LEAP Luxe: A State of Luxe

[Music] From consumer insights across the world to the latest tactics and trends, you're listening to Leap into Luxury, the GoTo marketing podcast for Luxury Brands. I'm MJ and together today with Natalie, my lovely co-host, we're going to be setting the scene for the series to come, discussing everything that is everything about luxury with specific references to marketing from the last 10 to 15 years and where we think it's going to be going. So, very exciting topic. It is indeed. It's an exciting time. If any of you work in luxury or are really interested in luxury, which I presume you are since you're here, you will know that the last few years has been a really exciting time for luxury. We've seen a lot of growth, which wouldn't necessarily be expected in a time of economic uncertainty, shall we say? Yeah. But nicely. Very nicely. Although if we do look back at the last recession back in 2007, Luxury did see a spike in sales and growth during that period too. The lipstick effect. Yes, it looks on. We love it. So, looking at 2022, there was a 20% growth in the industry, in the luxury sector and in specific. And that was driven by, well, a number of factors really, but this is global, right? We're talking global. This is global. Yeah, global. I mean, when you compare that to pre-pandemic sales in luxury, that's an 8% to 9% growth. So, it's not insignificant. It's massive. And that growth is continued. So, I saw a report from Bain & Company, and that growth is actually predicted to continue on a trajectory of 5% to 7% until 2030. So, it's not a short term trend that they're predicting. This is like something that people are. People in the nerve are saying it's going to continue. So, today we want to kind of look at, how is that impacting brands? Why could this be happening? And where do we think it's going to take us? Yeah. I mean, just to caveat, we could talk about this for hours and hours and hours. But we will try and keep this whole discussion a little bit top-line so that you can listen in throughout the series, and hear us dive into these topics in a little bit more detail with some of the experts that will have as guests. So, I suppose what's worth discussing is why we feel like there's this growth in the luxury market globally. But with specific reference, I suppose, to the marketing around it. Yeah. I think there's a couple of different factors. So, one being the pandemic, which has left people. There's a trend called "yolo spending," and I think coming out of a situation like lockdown, consumers are very much of the opinion like, "Let's just spend it because we don't know what's going to happen." You saw that with World Wars as well, so it's not the first time it's happened, but it's definitely, I would say, focused specifically on luxury this time. We don't really know why it could be that people have more disposable income, post-pandemic, or at least didn't 2021-22, or that they're just placing a higher value on this kind of higher end experience or product. Yeah, and as well, there's those purchases that just make you feel good instantly. It's instant gratification versus that kind of long term, saving up and buying things. There's a lot of uncertainty right now, even around the housing market. People save up and buy our house. So you know, Camus Hanbach was a very good investment. Thank you. It was indeed. But when it comes to marketing as well, I mean, it could also be the fact that we're reaching so many more people through the marketing platforms that we have available now, which is huge. I mean, things have changed even in the last 10-15 years. That introduction of kind of multi-platform marketing opportunities has completely transformed the industry. So not only are you seeing things on the traditional marketing platforms, TV, print, out of home billboards, that kind of thing, but you're also seeing the introduction of digital marketing of tactics, like influencer marketing. And there's a lot to be kind of spoken about there. I mean, we've got some stats here, actually, which are pretty phenomenal. So the global digital ad spending surpassed traditional ad spending for the first time in 2023. And that was at $333 billion when compared to $360 billion, respectively. So that is a huge stat in terms of how much now is being put into those digital platforms. And it's also worth noting those digital platforms will largely, not solely, but largely reach younger audiences. So we're looking at a market now, which isn't just kind of talking to X and millennials. We've got Gen Z and even Gen A, who are coming in, like the age to entry to market for luxury purchases is getting lower and lower. I know that it was for millennials, it was 18 and 4 Gen Z. It's been 15. So across all these different channels and social media, in particular, we're now reaching younger and younger audiences who have the spending power to engage with these brands, not just in a kind of social engagement way, but in an actual purchasing manner. But the things that I suppose matter when it comes to speaking about these newer audiences, are they like to digest marketing differently? They