Posted at Jan 10, 2020 4:23:21 PM by thatagency | Share
Luxury ads follow many different rules, but there are very specific trends that can be identified for 2020. A luxury advertising agency should be able to tell you not just about these, but about building your brand in the long-term. Indeed, many of these trends foreshadow greater movements in luxury advertising that must be understood as not just a factor of one year, but an evolution across several.
Understanding trends can help you anticipate not just what you need to do in 2020, but what you need to do in 2020 that sets you up for 2021 and beyond.
1. Advertising Investment Up
Spending on luxury ads is increasing steadily. A Luxury Daily survey found nearly three in five luxury companies have increased their spending. This is an increase from just over half the year prior. This holds for both goods and services, which represents a steady increase across the sector.
Increases in spending on luxury ads still trail increases in overall advertising spend. The sector's still growing, but this may indicate an increasing need to rely on a luxury advertising agency that prioritizes smarter and more highly targeted ad spending.
2. Traditional Still Works for Many
Print still matters for luxury. More than half of ad spending for high luxury brands still goes toward magazine ads. The largest share of broad luxury brands, such as luxury vehicles, still goes into television.
Know which traditional mediums still function well for your brand and products. There's an increasing need for social media presence and online advertising, but this should not be mistaken for an exodus from the traditional forms that still work on a consistent basis.
3. Luxury on the Digital Front
According to Zenith forecasts, all brands are expected to spend approximately 42% of their advertising costs on digital mediums. For luxury brands, that's only 33%.
Luxury brands are popular among older customers that still value traditional advertising. However, Millennials (aged 23-36) and Generation Z (aged 16-22) are quickly becoming the new luxury consumers. Both of these generations grew up in the digital era and are at the forefront of fashion
When you speak with a luxury advertising agency, ask for their approach to reach younger generations. In the next five years, you will be relying increasingly on Millennials and Gen Z as they are expected to make up 40% of the luxury goods market by 2025. Therefore, you need to work with someone who has a plan for reaching them and for targeting high income customers in generations that have far fewer of them.
4. Diversifying Digital
A big part of this is diversifying your digital approach. It's not just about social media or about one social media format. Social media is only one component. Online advertising is another. Influencer marketing is surging with macro influencers getting paid more than $20,000 for one sponsored post.
Understand that digital marketing is more diverse, more diluted, and more resistant than other forms of marketing. The younger consumers are more digital savvy and expect to be able to interact with and buy from luxury brands through a variety of digital channels. They also demand a superior online experience which delivers convenience and ease.
5. Some Vertical Segments are Ahead
Fashion spends very little on digital advertising. This is a vertical segment that people still seek out themselves, often physically. Compare this to luxury hospitality, which generally needs to be planned out ahead of time. The luxury hospitality segment spend half its advertising budget through digital mediums.
There's a spectrum of digital spending and – more importantly – a need for digital spending. Understand which part of the spectrum your vertical segment falls on and you can accurately assess where your luxury ads need to be focused.