Slowly, but why luxury brands are surely shifting towards digital ad spend?

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Luxury advertising is rapidly shifting towards digital media, led by luxury hospitality brands.

50% of luxury hospitality advertising will be digital this year, up from 47% in 2017, according to Zenith’s Luxury Advertising Expenditure Forecasts 2018.

Across all luxury brands, 33% of advertising will be digital this year, up from 30% in 2017.

 

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The report focuses specifically on luxury advertising, together with the sub-categories of luxury automobiles, fragrances & beauty, fashion & accessories, watches & jewellery, and – new for this edition – luxury hospitality, which consists of high-end hotels, restaurants, bars and clubs.

Hospitality is substantially ahead of the other luxury sub-categories in its commitment to digital adspend. Consumers in the luxury hospitality category now do most of their research and purchasing online, so brands have shifted their budgets to digital accordingly.

Consumers of other types of luxury goods are much more likely to make their final purchase after trying them in person.

Zenith forecasts that luxury automobile brands will spend 39% of their ad budgets on digital advertising in 2018, followed by watches & jewellery brands (28%), fragrances & beauty (27%) and fashion & accessories (13%).

Luxury brands have been slower to adopt digital advertising than most brands.

Across the 23 markets included in the report, advertisers in all categories spent 39% of their budgets on digital advertising in 2017, compared to luxury’s 30%, and we expect them to spend 42% this year, compared to luxury’s 33%.

 

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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.

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, Zenith report adds.

Digital advertising is now responsible for almost all the growth in luxury adspend.

 

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“We forecast luxury advertising in digital media to grow by US$886m between 2017 and 2019. Meanwhile television advertising will grow by US$27m, cinema advertising will grow by US$21m, and radio advertising will grow by US$2m,” the report notes.

“Luxury advertising in newspapers, magazines and outdoor advertising will shrink by US$305m in total, so there will be a net increase of US$631m in luxury adspend between 2017 and 2019. By 2019 we forecast that digital advertising will account for 35% of total luxury adspend,” it adds.

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