like to align with brands in a different way than what we've been used to in the last 10 or 20 years. And that means that those audiences are splitting off into all these different platforms and also at the same time demanding quite tailored communication, quite personalized communication, which must have a significant effect on people's marketing budgets, brands marketing budgets, and kind of offers up this whole new problem that we didn't have. I say, but I'm saying back in the day, really showing my age. But we didn't have it. It was a creative one to get. We'll go on TV, we'll go on radio, we'll have this lovely billboard, and we'll send out some emails. And now it's like, where do we put our budget? And thankfully, actually, we do have the ability to now track in a much more precise way, the effectiveness of each of these platforms and each of these marketing executions. And those data tracking capabilities, they have their pros and their cons, and that's actually something I'd be keen to talk about as well. We obviously worked together for a long time, and I think we probably are singing from the same Him sheet here. But I think that kind of row-as for those who don't know row-as is return on ad spend. Trackable row-as is really important, and I can see from a brand perspective, especially when you're presenting up to your FD, that that is a really nice thing to have in front of you. I don't think it should be relied on too heavily, especially in luxury. So we work in an industry that is filled with the best creative minds in the world, if we're only relying on kind of conversion ads, and I don't think it's the best story for the consumer. I think it should be more balanced. But that's something we can perhaps dig into in another episode. I could talk about that for a long time. You see, I mean, to kind of to touch on those pros and cons of this trackability. Certainly it helps a lot of brands now refine their audiences. They can obviously test and learn what's working, what's not working, and optimize actually quite quickly for that, the kind of return on investment that they're looking for. But like you say, it is very much a, we pop and add out digitally, it either converts or it doesn't, and the next week you can go into your board to whomever you're answering to, and say, "We spent this much, and we made this much." Which is great. But has that now drawn focus away from those long-term brand building KPIs? And those occur through things like creativity, through memorability, through that outside of the box thinking that you actually can't execute as well through those highly targeted digital ads. Is there an expectation to go above and beyond for these new audiences? And are we doing that? Or are we becoming too reliant on that data? And the bottom line? I personally think that we're going to see a little bit of a shift backwards. I think social media is getting more and more expensive, and I think the audience is getting more and more savvy. So they're seeing waning results, because people know they're being advertised too and don't necessarily trust what they're being told. I think I thought 2022, especially, was a really interesting year, not just because I bought a handbag, but if you look at Jacques Mous in the autumn, I'm sorry, spring summer shows in Paris. I don't know if you saw they did a massive handbag that was going down the streets in Paris. So that kind of experiential campaign, for me personally, is so exciting. I just think it is exactly what a luxury brand should be doing. It's completely unexpected. It is so over the top in the way that Coco Chanel shows where back in 1945. And it also created a load of social content that was really authentic. I know what's a good word. But, it went viral in the right way. I think I hope that we will see a return to that kind of creative social posting and that use of media in a bit of a different way. Yeah, I agree. I've definitely seen a drop off in those kind of stunts and that kind of experiential activation from a lot of the brands that I had hoped to see, pick it back up post-COVID. But I think during those COVID times budgets were kind of shifted, reorganized, put into digital and social executions. And from that you can get this like instant data that it's like if we spend X amount of our budget on a stunt like that, you cannot, firstly, you cannot really know how it's going to go, how successful it's going to be. You also can't refine the audience that see it, which obviously isn't the best argument for the case. And there are environmental constraints. We're seeing a lot of backlash at the moment about executions from certain brands where one of the main responses, what was the carbon footprint of doing this for one day? There's also the cost of it and you can't track the efficacy of it. But there are stats that say 41 percent of marketers believe that events are more effective than digital advertising, email or content marketing. And that is because you cannot neglect the memorabilit and the surprise and delight the wow factor that people get from seeing something like that. But it's a case of kind of, I think it comes