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’s Note Putting a Face to a Name: LinkedIn as a Sales Tool
January 7, 2009, 3:11 pm
Filed under: Uncategorized | Tags:

linked in logo

It is easy to pretend the voice on the phone is not a real person.  In sales, one of the most effective things you can do is to put a face to a name and voice.  Adcision Luxury Media, a online luxury advertising agency and publisher representation firm and the writers of this newsletter, have spent some quality time exploring the many tools and resources that social networks, specifically LinkedIn, provide and have found them to be tremendously useful.  From identifying appropriate contacts to joining groups and finding potential clients, LinkedIn is more than just an avenue for finding a new job or connecting with old colleagues.

Most valuable of all appears to be the groups.  From corporate and alumni groups to common interest, it is easy to post discussion questions, relevant news articles and meet others who are in your profession or share common goals.  Here are a few Adcision has joined and recommend for those in the luxury space:

Luxury and Lifestyle Professionals-(12,560 members)- Managed by Lionel Crochet.  This group does an excellent job controlling the discussion boards and posting relevant content.  Lionel tells us that, “luxury and lifestyle industries cover a lot of connecting business from travel to fashion, jewelery, architecture, design or transportation for instance. I figured those industries and its professionals collaborate enough to create a need for online networking. This may allow businesses and their associates to create bridges, ventures, deals or collaborations. Sites like LinkedIn, Facebook, Ning or MySpace where the Group is present are meant for that and I hope our cheer number of members make more and better business thanks to “Luxury & Lifestyle Professionals.”

Luxury Interactive– (57 members)- Managed by Steven Peters.  This small targeted group will be an excellent tool for networking pre and post show for both London (March 2009) and New York (June 2009).

The Luxury Letter– We decided to form this group for our members and encourage you all to sign up.  The goal of this group is to create a controlled environment for you and your peers to exchange dialogue.

If you are a member of a group that you feel others would find valuable, please let us know by leaving a response on The Luxury Letter blog!

Are You Maximizing Your Opportunities Online With High Net Worth Buyers?
January 7, 2009, 3:10 pm
Filed under: Uncategorized | Tags:

By Susan Adams, President of Fractional Sales Solutions

I was on an interesting webinar a few months ago that was sponsored by Google. The topic was how the affluent use the internet. I’m of the opinion that the internet is the least understood of the marketing mediums for those companies that actively sell to high net worth buyers.
The most interesting statistic from their survey was that millionaire earners are the most prolific shoppers on the internet. The reason I found this so compelling was that many wealthy shoppers are given exceptional service experiences from the retail stores they visit. So, why would they abandon these stores that cater to their needs to go shop on the internet?
It’s simple. The internet is fast and anonymous. One of the things I learned in my years of selling to multi millionaires is that they prefer to be anonymous. Most of my contact with these clients was over the phone. They rarely wanted to meet in person, and instead, preferred to speak with me over the phone.
It only makes sense that they would be attracted to the internet because of the anonymity they find using this medium. They can research a product or service from the comfort of their home or office without ever having to get on the phone and talk to a sales person. In fact, one gentleman in the survey found a $15,000 watch he wanted to buy and was completely annoyed that he couldn’t purchase it online. Instead, he had to call and speak with a sales person.

Money to Spend, But No Time to Spend It

The second interesting fact concerned the amount of time (or lack thereof) they discovered among the various groups of ‘affluents’. The more money a person has, the less time they have to spend it. This is a point I make repeatedly with my clients trying to market online to the affluent. We know they lead busy lives and have very little personal time. So, it makes sense that their first stop for any major purchase is the internet.
It’s important to remember that the average consumer spends 7 seconds on a website before they click away. While there are no statistics of this kind for the affluent niche, you can assume 7 seconds may be generous. With that in mind, take a look at your online presence. Does your home page immediately connect with a high net worth individual?
For example, if you’re a luxury resort, are you talking about family experiences, or are you highlighting the spa or the golf course? The affluent are more family-oriented than other demographic groups, so lifestyle experiences that speak to connecting with family are more likely to resonate than a description of the ‘world class spa’. If you’re wealthy, you have world class accommodations everywhere you vacation.
There were a few other important findings for marketers:

  • The affluent believe that those companies NOT FOUND online have cheapened their brand
  • The wealthier you are, the more likely you’ll be annoyed if you CAN’T find and purchase something online
  • Brand awareness isn’t enough…you must have data to support the prospects’ need for due diligence
  • Peer recommendations (testimonials) are a powerful tool among the wealthy. They all want to know, ‘Why are other people like myself buying this or looking at buying’?

