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The recent interest in how luxury brands are capitalising on the benefits of digital may at first seem surprising. In a period of global economic tensions and the subsequent squeeze we've seen in consumer spending across multiple regions, it's arguably a time of even greater pressure for those brands selling high-end clothing, accessories, fragrances and jewellery/watches.
It's largely such economic pressures that are driving luxury brands to re-evaluate with a greater sense of urgency exactly what digital can offer them. Not a week seems to go by now without luxury sector commentators calling on such brands to 'up their digital game'.
At Microsoft Advertising we have a commitment to invest in consumer research that helps both ourselves and our clients better understand current consumer behaviours and also emerging trends - especially people's use of digital media, services and communications in relation to specific product categories. To address and understand many luxury brands apparent "under-investment" in digital, we have, since late 2007, been engaged in an ongoing global research-led investigation - Luxury Lovers - to test this hypothesis of digital under-investment and explore several questions along the way:
· What motivates people to purchase 'high-end' or 'luxury' clothing, accessories, fragrances or watches?
· What are the emotional and rational benefits of such products?
· How do luxury consumers (what we've termed Luxury Lovers) engage with their brands of choice
· How open are they to digital marketing?
· How can digital marketing be successfully utilised by luxury brands?
Our initial qualitative investigation centred on the U.S., U.K., French and Japanese markets. It identified a strong appetite amongst Luxury Lovers for greater engagement with brands in the digital space. This demand stems from the nature of the relationship that consumers have with luxury brands: a relationship built on the key motivations we discovered of indulgence, exclusivity, status and quality.
A follow-up second phase of research in Q3/Q4 2008 quantified these motivations and other consumer behaviours for eleven European markets and seven markets across Asia. This has provided luxury brands with a rich data source to aid their communications planning process across markets within these two regions - highlighting similarities and differences in luxury consumer drivers and behaviours.
Luxury consumers emerged as heavy users of digital media and services, and despite many being time-poor through work commitments, they still make more use of online video, instant messenger and social media than the average consumer. Specific to luxury products, nine in ten of our European Luxury Lovers research their purchases online and eight in ten are already receiving digital communications direct from brands or their retail distributors.
The strong sense of 'ownership' associated with luxury goods manifests itself in terms of the appeal of online marketing approaches, with desktop wallpapers and gadgets/widgets (that provide branded utility) all performing well in the eyes of the consumer.
This work has helped us at Microsoft Advertising in our engagement with our luxury brand clients, particularly Chanel. Chanel is one of the world's most desirable luxury brands. Renowned for their spectacular advertising in traditional media, the House of Chanel's first foray into interactive advertising had a lot to live up to and was a world media first for a luxury brand. Microsoft Advertising, as exclusive interactive portal partner for this campaign, worked with Chanel and their creative agency to jointly develop and globally execute an immersive brand experience that would launch the new celebrity face for Chanel No5.
Complex rich media technologies and streaming HD video were deployed to deliver full day homepage ad experiences and Instant Messenger activities that brought the new Chanel No5 film to millions of affluent MSN and Windows Live users, in a synchronized movie premiere across multiple markets globally on 5th May 2009. (See the creative in action.)
Our work in this area has been an on-going commitment since 2007 and in that time we have seen luxury brands increasingly test and now incorporate digital into their communications campaigns. There's a long way to go, but more recently digital investment has become much more significant some brands - our recent work with Chanel is testament to this.
Further details of our findings to date are available from our advertising site
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