down to being within that brand, you either got the extra money and you can afford to spend it the likes of coach and Louisvay who do this all across the world. So well. You either have it and it's and it's kind of an added beautiful luxury for like a minute ago to put into your marketing plan or it's something that you really take a risk on and you need the people inside the brand to be like, yes, audit, let's go, let's go for it. Let's be that brand that people remember 10 years from now because we did that thing. But that's the entire point that people do remember it 10 years from now. I think yeah, I hope that there is kind of a priority placed on the personal interaction with brands because I do think that that is what is going to build long-term relationships people like Gen Z are reportedly less loyal customers than older generations. So I think building that long-term relationship and trust with the up and coming generations who are going to account for a huge portion of luxury spend is just going to get more and more important. And having a robust social campaign and digital like digital campaign is totally important and I'm not trying to negate that. But I do think we need to have equal importance placed on brand storytelling. Yeah, be that experientially or you know through great cinema ads or whatever it may be, I just think there needs to be a balanced approach. No, absolutely. And I think that you know all those statistically content marketing like digital marketing costs, actually I think I've got to start here. Costs about 62% less than traditional methods, say things like TV and apparently generates three times more leads just overall on an average. But it's also been stated that TV advertising is responsible for as much of 72% of all brand awareness. So if these new generations are becoming a for lack of a better term, a little bit less loyal less, you know, a bit fickle when it comes to the brands that they're aligning with, is that a result of only being marketed to through digital executions. And if so, where do you find them if they're not watching TV? Where do you start building that emotional connection and start talking about the brand as a whole? And that's where these experiential kind of stunts come in and kind of giving something that's a little bit like I say outside the box. And it's interesting because the way that that consumer or this modern consumer has changed, there are so many things that they're looking for from a brand now. Previously I don't know 50 years ago, you're looking for a brand that works, you know, you want to let us know. Right, first. Good shade of red. But now there's so much that comes with it. These modern consumers are looking for authenticity. They're looking for for cause driven brands to align with to that that match their their ethics through, you know, their work on social purpose. And as well, they want to explore their own individuality and and there's so many more. Yeah, and I mean, I don't think lack of fidelity in a in a new generation of consumers is the worst thing in the world. I think it's going to drive businesses to operate in a more conscious and hopefully ethical manner. And that's a really good thing. I just think it's going to stretch marketing budgets because expectations are so high and the room for error is smaller, but budgets are still only a certain amount. So I think what's going to be really interesting to see is what brands really focus on certain channels and place their faith in them and which try and do everything. I think it's going to be those that fly in my opinion are going to be those that pick the channels that are right for them and then really let them work well. That's interesting. So I mean, I suppose we've kind of covered how things have changed but where on that note do you think things are going to be moving forward to where do you think things are going to be evolving and changing when it comes to reaching these new audiences? I think personally, I think brand kind of brand exhibitions and large scale experiential is going to become bigger and bigger. So you look at Lou Vuitton, they've done the 200 trunks, 200 visionaries, exhibition again this year. I think it's in Singapore at the moment or it's just closed there and that's something that's worked really well for them. A brand that we work with really closely Verve Cliqueau are very good at this kind of activation. This summer they had an exhibition in Piccadilly in London where they were showcasing artistic collaborations. They had kind of done over the years and I just I think that kind of events and exhibition really builds like the brand story in people's minds. It's something I've certainly spoken to a lot of people about after I went to their exhibition. So I think that will continue to grow. It's also kind of a trend that you're seeing a bit more in Asia and what happens in Asia we tend to follow with. Yeah, we'll see. I think also I'm not an expert on this but it will be interesting to see where we go with the Metaverse. I can't talk too much about that because I'm far too old to understand it. But it is something that these brands