Companies also need to think beyond their websites and look into other, more nonconventional, areas for advertising. I frequently remind clients that their online presence needs to go beyond websites and pay-per-click advertising.
For example, have you ever considered some of the places wealthy buyers are likely to go on the internet? Places like social networking sites, blogs and charity sites? What better place to get acquainted than a blog on a specific charity?
There are also many ‘cause-oriented’ sites like the green movement or political sites.
As with any marketing or advertising, it all goes back to understanding WHO your client is and how WHO they are helps you effectively market to them. Your marketing message shouldn’t be telling the prospect what you think they need to know, but rather finding out what they need to know about you and then crafting a message that resonates.

Why not attract the affluent with a message that says, ‘We understand who you are and why people like you purchase this product or service’.
Different? Yes.
Effective? Definitely!

Adcision’s 2009 Predictions
December 9, 2008, 2:44 pm
Filed under: Uncategorized

by Hibben Silvo, Editor

2009 is going to be big on two things: unknowns and opportunities. 2008 has been a challenging year and 2009 is upon us with plenty of question marks and furrowed brows. To help with this, the best course of action is to develop solid educated guesses, better known as predictions. To get the ball rolling Adcision Luxury Media, a luxury oriented online advertising agency and publisher representation firm, and the publishers of this e-newsletter, have developed our own. We hope that these encourage our readers to think outside the box and help to provide encouragement in these difficult economic times.

Adcision has asked several industry experts to weigh in on our predictions including: Melissa Vigo (Sapient), Amanda Ross (Vivre), Michael Keaveny (Razorfish), Adam Broitman (Crayon), Meryl Macune (Estee Lauder Companies), Rebecca Matt (Morpheus Media). Read their reactions to our bold predictions below and leave your own 2-cents:

1. 2009 is the year for Online Luxury Advertising: Despite an overall decrease in online display advertising, luxury brands/services will fare better than other markets. With loyal clientele and 56% of millionaires preferring to shop on a retailer’s website, luxury online advertising will endure (Shopping Secrets of American Millionaires, Media post).

2. Old School Online Advertising Meets New School Online Advertising: Social media, Web 2.0, and viral marketing campaigns will partner with traditional display advertising for more effective and well rounded campaigns

3. Obama will inspire more than just political change: The success of Obama’s use of online promotion will inspire those not already participating in online advertising to jump on the bandwagon and those already running campaigns to increase their online budgets

4. Beauty isn’t just skin deep: A new emphasis will be placed on the creative and being creative. Simple display advertising will no longer be enough; campaigns must be both attractive, eye catching and well planned from placement, to creative to how the entire campaign comes together

We asked people in the industry to offer their opinions on our predictions based on their own personal experience and got some great responses. Below are a few of their insights:

1. Do you agree/disagree with these predictions? Which ones in particular?

Adam Broitman, Director of Strategy at Crayon and Author of A Media Circus

“There are generally two types of luxury shoppers (at a very high level)—the undeniably affluent and the aspirational. It is hard to say if luxury marketers will see significant growth online, as the category may experience a drop in spending by the aspirational segment. With that in mind, there is no doubt that spending in this segment will grow, as it should follow internet adoption trends—which is led (to a large degree) by those individuals with above average means. “

“I have every confidence that all marketers will be much more aware of the impact of social media in 2009. My prediction is that, by the end of 2009 most marketers will have dipped their toes in the water, and will have learned a few lessons:

· Social Media is not a strategy unto itself—it is a part of a 360 holistic, integrated strategy
· Content leads to conversation—if you don’t give people something to talk about, they will not talk
· Social web strategy needs to be distributed—you can’t just place a banner on Facebook, or build social elements to your site. You need to do both; all in the name of an overarching strategy

Ultimately all media is social. By mid 2010, social media will be an integral part of all marketing campaigns (including traditional marketing) for all seasoned marketers.”

