Luxury Dinosaurs: Soon to be Extinct?

Emily Dorotheou in Advertising

in Advertising

High Net Worth Individuals (“HNWI“) are a growing online presence. Over 98% of luxury shoppers use the Internet daily and more than 90% go online to research luxury products before they buy, using computers, smartphones and tablets. According to a McKinsey report, the value of online luxury goods sales could be €70 billion by 2025.

In contrast to their HNWI buyers, luxury brands have, traditionally, not been comfortable with the digital world. That has to change. Advertising is no longer about print, outdoor and television campaigns. It has morphed into a combination of content strategies, YouTube channels, social media and influential online leaders. So why have luxury brands resisted the digital world for so long? And, more importantly, what can they do to fully embrace online advertising and harness its appreciated potential?

Ready to take a leap of faith?

Luxury brands have been very cautious of the online world. Ten years ago, luxury brands were spending minimal amounts on their digital campaigns. The main reason was the fear of losing control over their heritage and image, so diluting their exclusive status. How can you maintain exclusivity around your goods if everyone can see them? Is it detrimental to your brand to reveal prices online? How can you maintain your brand status if you allow users to post reviews and comments after your Tweets or Facebook posts?

The value of online luxury goods sales could be €70 billion by 2025.

Another reason why luxury brands were slow to embrace digital advertising was the limited and uninspiring nature of the underlying technology. Online advertising initially consisted of simple banners, annoying pop ups and slow loading times which did not sit comfortably with what luxury brands were all about. Luxury brands were not able to replicate their glossy magazine and television campaigns online. New advertising techniques, however, mean that this is no longer an issue. Brands can now experiment with subtle and less intrusive adverts, which are more in line with their message and personality.

Embracing digital advertising also requires a complete shift in luxury brands’ thinking and attitudes. This repositioning however is worth it: McKinsey found that nearly all of the €5 billion market growth for luxury goods in 2014 came from e-commerce. More than 90% of HNWI are active on social media, with 55% of millionaires being on Facebook in 2015. As shoppers grow increasingly active online, their expectations of brands also grow. The upside for brands is, by keeping up with customers, they get access to their online footprint. By creating an online presence, brands have access to data which provides an insight into shopping habits, leading to more effective targeting and customer profiling.

More than 90% of HNWI are active on social media, with 55% of millionaires being on Facebook in 2015.

Luxury brands are therefore faced with a choice; maintain the exclusivity surrounding their brands or embrace the democratic online world, where all online shoppers are equal.  However, in order to embark on a strategic and effective campaign, companies will first need to consider a shopper’s journey from initial temptation to final purchase, and their exposure to the various advertising touch points along the way.

“Consumers pay a premium for luxury products because they perceive something extraordinary within them”
– Shuli Lowy

Affluent shoppers tend to have pre-selected brands in mind when considering their potential purchases. This is to be expected, as luxury brands tend to be synonymous with certain items. Looking for a trench coat? Go to Burberry. Tempted with a handbag? You will probably be torn between Chanel and Mulberry. Need a new watch? Cartier vs. Tag Heuer. Shoppers are more likely to spend large amounts of money with brands they trust. McKinsey found that more than 75% of luxury purchases come from brands featuring in shoppers’ initial consideration. Once shoppers have set their hearts on a particular brand for a particular product, it is very difficult to get them to change their minds. Brands therefore have to focus on emphasising and reemphasising their profile and product association. Advertising, therefore, has to be consistent.


Luxury shoppers also want to feel like, not only are they buying a product, but that they are also buying into an experience. When you buy a luxury fast car, you are not just buying a Lamborghini; you are buying a part of the Lamborghini world.  When shoppers buy online from Tiffany’s, they expect chic packaging. When shoppers buy online from, they expect personalised touches. The entire shopping process must be a seamless journey, through which customers enjoy a consistent brand experience. This means that luxury brands have to create an entire universe into which shoppers can enter, no matter whether the entry point is online or offline.

Physical stores still have a place

In 2013, 82% of luxury purchases happened in stores, and last year stores were found to have the greatest impact on sales. This shows that, whilst HNWI are spending more time researching online when considering a product, they are still drawn to that special experience that comes with buying in store. Luxury brands can therefore not afford to ignore their store presence. Some luxury brands, appreciating that shoppers still want to make their final purchase in store, do not even offer their iconic products online. Hermès, for example, does not offer the Birkin or Kelly handbags online; similarly, Dior reserves a proportion of its “Lady Dior” bags for in store sale only. This approach means that the thrill of buying in store is maintained, but that shoppers can still be tempted online.

Expanding reach but retaining exclusivity?

High value goods are aspirational items and are often out of reach for most people. Once HNWIs see a product on Instagram or Snapchat, they want it. Instagram, Twitter and blogs are highly persuasive in shaping what shoppers want and aspire to have. As social media is a very inclusive activity, brands can use these channels to also reach out to shoppers who may not initially be able to afford their products. Social media campaigns can help luxury brands create a relationship with their followers, which they can continue to foster if and when their followers turn into future customers. There is of course a danger in raising your (well dressed) head above the social media parapet; brands can leave themselves exposed to poor reviews and negative comments, which can have a negative impact on their image. Brands need to utilise technology to raise their profile, whilst not jeopardising their image. The Internet’s “open to all” character has meant that traditionally exclusive brands, such as Hermes, Prada and Fendi, are now available to every online user. The challenge has been to embrace this inclusiveness, whilst maintaining the exclusivity that comes with being a high end brand.

Next week on ADTEKR, we will take a closer look at the ways in which luxury brands are improving their digital campaigns.

Luxury Dinosaurs: Soon to be Extinct? was last modified: February 12th, 2016 by Emily Dorotheou