are feeling a lot of pressure to consider and to execute on and there is the question there where it's like will this be worth it long term because you are in theory reaching an audience that will one day be your primary customer. And lots of the brands who can afford to explore these sites are. So you've got LVMH for example who are pointed head of crypto and Metaverse of its digital innovation division in January last year. So they're already well into this. And since then you've got the likes of Tiffany's, you've got Louis Vuitton, Deal or launching their own NFTs. We've got Fenty Beauty targeting Gen Z through Roblox and Naz have also done the same thing and both with Epic results. So it's a question of is it if you've got the budget should you pump for it and see how it's going to go long term. And that is a question that's not too dissimilar to talking about these experiential stunts and activations. If you've got the budget do you do it and you pump for it and you have no full way of tracking the efficacy immediately. And it's nice to see these people doing this. I mean, Naz has taken its hero line into the Metaverse with this female focused NFT artwork and augmented reality filters. And again that's amazing how these different brands in luxury and beauty are harnessing tech these days is wonderful. But there is a question there about these budgets. If you are then expected to be on traditional advertising platforms. If you're expected to be on TV, out of home, on the radio, in magazines, you're also expected to be in the Metaverse doing your social ads. You need to be creating NFTs. You need to be building communities on Discord. I mean, when does the end? Yeah, there's anyone marketing manager. And I don't envy them at the moment. And saying this, I mean, even though budgets have statistically increased marketing budgets, have increased since I'd say the 90s, they are spread a lot thinner now, and the expectations for a return on those is so much higher that it's a sharp to meeting and say we spent this much and we made this much, and it never used to be that way. And it's a much harder job to be a marketing manager. - You know what I mean? - But you say it's like I can't imagine. And you're right in saying just focusing on one or a few are handful of primary platforms and seeing how they work for you and seeing how your audience respond to them is probably the best advice for people who don't have the LVMH bank account. (laughing) To hit up. But it is a question, is a risk that you could be taking alienating this up and coming audience? - I guess we'll see as well with the advent of AI, kind of accelerating creative production processes. Is there a way that these brands are in a few years able to deliver on mass for the same kind of budget as they would have traditionally? I mean, there's also obviously with the introduction of digital marketing and social media marketing specifically, there is a question that arises here of how do you stand out? How do these luxury brands stand out? Because it has opened a whole world for new and upcoming brands to enter in into the space. And it's been a long time coming for these brands, to these new brands to have an opportunity to do that. But then it's a case of there's a lot of noise out there. So how do you stand out in the space of a three second attention from a consumer? How do you stand out? And that's actually where I suppose more creativity is needed and that outside the box thinking. There's gonna be more social targeting limitations in our future, I imagine, ever since the Apple's iOS update a few years ago, already that has affected the ability to specifically target groups that we used to be able to do. And that's gonna lead, again, to needing something that really kind of attracts the consumer, especially when you're fighting against thousands of others. I mean, I guess something we haven't spoken about is the elephant in the room, influencers. How do you think that relationship's gonna continue? Because I have noticed, I think there's a waning sense of trust in influencers. - Oh yeah. - Yeah. So I think there's definitely gonna be a shake up in that sphere. I don't know how it's going to look moving forwards, whereby I read on business a fashion and an article this week and they were talking about the rise of influencers with day jobs. I don't know whether that kind of influencer will foster a bit more trust with consumers because their income is less reliance on brand partnerships and then you therefore think, well, are the ones they choose to do really authentic rather than just money-driven? What do you think? - Well, it's so tricky because obviously, influencers were not a thing, not really. I mean, you had brand ambassadors for sure. And then all of a sudden social media allowed us to kind of speak to real human beings and they told us we should really buy this face cream so we did and it was epic. And it was actually beautiful to see and beautiful to work on those kind of projects before. I know that kind of in the luxury industry, they were slow to adopt this method. And I'd say because there's always that kind of problem