Melissa Vigo, Associate Media Director at Sapient
“I would have to agree with all of the predictions stated above. I highly agree with the prediction of “beauty isn’t just skin deep.” It’s all about the “first impression” when you see an ad. If it interests a consumer and they can relate to it, then they’ll interact with your brand. “

Amanda Ross, Senior Online Marketing Manager for Vivre
“I agree with all of the statements…with the economy, etc, businesses will need to turn to the more cost effective media of the online channel, as well as really begin to penetrate the mobile and smartphone marketing space. Furthermore, working in the online space for over 6 years now, I agree with the new school advertising model as taking precedence, as the internet has become an oversaturated commodity and people are hungry for innovation, personalization, and intelligent communication.”

Susan Adams, President of Fractional Sales Solutions
“I agree that online advertising will be the new way to reach the affluent. As people acquire wealth, they have less time for everything. The super affluent have personal assistants, private jets…all designed to give them more time and make their lives easier. That’s why they use the Internet. It’s easy and it’s anonymous. They can gather information without ever talking to a sales person.”

Meryl Macune, Executive Director of Online Marketing and New Media for Estee Lauder
“I agree with point one in that luxury brands will continue to utilize the internet to further engage consumers by being able to truly target this customer in more niche, upper end, luxury sites.
I also agree as the Internet and other alternative digital platforms become a more integral part of users lives, brands will look to integrate all elements of a campaign via Internet and offline traditional media such as print. Lastly, agree that brands have to think beyond the simple display advertising to give a consumer a reason to engage with your brand.”

Cal Simmons, Founder and CEO of Adcision Luxury Media
“Although there is an overall downward trend in advertising, the flexibility and targeting that online advertising can allow luxury brands leads me to agree that they will fare better than other forms of advertising. It will no longer be enough to simply have only display ads. Campaigns will be planned to include display, sponsorship opportunities, blogging, and other ‘outside the box’ advertising. One must cover all their bases and reach in multiple directions to be truly successful.”

Michael Keaveny, Media Supervisor at Razorfish
In reference to #3 – “Yes, the Obama campaign’s success with online promotion will help to re-affirm the space for some, and legitimize its value for others. Social media, especially Facebook, may have opened eyes and proven itself the most as a result.”
In reference to #4 – “Yes, it is increasingly difficult to stand out with digital display advertising. Just being there is not enough. The channel is getting more crowded and consumers are utilizing a more fragmented mix of properties.”

Anonymous, Media Planner
In reference to #2 – “Disagree – When it comes to luxury audiences, I’m not sure if any advertisers have figured out exactly how their audience is using social networking and UGC. Our audience is a lot different than the usual Facebook/Myspace crowd. So it becomes twice as hard to come up with a sound program that integrates the new Web with old media.”
In reference to #3 – “Disagree – I think advertisers look at Obama’s campaign in a vacuum. It occurred with a much broader audience and with different objectives. Most political pundits point to a wide variety of reasons why Obama won (i.e. the economy, Bush’s low ratings), and I don’t think anyone gives the online marketing the credit it deserves.”
In reference to #4 – “Agree – This should and always be the case. But it gets harder as new technology enables new types of advertising. Hopefully luxury advertisers are willing to take a chance with their creative and utilize these new technologies, but that remains to be seen.”

Rebecca Matt, Senior Account Strategist for Morpheus Media

“I definitely agree with all of these predictions. I particularly agree with number 1 as I think there has been a lot of research to support the fact that despite a downturned economy, luxury shoppers are still shopping. While they may not be spending AS much, they are still spending. Additionally, the research I have seen has shown that not only are these people still shopping but if the brands that they love increase their advertising in a downturned economy their consumers not only remain loyal but that brand is much more likely to have an increase in profits after the recession.”

