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Online Marketing for Luxury Brands - Simplifying a Complicated Relationship: Part One

Luxury brands, until recently, were hesitant to explore the online marketing space. One of the main reasons for shying away from online, especially social media advertising was the prospect of losing the 'exclusive' tag. However, despite arriving a little late to the social media party, prestige brands have more than made-up for the lost time. What gives these 'select few' the edge over other brands is the one-on-one relationship they share with their consumers. According to a recent study by ThreatMetrix in partnership with the Ponemon Institute, it is this close relationship that establishes the trust between luxury brands and their customers and allows them to succeed in areas where other brands have failed. Further supporting these findings are some interesting examples of prestige brands that have aced online marketing:

  • The first luxury brand to launch an F-commerce initiative entirely on the social medium was Oscar de la Renta.
  • Bulgari, which thrives on its 'niche' status, recently launched a Facebook storefront with jewelry retailing for $12,000 and up.
  • The greater part of Burberry's traffic comes from Facebook, when compared to Google.
  • Footwear and handbag brand Jimmy Choo's creative director and founder Tamara Mellon, decided to draw attention to the label's first fragrance by launching a new blog, A Day, A Thrill.

Luxury Brands 2011 - Traffic SourcesPM Digital Research's analysis on the luxury retail market shows that social media accounts for nearly 10% of traffic to the luxury category, Facebook being the most significant player, with its share ranging from 4% to 10%. Although this may not be much when compared to other channels like 'Search' and 'Shopping' sites, this figure is nevertheless on its way up.

With a large percentage of high-income shoppers using online media to purchase products currently, it has become a norm for most luxury brands to have a Facebook or Twitter presence. However, simply being present on a horde of networking sites does little to increase traffic or sales. In the first of a two part series, team Position² looks at how engaged these brands really are what influences the affluent customer to buy that expensive something via social media.

  • What Makes Social Media the Information Goldmine?

For 90% of affluent internet users who regularly shop online, digital media is their number one source of information (Digital Strategies for Luxury Brands for Publicis NY). With most of their prospective customers thronging social media sites for everything from product recommendations to posting reviews, it is not surprising to see previously social media-shy brands making the transition to e-commerce.

  • The Impact of Third Party Information Sources: Converting prospective customers to regular shoppers and influencing their online purchasing behavior is largely dictated by third party information sources like customer reviews, discussions and price comparisons. Despite brands' websites and social media pages featuring all the necessary information, nothing works as well as word-of-mouth recommendations. For luxury brands looking to increase their customer base, it is important to allow customers and visitors to have access to this information.

Bare Escentuals - Facebook Page

  • How Bare Escentuals Nailed It: Previously, prestige brands were not comfortable about posting user reviews and allowing the general population to view and share this information via social media. However, one company that can serve as an example of how user reviews and information exchange can positively impact their brand's image online and send the sales charts soaring is Bare Escentuals. The luxury brand invites users to review their products and post their thoughts on their Facebook page. By creating a feeling of being a 'close-knit family', Bare Escentuals encouraged users to share photos, stories, even going as far as allowing them to comment on sales via the "Global Family" Facebook tab. Still wondering about letting people in and losing the 'exclusive tag? Bare Escentuals, boasting+484,000 'likes', should be inspiration enough.
  • Engaging with the Niche Customer Online

Despite having a social media presence, many brands, until recently, did not allow fans to post on their page(s), restricting communication and leaving no room for engagement. According to L2 Prestige 100 study, 20% of prestige Facebook pages did not allow fans to post on the brand wall. This, however, changed after 15th August 2011 when Facebook made two-way interaction mandatory. In what we can call 'a leap of faith', luxury brands today are not only encouraging interaction in the form of user reviews, but are also going that extra mile to strengthen engagement with customers.

Most Responsive Brands

  • Why Are Luxury Brands Hesitant to Engage Online? The L2 Prestige 100 study ranked L'Occitane #1, followed by Kiehl's and Korbel in its list of most responsive Facebook brands. While the study certainly shows that prestige brands are better engaged than before, there are some other brands such as Prada, Marc Jacobs and Hugo Boss that have only recently opened up and, in some cases, are still only selling limited items such as accessories. Keeping up with the competition is one of the main reasons why these brands have joined social media sites. Studies show that this hesitancy stems from their worry of losing the coveted 'exclusive' statuses, considering the uncontrolled environment of social media.
  • Engaging with the Younger Luxury Demographic: Where some brands are testing the waters when it comes to online engagement, there are others who have done their homework and know where their most important customers are. Although fairly new to the social media marketing space, today's luxury brands understand the importance of reaching out to and engaging with the next generation of luxury customers i.e. the younger demographic. Financially empowered, more open to the idea of online shopping, and willing to connect with brands via social media, it would be unwise to ignore their potential as luxury customers. What we suggest? Listen to what they have to say and understand their needs before attempting to engage with them online.

L'Occitane Korea - Tweets

  • Beyond Geographical Boundaries: One of the great things about social media marketing is the power to reach across geographical boundaries and connect with customers from any part of the world. When French skincare line L'Occitane en Provence decided to take brand engagement to the next level by talking to potential customers from different parts of the world, the company decided to launch a social media-driven photo project in July 2011. By asking customers to snap photos of the brand's Shea Butter Hand Cream against the backdrop of a landmark specific to their town or country, L'Occitane saw social media interaction from consumers in New Jersey, China and Amsterdam, to name a few. Allowing users to upload these photos on L'Occitane regional social media sites such as the U.S. Facebook and Twitter, the Korea Twitter and the Israel Facebook, the skin care company successfully engaged with global consumers and increased the brand's visibility in the process.

How can luxury brands approach social media content? Will offering discounts and deals tarnish the 'exclusive' tag?

Having to choose between holding on to their 'exclusive status' and venturing into the unfettered world of social media marketing, luxury brands today are trying to find the middle ground; this they are doing by having a social media presence, but not completely letting go. Our first part of the series covered why prestige brands are hesitant to engage with customers online and how they can make their social media page a rich source of information. In the second and final installment, we will feature tips on how luxury brands can improve their online content and if offering deals and featuring contests is a wise move.

Team Position²

Position2 is an innovative digital marketing agency that accelerates demand through integrated Content Marketing, Paid Acquisition, and Marketing Technology solutions. Our demand acceleration solutions map the buyer's journey across multiple touch points such as search, social, mobile, media, and email. These integrated campaigns are powered by cutting-edge content creation, digital advertising, web design/development, marketing automation, and analytics. We serve hundreds of clients ranging from VC funded startups to Fortune 500 multinational firms. Our 200-member team is based in Silicon Valley and Bangalore and consists of marketing gurus, engineers, data scientists, writers, and designers. Founded in 2006, Position2 is backed by Accel Partners.