Luxury brands have undoubtedly been affected adversely by the coronavirus pandemic, particularly those in retail sectors such as apparel and accessories.

For example, the luxury apparel and accessories industry had grown into a $24 billion market prior to Covid-19, and had been projected to peak at an impressive by 2023 as a result of increased investment by Millennials and the members of Generation Z.

Of course, this sector and the luxury market as a whole is facing slower than expected growth through 2022, although the demand for big ticket purchases remains. The question that remains is how can luxury brands successfully leverage advertising to steal a march on their rivals in the current climate?

Getting Started –  What Affects Luxury Purchases?

Quite apart from cost and accessibility, there are a number of factors that impact on luxury purchase decisions across a range of markets.

Perhaps the most telling is the consumer’s individual online experience, with this influencing some 40% of luxury purchases across the board. What’s more, this figure is growing year-on-year, particularly as ecommerce becomes increasingly dominant and more purchases are made online.

We also live in an age of increasingly integrated marketing campaigns, which typically utilise several offline marketing channels to help drive traffic online.

In this respect, data collated by Nielsen suggests that out-of-home (OOH) advertising has superseded television as the best offline medium to drive online activations, with this indexed at nearly four times higher than the expected level relative to its associated ad spend.

More specifically, OOH media accounts for around 26% of gross search activations generated by radio, television, print and outdoor channels, despite only comprising 7% of the total combined ad spend across these mediums.

This impact was particularly prominent across social channels like Instagram and Twitter, which are synonymous with luxury brands and promotion (particularly in fields like fashion and apparel).

Beyond this, it’s thought that mobile advertising click-through rates for luxury brands actively increase by 15% when they’re driven by OOH advertising, with this regularly exploited by fashion retailers and those operating in the lucrative apparel space.

With these numbers and trends in mind, there are two clear and important takeaways.

Firstly, OOH is now established ahead of television and print media as the most effective offline ad channel for driving online traffic within integrated campaigns, with this trend prevalent both across the board and specifically in the world of luxury brands.

Secondly, it’s important that luxury brands successfully integrate OOH as part of diverse and targeted campaigns, while aligning this with a good and enjoyable online experience for customers.

This can create a more holistic, effective and immersive consumer journey, and one that encourages individuals to spend their money on luxury and big ticket purchases.

The Effects of Generation Z on Luxury Brands

As we touched on earlier, Millennials and Gen Z members have been largely credited for the recent growth among luxury apparel and accessory brands, with the latter having a particularly prominent impact on a diverse range of luxury brands.

Certainly, luxury brands have been forced to cater to an increasingly youthful and influential audience of late, particularly as Millennials have come of age (the youngest members of this demographic are now older than 18) and Gen Zers have also emerged a powerful customer segmen

Sure, Gen Z members don’t boast the wealth of older customers, but they have considerable amounts of disposable income and are more than willing to spend this on bespoke and luxurious items that help to set them apart from their peers.

Also, if we look at the rise of OOH and mobile as key drivers of luxury brand spending, it further reinforces the influence of Generation Z in the marketplace. 

For example, it’s estimated that 64% of Gen Z smartphone users are constantly connected online, while a further 57% admit that they feel insecure without their handset or similar mobile device.

Even on a fundamental level, around 95% of Gen Z members own a smartphone and spend an average of four hours and 15 minutes per day on their mobile. 

There’s no doubt that such behaviours have influenced the luxury brands that have become increasingly reliant on Generation Z members, with entities now more likely to leverage OOH as a way of driving mobile traffic and real-time promotions both in-store and online.

If we analyse the growing influence of Gen Z among luxury brands, it’s also fair to say that younger customers have forced a change of mindset from high-end businesses and retailers.

More specifically, luxury brands know that they can no longer rely on the age-old perception that “luxury = good”, particularly when you consider the importance of ethics and social responsibility among Gen Zers and millennials.

Various studies have shown that climate change and sustainability remain the primary concern for Gen Z members in the modern age, followed closely by unemployment, healthcare and disease prevention. Each of these concerns have a distinctly human and ethical element, and luxury brands have been forced to adapt to this in recent times.

Not only is the demand for ethically-sourced and sustainable products within Generation Z robust, for example, but the members of this demographic are willing to pay substantially more for truly sustainable and eco-friendly products.

This mindset applies to a staggering 73% of Gen Z consumers, with 54% of this number saying that they would pay as much as 10% more for a sustainably made and sourced product. 

This is a crucial consideration for luxury brands, who are now able to justify even inflated price premiums in instances where they can demonstrate the sustainability of their products and how individual materials are sourced.