Tanya Ryno, Publisher of Lift Magazine
“I agree … Luxury brands can re-create a similar online scenario online as in the offline world. They can communicate the brand messages through high-end creative emails, online ads and page sponsorships and build a luxurious virtual presence through a website or micro site. This is what sets them apart offline, they are able to create an experience … it’s not so much the product as it is the experience that makes the luxury brand luxury and I believe online is perfect way for them to extend their brand.”

Matt Simrell, Director of Business Development at US Connoisseur, Inc.
“I agree that online ad spending will gain in dollars. Print will still, as always get the lion’s share of luxe ad dollars. I think that the shift in budgets from print and other “traditional” media to online interactive campaigns will be logical in the minds of those who are directing the funds. This is because it is “instant gratification” in terms of tracking. This makes answering the age-old question “is it working?” much easier to answer.”

2. What changes are your client’s making when planning 2009 campaigns?

Melissa Vigo, Associate Media Director at Sapient

“I’ve been seeing more of a shift in media dollars going towards online marketing and away from traditional media methods. There are a lot of talks around web 2.0 especially for brand awareness focused clients. Employing a viral strategy allows advertisers to get a greater bang out of their marketing dollars. A lot of our clients are also testing targeting technologies such as behavioral and re-targeting.”

Michael Keaveny, Media Supervisor at Razorfish
“In our challenging economic environment, clients are more than ever are looking to spend their budgets wisely. There is a greater emphasis on efficiency, and we are expecting a lot from publishers. Our assumption is that they can be increasingly accommodating during these times.”

Susan Adams, President of Fractional Sales Solutions
“Many are changing the demographics they market and sell to. The Millionaire Next Door is not buying right now, so if that’s your target group, you need to move up to a different demographic.”

Cal Simmons, Founder and CEO of Adcision Luxury Media
“Both targeting and innovative sponsorship opportunities have been popular, efficient and budget friendly options for many of our advertisers. Many advertisers are looking for new markets and publishers that are perfectly targeted to their demographics and offer both traditional display advertising and outside the box opportunities. Others, such as Estee Lauder, have purchased ‘skins,’ sponsored advertorials, and roadblock campaigns to make the most of their online advertising budget.”

Rebecca Matt, Senior Account Strategist for Morpheus Media

“I think what we are seeing with our client’s is that while with some there is still a willingness to try new things, we are really sticking to the tried and true publishers. So we are still advertising but really focusing on what we already know works.”

3. Do you have any predictions of your own?

Adam Broitman, Director of Strategy at Crayon and Author of A Media Circus
“A recent article in the LA Times spoke about the role of intimacy in luxury marketing. Given that the luxury market is small, marketers have always needed to cater to the needs of as many individuals as possible. That has never been more true than it is today. Luxury shoppers are still buying, but they will be more selective—those marketers that know how to build relationships will win the game.”

Melissa Vigo, Associate Media Director at Sapient
“Mobile Marketing – Will play a bigger/better role in 2009, whether if it’s reaching a consumer through SMS marketing or mobile web ads. Mobile ads tend to have higher click through rates making it a great opportunity to reach consumers on the go..
Targeting Technologies – There is such a variety of targeting technologies available to advertisers such as behavioral, re-targeting, content targeting and others. Advertisers need to understand their target audience and what their online media habits/behaviors are.”

Michael Keaveny, Media Supervisor at Razorfish

“In the long term, sites that cater to luxury brands will be increasingly challenged to offer more large creative sizes without being interruptive to the user. Things have come a long way, but this will be necessary to compete better against print for share of luxury advertising budgets.“

Susan Adams, President of Fractional Sales Solutions
“I think those companies that do target marketing to the affluent will be much more successful. To simply keep thinking, ‘they have money and can afford what we sell’ isn’t a sound strategy. The affluent are a complex group and if you understand their buying motivations, you’ll be much more successful in a tough economy.”

Cal Simmons, Founder and CEO of Adcision Luxury Media
“Tightened advertising budgets will inspire a major luxury brand to jump out ahead of the crowd with an innovative, provocative campaign fully utilizing the interactive nature of online advertising. This will create huge buzz. We don’t know who it will be, but we do know that more and more luxury brands are embracing online and looking for creative ways to tie in social media and engage their clients in a broader conversation.”