where when you're a luxury brand, everything that you put out into the world needs to ooze luxury and that's very important. - And that's very important. And it needs to be so on brand. So it's a hard thing to let go of is that control. - And I think rightly so, these brands have spanned, you know, sometimes a hundred years building of this brand look and feel. And I got the sense that there was a reticence to hand that over to someone who doesn't have a real understanding of the brand and I get that and sympathise to be honest. But as marketers and humans and influencers always do, there was a solution to be found. - Of course. - And it has been done well and it has been done in a premium way. But since it's been kind of dictated that you need to express when you are being paid for marketing this thing or for influencing all the half of a brand. I mean, the hashtag ad has really changed away that people are now receiving that information from influencers. So like you say, there's now this lack of trust. People do not want to be sold to. - No, not in space, in a social. - No, but almost, and that's where you start thinking again about those traditional methods. Where you're in a situation where you're not overwhelmed by a million different ads every time you're trying to scroll through something. If you see a billboard, you're not mad that you saw that billboard. But if you get served an ad while you're trying to watch your favourite show or you're trying to look at what your friends are up to on Instagram, you get a little bit and not you're like, "Oh God, another ad." - Yeah. - It feels almost like an interruption, doesn't it? - Yeah. - Like your personal time or space. - Yeah. - But that's where I say the future of influencers is gonna be something I'm really gonna be looking closely at because I don't want it to leave as quickly as it came. - No, I think there's definitely a place for it. - There's gonna be a place is just how that's executed and how effective that will be, will be really interesting. But the likes of Amazon, so I forget which programme it is actually, but Amazon have just launched a series where they're offering a service where you can pause that show that you're watching and purchase what it is that you're seeing on screen. So if that were something - Absolutely. - And devastation. - Something on the. - Something wasn't available in Daisy Jones in the six. (laughing) - You've hedged toe and tuffles, - Yeah. (laughing) - And that's huge. Like, will that be the future of, of, of, of, the market, say, I mean, I know obviously we've had brand, product placements in, in TV and film for a really long time but this is different. You can actually click straight away and purchase it through Amazon. I mean, could this be the way that things change? But studies have found actually that 92% of consumers do trust influences over brands when making, sorry, making their, their decisions, making their purchasing decisions. And I don't know how much that's gonna change, but, but 92% is pretty high, yeah. - Right, yeah. - Trusting them over the brands. - Yeah. - And that's, that's a huge issue in itself. Why, do I, aren't we trusting these brands? And it's because of that, that being sold to. - I think it's the oversaturation of the ad space that makes it hard. - Yeah, that's true. - Yeah, true. - People don't understand the level of regulation that actually exists behind these brands. As, yeah. And I also think that there is work to do there with, with connecting with consumers, brands to connect with consumers rather than just sell to them. I know obviously that the bottom line is the bottom line, but, but there needs to be a reason why you are affiliated with, with these products and this brand. And, and the way to do that is to build this brand story and is to align with these consumers and to build that community. And, and that can't be done like I say in a three second. - You're preaching through the fire of an ad. So, so it is really tricky and it takes, I'm really hoping that we're going to see some innovation in this kind of space soon. - I think you're right. Yeah, it's, it's going to be really interesting to see what happens. I do think that, and you're right in saying brands should really carefully consider the long term relationship they have with their consumers over purely, over how, over focusing on selling constantly. So, that's going to be something that's really interesting to watch unfold. And, I guess that's what we're looking to is we kind of go through the series. So, we're going to have lots of different guests on from all different walks of the industry and we can dive into these topics and see what the brands are thinking, where are we going to go, what are their pain points and what are they, what are they excited about? - Yeah, I mean, we speak obviously from a marketing point of view working across lots of different brands, but actually speaking to the people behind the steering wheel is going to be really insightful and we're really looking forward to it. I could have spoken for hours on these topics. I'm having to hold back, but stay tuned. - Stay tuned. - Yeah.