like to emphasize that looking for your target audience doesn’t mean looking at the largest websites. It means looking for the right people who you feel will buy your product.  Doing the extra work to figure out where your customers are online will pay dividends and make you look like a superstar when you show the results to the boss.  It’s amazing how a little extra work can go a long way.