Anonymous, Media Planner
“I think display advertising will continue to slump, as it becomes harder to prove its worth against more proven methods like search. Just like TV, users are also becoming immune to display advertising and unless sites find a more unique way to engage users with advertisers, CTR’s will continue to fall.”

Rebecca Matt, Senior Account Strategist for Morpheus Media
“I think with Obama in office we will see in upswing in our Economy. I also think that just as a wave of the future and with the increase of phones like the iPhone, that more people will spend their advertising dollars online. Print will never go away, it just won’t, but I think we will see less of it. I think that people are starting to realize what great things you can do online and how trackable and accountable you are for it. It really is a better bang for your buck.”

Tanya Ryno, Publisher of Lift Magazine
“The sensorial customer experience that is created in a store will be re-created and controlled on the website: thanks to the visual and sound experience, the usability, customer service and customization, will make the Internet a success for luxury brands. I don’t know how they’ll do it, but I imagine that ads will become much more interactive. Example: You may be able to have an online chat with someone about a product immediately by clicking on part of an ad … you you may be able to purchase directly from an ad … I’m not really sure, but it will be cool whatever it is!”

Matt Simrell, Director of Business Development at US Connoisseur, Inc.
“My prediction is that luxe spending in online and interactive will increase substantially over 2009. I think that it will be a learning experience for all. I have the feeling that this online advertising will “spurt” more talk and activity than actual sales dollars as a result. You must realize who your target customers are, and where to find them.”

Guide to Luxury Brand Success in Economic Downturns
November 4, 2008, 2:43 pm
Filed under: Uncategorized

By Milton Pedraza, CEO of the Luxury Institute, LLCfinalcrop1626-12

First the story was that luxury was omnipotent and luxury consumers were immune. Even the “affluents” were trading up, they said, and luxury could do no wrong. Now the story is that luxury has lost its luster and even the wealthiest are bailing out. Makes for great headlines.

Neither view was, or is, an absolute truth. The luxury market and wealth segments are very dynamic, comprised of different products and services categories, and different segments of wealth that respond differently to economic cycles. The responses are driven by both consumer demand and psychology.

It is true that things are never as good, or as bad, thankfully, as we make them out to be. Even consumers, reporting their expenditures, past and future, and their attitudes and sentiments, tend to get it very wrong most of the time. For proof, go no further than current political polls. Try to correlate consumer sentiment indexes with retail sales over a long period of time. It is tough to achieve. That is not to say these are not useful exercises conducted by well-intentioned professionals, and may be good indicators of consumer perceptions at the time. Overall, however, we believe that current rumors of luxury’s demise are greatly exaggerated—as exaggerated as the previous estimates of never-ending growth.

Luxury Institute and Global Insight research show that the reality is that luxury is cyclical and always has been, as are all other industries, and that the luxury winners take a long-term view and business approach. We believe strongly that despite the recent crisis of confidence, the global economic fundamentals make it likely that millions will continue to be lifted from poverty and that millions more will become millionaires around the world in the next few decades.

Freely available technological innovation and emerging market population growth in economies that have the legal frameworks to support entrepreneurship and property ownership—and the eventual availability of capital—bode well for the future of luxury goods—and especially luxury services. In more mature markets, this economic cycle, like all others preceding it, will turn. When it does, the current mentality of retrenchment will yield again to one of acquisitiveness.

Downturns, however, do not need to be downtime for luxury executives. Here are seven “tough-love” steps from the independent and impartial Luxury Institute, to ensure that your brand not only survives, but thrives, in this current serious economic downturn.

1.) Eliminate the Hobbies: Many luxury brands have entered into categories where they have no expertise or credentials, merely because they want to be “lifestyle” brands. Some categories are logical extensions for a luxury brand. Most are not a good fit, and will be marginally profitable. Fashion brands are notorious for pasting their logo on anything that they think will generate growth regardless of the impact on the long-term brand equity, and the long-term bottom line. Wealthy consumers are highly discerning, educated buyers. Several years of Luxury Institute empirical research shows that wealthy consumers prefer, and are willing to pay a significant price premium for, brands that are specialists. Leiber in handbags, Harry Winston in jewelry, Christian Louboutin in women’s shoes, and Berluti in men’s shoes are brands that wealthy consumers rate highest as category specialists. Conduct a rigorous assessment of your brand’s category portfolio and unflinchingly eliminate the marginal “hobby” categories. Renew your focus on what you do best and innovate within those categories.

