Press commentary on the digital marketing strategies of luxury brands. Read the full article.

Luxury brands, at risk of losing market share to competitive digital marketplaces, are investing in more aggressive online marketing tactics. Across search and social platforms, heritage brands have found themselves facing off with a rising cohort of digitally literate marketplaces, which have established their companies with performance marketing tactics built into their tool belts. These companies, including Net-a-Porter, The RealReal, Farfetch and StockX, have pushed luxury brands to rethink marketing strategies as advertising spend shifts from print to digital ads. Social media is set to overtake print in 2019 to become the third-largest advertising channel, after television and paid search, per Zenith.

Crowded digital marketing territory has led the strategies of luxury brands and marketplaces to diverge. A data analysis of 10 luxury or luxury-affiliated companies shared exclusively with Vogue Business by research platform Loose Threads found that while luxury brands focused their strategies on amping up ownership in search and maintaining consistency on social media, marketplaces preferred to take up residence in customer inboxes.

Most luxury brands have embraced social media advertising but to varying degrees. Loose Threads calculated 473 active ads (meaning individual advertisements that could be served to a user) by Louis Vuitton on Facebook and Instagram in the US during Q3 2019, while Ralph Lauren had 369. These brands’ activity was considerably higher than any of the other eight luxury and luxury-affiliated companies analysed. Louis Vuitton particularly stood out to Loose Threads as the only fashion house to consistently promote new products on the social platforms, regularly refreshing the pieces audiences see.

Most luxury brands have embraced social media advertising, but to varying degrees. Loose Threads calculated 473 active ads (meaning individual advertisements that could be served to a user) by Louis Vuitton on Facebook and Instagram in the US during Q3 2019, while Ralph Lauren had 369. These brands’ activity was considerably higher than any of the other eight luxury and luxury-affiliated companies analysed. Louis Vuitton particularly stood out to Loose Threads as the only fashion house to consistently promote new products on the social platforms, regularly refreshing the pieces audiences see.

Other brands manage to rely on organic reach. Dover Street Market and Comme des Garçons did not spend on social media ads in the period analysed. But organic reach may only get retailers so far. Richie Siegel, founder and lead analyst at Loose Threads, predicts that social ad spend is inevitable, and not putting a dedicated team in place now will make it “culturally harder to catch up”, he writes via email.

Why are you in my inbox?

While effective, paid social is becoming increasingly expensive as ad buyers bid on limited territory. The average price per 1,000 impressions on Facebook was up by 90 per cent year-on-year in Q2 2019, according to AdStage. With rising costs, digital marketplace disruptors are at a disadvantage. Luxury monobrands are better positioned to spend more on consistently maintaining a renewed presence on social, as evidenced by the analysis. Loose Threads only registered eight active MatchesFashion ads on Facebook and Instagram during the quarter, and one Net-a-Porter ad.

Instead, most marketing activity by these firms was directed to email inboxes, where retailers can get in front of an existing network of subscribers without paying premiums for ad spots. Luxury resale platform The RealReal sent 216 emails during the period analysed by Loose Threads (effectively two per day). The emails highlight key points like product availability and, in most cases, competitive pricing. Focussing heavily on promoting discounts can help catch the attention of customers browsing through inboxes. Nearly all of the 200-plus emails sent by The RealReal analysed by Loose Threads plugged price drops

Luxury houses, however, can’t get away with such frequency or promote themselves this way. In that same period, Loose Threads found that Ralph Lauren sent only six emails and Louis Vuitton sent none. The purchasing journey for a luxury item can sometimes span months. Determining the appropriate number of targeted ads pushing an item a customer has shown interest in is a complicated science. Get in touch too often and the brand can come across as needy, diluting brand equity. But stay too out of sight and the potential purchase might be forgotten. There’s a sweet spot in-between: Dyer says that return on investment improves up to a certain number of interactions per purchase journey; after that, it degrades.