The Last Word – The Most Effective Ways for Luxury Brands to Advertise

All that remains at this stage is for luxury brands to understand the best practises when advertising themselves, their products and services in 2022. Here are some tips to keep in mind:

  • #1. Use Visual Aids and High Quality Imagery: While some rules of engagement for luxury brands may be changing, others remain universally relevant. Take the importance of using high quality visual aids and imagery when promoting luxury goods, for example, which can showcase premium items in their best light and capture the impact of appealing colour contrasts or unusual (and ideally sustainable) materials. This approach is also particularly effective when advertising through large-scale 48 or 96-sheet billboards at roadside locations.
  • #2. Combine OOH With an Immersive Online Experience: As we’ve already touched on, integrated campaigns are highly effective for luxury brands, especially those that want to leverage OOH media to drive optimal levels of traffic online. The key here is to adopt an holistic approach that combines effective OOH with a truly immersive online experience, and one that also incorporates mobile browsing through social channels such as Instagram.
  • #3. Be Transparent and Ethical: The trend for Generation Z members (and to a lesser extent, millennials) becoming the dominant buyers from luxury brands is strong, while it will become increasingly prominent with every passing year. This is requiring luxury brands (especially those in apparel and retail fashion) to develop a transparent and ethical identity, which is supported by a compelling narrative and the underlying business model. Of particular concern for luxury fashion brands is the importance of sourcing sustainable materials to create garments, alongside the eradication of questionable labour practises within the international supply chain.
  • #4. Create a Sense of Exclusivity: While luxury brands have always relied on their ability to create a sense of exclusivity, this can often be difficult when operating online. More specifically, it’s thought that such brands can lose their sense of exclusivity in the crowded and competitive online space, so it’s crucial that entrepreneurs take steps to negate this issue in the current climate. For example, they could create special, limited-time offers for selected and particularly valuable customers, or introduce a tiered membership scheme that affords different but tangible rewards for individuals based on their status.

  • #5. Develop a Loyalty Program: This leads us onto the importance of developing a customer loyalty program, which incentivises customers to spend their hard-earned cash and directly rewards their patronage over time. While this is a staple of retail success and sustained brand engagement, it’s arguably particularly important for luxury brands that apply price premiums to their unique products and services. Just make sure that your loyalty program is targeted and provides relevant rewards to customers, while the value of your scheme must broadly match the amount that individuals have to pay in exchange for your offerings.
  • #6. Try to Get Featured in Buying Guides: When dealing with luxury items and purchases, it’s often far harder for customers to make decisions that justify their total spend. The increased competitiveness of the ecommerce market has also made it even harder for luxury brands to set themselves apart online, but such challenges can be overcome by trying to get your company and products featured regularly in buying guides. In short, buying guides provide advice and objective guidance to help customers make a decision, helping to simplify the purchasing process on behalf of consumers and subtly promote specific products and services as solutions to targeted problems.
  • #7. Never Forget Your History (If Applicable): If you do intend to distinguish your luxury brand online, creating an engaging narrative around its history and heritage (where applicable) remains a highly effective marketing tool. Certainly, a rich and engaging heritage adds a sense of depth, authenticity and credibility to a brand’s value, enabling such firms to optimise the price premiums associated with individual products. This trend was one that engulfed the burgeoning gin industry over the course of the previous decade, intensifying brand loyalty and creating a willingness to embrace higher price points.
  • #8. Don’t Underestimate the Importance of Slogans for Luxury Brands: From Nike’s iconic ‘Just Do It’ to Apple’s ‘Think Different’ the history of business and commerce is littered with iconic, impactful and value-adding slogans. There’s no doubt that luxury brands can benefit from this type of advertising tactic, particularly when you consider that the primary purpose of a slogan is to broadly highlight the advantages or unique selling point of a particular business or product. This is very important for luxury brands who want to sell their products at a premium, and the key is to focus on simple copy that resonates with customers and conveys what’s key about your company.

In Conclusion

Ultimately, luxury brands have faced significant financial and economic challenges in the wake of the coronavirus pandemic, with projected growth levels having been adversely impacted through 2022 and 2023.

However, there remains considerable growth potential across a diverse range of luxury brands, with creative and effective advertising crucial if businesses are to leverage this to their advantage.

Certainly, luxury brands that leverage OOH as part of integrated marketing campaigns are likely to fare better than others, particularly in terms of optimising online traffic volumes and targeting customers through social channels such as Instagram.