2.) Go Up-Market Right Now: One of the great ways to kill a luxury brand, albeit slowly, is to go down-market. Gucci was a great comeback story because someone had decimated it before Tom Ford saved it. It is the “boiled frog” syndrome. The warm water feels so good that the frog doesn’t know it’s being made into soup till the water starts to boil. By then, it is too late to bail. If you are a luxury brand that really aspires to be a mass brand, then create and execute a strategy to be distributed in as many mass-market outlets as possible. You have lots of choices. If you aspire to be a top-rated luxury brand, then Luxury Institute research says that you must serve high net worth consumers, be unique and exclusive, your distribution must be limited, and your service impeccable. Great quality is not enough. Focus on going up-market with bespoke, one-of-a-kind, custom made, made-to-order, or limited edition products and deliver service to match. Only then will the new, growing multi-millionaire consumers globally be willing to pay a premium for your products long term. That’s your growth strategy.

3.) Innovate and Dare to Be Different for a Change: Luxury firms have homogenized luxury to the point that 63% of wealthy consumers feel that luxury is being commoditized. Walk down most high streets such as Fifth Avenue, Avenue Montaigne, and Bond Street and you see the same look and feel in store designs and products, to the point that you can take away the store signs and logos and wealthy consumers would probably not be able to identify who is who. Same is true for services. It is time to stop emulating your competition and to begin innovating such that you are creating never-before-seen products and categories that are relevant and revolutionize your industry. Companies like Apple are beating luxury at its own game by creating great products and services, innovating features and benefits, and charging a premium. Now Apple stores are becoming high tech/high-touch destinations. If luxury has any claim to fame it is in innovation and novelty. Demand innovation and you will get it.

4.) Leverage Your PR, Not Your Advertising: Especially in challenging economic times, every communication dollar counts. Public relations is a far more effective and credible vehicle for persuasion of key constituents than advertising. Give your agency the opportunity to communicate the authenticity and rich history of your brand, your brand icon, your brand integrity, your brand’s corporate citizenship, your knowledge of the category via your vast internal data, and most importantly, your breakthrough innovations.

5.) Deliver Extraordinary Experiences: The truth about extraordinary customer experiences is that they are delivered not with gimmicks and props, but by talented, caring people who connect with customers one-on one. How much extra does it cost you to staff your company with people who are experts in your products, and even your competitors’ products? Who are trustworthy? Whose interests are aligned with your clients? Who are genuinely interested in helping people with a smile? Great people are the most difficult resource to scale, yet companies such as Ritz-Carlton and Nordstrom manage to do it despite their size. Wealthy consumers consistently tell us that both deliver extraordinary customer experiences. Apple now has better experiential stores than many luxury firms. And it is not the bricks and mortar—or frosted glass in the case of Apple—that are delivering that. When will wealthy consumers, the only constituents who count, rank your brand at the top for delivering a superior customer experience?

6.) Innovate Online: Luxury brands have been in perpetual debate over whether they should be present and sell online or not, and if they do, how to advertise online. Reminds you of the dotcom era when so many “experts” were vigorously debating whether content was king on the Internet, and whether technology would become a commodity. Thankfully, the Internet debate is over for most luxury brands. Now is the time to use this rich channel to reach wealthy consumers around the globe no matter where on earth you happen to be located. If a luxury brand asks whether they should spend scarce funds on opening another store, launching a print advertising campaign, or investing in a great website and online advertising, the Internet wins every time as the fastest, cheapest, and most effective way to leverage a luxury brand in today’s global marketplace.

7.) Let the Voice of Your Customer be Your Guide: Strategy meetings are great, but you will find yourself in circular groupthink in economic downturns. Everyone will want to play defense, but what you need now is a great offense. Inject the voice of the wealthy consumer into your strategy sessions. Use internal and external quantitative research, create an online community, mine your transactional database, engage customers one-on-one at point of purchase. In effect, do whatever it takes to understand what consumers are thinking right now and why they are behaving the way they are. Find ways to put consumer feedback into practice immediately. Your customer will guide you to succeed in any landscape, including a downturn. This, too, shall pass, and your brand will be the stronger for it.

