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Even luxury heads for a digital exposure

Global ad spend by high-end labels on this format to see sharp spike, Zenith forecasts

Gulf News


Even luxury is taking on a higher digital exposure. Long content with making a statement on traditional advertising formats, these brands cutting across categories are intent on reaching out to audiences this way.

Carmakers of the upscale kind will spend 39 per cent of their ad budgets on digital advertising this year, followed by watches and jewellery brands (28 per cent), fragrances and beauty (27 per cent) and fashion and accessories (13 per cent), according to Zenith’s latest projections on where ad dollars are headed in the luxury space.

“After a relatively slow start, luxury advertisers are now committing to the digital future, led by luxury hospitality brands,” said Jonathan Barnard, Head of Forecasting at Zenith. “Luxury brands face unique challenges online, such as the need to maintain exclusive brand values while communicating with potential customers at scale.

“By using personalised digital communications and high-quality e-commerce experiences, luxury brands can generate new sales while preserving their exclusive appeal.”

In fact, luxury brands were slow off the mark in getting onto the digital bandwagon. Luxury brands have “historically been sceptical of the value of the digital environment for conveying their brand values, with its limited ad formats, crowded pages and often poor-quality content”, the report notes. “However, the environment has been improved by better ad formats and more high-quality content such as premium video, while programmatic private marketplaces, preferred deals and programmatic guaranteed deals all help brands pick the right content for their messages to appear in.”

So much so, digital advertising is “now responsible for almost all the growth in luxury ad spend”.

Zenith predicts luxury-specific advertising within digital media to grow by $886 million between 2017-19.

Television commercials will grow by $27 million, those at cinemas by $21 million, and radio ads by $2 million. But luxury advertising in newspapers, magazines and outdoor advertising will shrink by $305m in total. By 2019, Zenith forecasts digital advertising to account for 35 per cent of total luxury ad spend.

“We expect total luxury ad spend to rise 2.4 per cent in 2018 and 2.8 per cent in 2019, below the growth rate of advertising in general,” the report notes. “In the 23 markets included in this report, we expect ad spend across all categories to grow by 4.2 per cent in 2018 and 3.6 per cent in 2019.

“Some luxury advertisers are struggling to adapt to the preferences of younger consumers, who often value experiences over material luxuries. The continued decline of print consumption poses a particular challenge for high-end luxury brands, which still rely heavily on magazines to communicate their brand values.”