8.) Outbehave Your Competition: In his book, How, Dov Seidman explains that in a commoditized and undifferentiated world, you not only have to outperform your competitors; you must outbehave them. The Luxury Institute has found that 57 percent of wealthy consumers prefer products and services from companies that are socially responsible. That means being completely ethical with all of your constituents, being charitable, and being eco-friendly. The recent events on Wall Street, and their effects on the world economy, have heightened what it means to be socially responsible. Recession or no recession, brands that meet those standards will ultimately survive and thrive.

Business & Finance Publications – Brand Status

Luxury Institute Survey: Wealthy U.S. Consumers Rate the Most Prestigious Business and Finance Publications: Wall Street Journal, the Economist and Morningstar

Looking Ahead: Planning Your 2009 Campaigns
October 7, 2008, 1:41 pm
Filed under: Uncategorized

By Hibben Silvo, Editor

Our parents and teachers told us time and time again not to procrastinate, and now that 2009 is around the corner the same advice applies.   With the economy in bad shape, and no clear improvement in sight, planning ahead is even more important than ever.  Many companies are quick to cut their marketing and advertising budgets when times get tough, but this can be the most costly move of all. MarketingSherpa Publisher Todd Lebo says that, “If marketers want to flourish regardless of the economy, they need to justify each and every marketing tactic.  There is a surprising amount of change in how companies plan to spend their marketing dollars in 2009.”  These changes are positive but it is also increasingly necessary to plan advertising campaigns with efficiency in mind; every dollar has to count.

At Adcision, the publishers of this newsletter, we pride ourselves on offering our advertisers transparency, targeting and optimization.  It’s ‘Advertising 101’ that a targeted campaign will yield better results than one in which an ad appears on just any website.  This is especially the case in the luxury market, you must ensure that your ad is being seen by consumers who can afford premium products and services.  Transparency and optimization takes a targeted campaign to the next level.  The ability to control which sites your ads appear on, how many impressions are dedicated to each site, and to edit and optimize throughout the campaign will ensure that your budget is being spent efficiently.

Creativity is key and the Internet is filled with a never-ending source of possibilities.  It’s a relatively untapped resource, especially by advertisers who often think their only options lie within traditional display advertising.  Adcision encourages our advertisers to think outside the box when planning their campaigns.  There is unlimited potential; from new ad formats (ad widgets, video, etc.) to page and event sponsorships.  There are even dedicated email blasts and sponsored posts and e-newsletters available.  These are just a few ways to promote your brand on the Internet and we welcome and challenge you to come up with your own.

Don’t just think outside the box, but think outside the United States.  There are growing luxury Markets in India and China.  Global chief executives of Mediaedge:cia Worldwide Ltd (MEC) and MPG have recognized the value of these markets and recently spent time in India planning their business strategies for the coming year. I hope that many others can identify the benefits of investing in these markets and follow suit.

If all these reasons haven’t inspired you to start planning ahead then here’s another: some publishers will allow you to book 2008 rates for 2009 if you reserve space before January 1st.  Just because you are a premium advertiser does not mean you can’t bargain hunt.  By booking now you not only save money but you secure premium ad space so that you are guaranteed to run on the sites and pages of the greatest value to you.  So, plan now, book now, and you will have a little extra room in your budget for an extra e-newsletter sponsorship or a few dedicated email blasts.

Here is a summary of our advice for planning your 2009 campaigns:
–    The economy is bad, but that doesn’t mean your advertising campaign has to reflect that – targeting,       transparency, and optimization are key.
–    Creativity will get you noticed – don’t feel locked in to traditional display advertising.
–    New Markets mean new business – the United States isn’t the only affluent audience on the web.
–    The early bird special looks better every day – plan and book ahead of time to secure 2008 rates.
–    Consider Adcision Luxury Media as a new channel for reaching affluent consumers.  Call us at 703-837-0870.