6 digital marketing trends in the luxury industry 2020

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Introduction to digital marketing

Digital marketing trends are consistently shaping the luxury industry, brands, consumers, influencers and so on. For the past decades, businesses have been evolving towards digitalization and trying to shift into a more technological approach that adopts digital tools in everyday tasks, at both individual and organizational levels, to have more accessible and transparent data, faster processes and higher productivity.

Today’s consumers need to be targeted and engaged 24/7 in order to develop interests and loyalty towards a brand. To achieve such a goal, innovative digital strategies need to be created and employed.

COVID-19 as the catalyst of digital marketing

In the first half of 2020, the COVID-19 crisis has acted as a catalyst for digitalization and the emergence of important digital trends. As lockdowns prevented people from pursuing normal human interactions, brands have identified alternative methods of engaging with audiences, while stimulating discovery, interests, likability and, ultimately, consumption.

Increased interests in digital experiences and online content.

According to Deloitte, digital sales grew by 18% in Q1 of 2020, compared to the same period in 2019. Moreover, as the same report shows, traffic growth by 13% was registered, with desktop usage going up by 9% in the first quarter of 2020, after a drop by 9% in Q1, 2019, and traffic from social media jumping from 6% to 8%.

A simplified 3D visualization and configuration demonstration provided by luxury brand Lolo Chatenay and tech startup Hapticmedia.

Ready to use 3D configuration technology for higher conversion rates like Guerlain, Baume, Kenzo and more? Contact Hapticmedia to get a free quote!

What happened during lock-down was that people went more online, where they obtained information, interactions and communities and shopped for both essential and nonessential goods, out of which, DIY and home products saw the highest growth of 70%, while luxury grew by about 10%.

Many of the habits that consumers developed during this special period are staying with them, creating a new digital marketing landscape that professionals need to master in order to ensure that brands keep up and increase market shares.

Larger shares and bigger impacts

As Sarah Willersdorf, partner and managing director at the Boston Consulting Group, mentioned to Forbes, Generation Z’s role in shaping digital marketing cannot be overlooked. If in 2019, this audience group represented only 4% of the luxury market, then by the end of 2020 its contribution is expected to double.

Still, this is not where their impacts end. Gen Z members also have a long lasting effect on the consuming patterns of those around them, influencing both Millennials and Generation X, be them friends, family, or coworkers.

Digitally-native, tech-savvy and hard to please

Much more digitally-native and tech-savvy than previous generations, consumers born between 1995 and 2010, as Mckinsey describes, have overtaken Millennials by numbers, being the largest generation in the U.S., and the most ethnically and racially diverse generation, as Pew Research shows.

Moreover, Generation Z is an extremely challenging audience, as they require a more innovative and creative approach from marketers. For example, fans of TikTok, Fortnite and the VSCO culture are significantly into nostalgia marketing, which is a paradoxical trend taken into account that they did not really experience the ’90s.

Gen Z-ers usually spend approximately 3 hours online each day, particularly through mobile devices.

Particularities about Gen Z-ers

When it comes to values and priorities, such consumers have several particularities, as Wesley Mathew, head of marketing UK and India, says in The Drum.

They are financially-focused, competitive and independent, in charge of their own decisions and aspired towards entrepreneurship.

They place high values on authenticity, sustainability and are big environmentalists. For them, it is important to contribute to the society, to have a voice and to co-create a culture. This is why they are not only content consumers, but also producers.

They are hip and are always looking for new cool things, focusing more on products than on experiences. Their sense of humour is obscure and they respond to edgy campaigns.

As this technology-focused generation is growing in purchasing power and influences, marketers need to adapt approaches to cater to them and develop digital marketing strategies that convert.

1. Consumers love shoppable content

Shoppable content is any type of content that offers consumers a direct opportunity to buy a product within just a few clicks. Types include shoppable images, articles, videos, social media content, live streaming and digital magazines.

A report by ViSenze placed shoppable content as one of the technologies that consumers are most excited about, with 43% of respondents declaring enthusiasm. In China alone, social media shoppable content or social commerce in a sense, is assessed at $242.41 billion and is expected to double by 2023.

Social commerce nowadays enables users to buy their favorite goods and services without exiting the apps, thus reducing cart abandonment. Moreover, such platforms are actually democratizing e-commerce, as they enable smaller and less digitized businesses to sell without a direct-to-consumer platform.

In today’s world of social commerce, shoppable content such as livestreaming is really catching on and bringing in huge and immediate revenues to brands as well as convenience and excitement to consumers.

2. Personalization is key to creating a memorable experience

Consumers do like the idea of personalization

The growing trends of purchasing a custom-made product can be reflected by increasing shopping demands towards it. Reality is, 25-30% of them showing high levels of interests in buying such products, making it a huge market for potential entrants.

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Ready to use 3D configuration technology for higher conversion rates like Guerlain, Baume, Kenzo and more? Contact Hapticmedia to get a free quote!

Consumers are also willing to pay premium for such personalized products. This is confirmed by another report from Deloitte, 57.2% of worldwide millennials interviewed replied “Yes, definitely!” to the question “Would you be willing to pay more for a high-end fashion or luxury item that was personalised to you?”, while 35.2% answered “Maybe”.

Shoppers have now developed a stronger need to feel appreciated by brands they choose and confess that they take such factors into account when making a purchase. Personalization leads to better customer experiences and has thus become a crucial differentiator in the market.

Brands too have witnessed the advantages of personalization

According to Forbes Insights, 40% of marketing executives report that personalization has a direct impact on maximizing sales, basket size and profits in direct-to-consumer channels, such as e-commerce, while another 37% point to increased sales and customer lifetime value through product or content recommendations. More than one-third of respondents have seen increases in their transaction frequency as a result of personalization strategies.

Source: Guerlain 3D perfume configurator in cooperation with Hapticmedia.

This is why an increasing number of luxury brands are now joining this game, allowing buyers to transform iconic products into unique signature pieces. We, at Hapticmedia, work with luxury brands to offer product customization technology that enables users to co-design products and leave their unique marks on the item.

One of the most successful projects for example, is the one we did with Guerlain, which encourages beauty fans to personalize perfume bottles, customizing shapes, colors, accessories and even adding their initials or messages to the item.

3. Video ads are in but be aware of different demands based on different targets

For years, marketers have agreed that video is indeed king and it is now confirmed. According to Youtube, one billion hours of video are watched daily and over 2 billion logged-in users access the platform monthly.

As a consequence, 85% of businesses use video in digital marketing and 92% of marketers claim that it is an important part of their strategies. In this context, it is understandable that video ads are now one of the important trends for 2020 that professionals need to master.

In fact, depending on demographics and purposes, there are different techniques that marketers should be aware regarding the length, shape and content of the video.

For example, in certain cases shorter videos prove more effective than longer ones; while in other case, the opposite. As figures from the International Advertising Bureau show, 10-second videos have better results with younger demographics.

Moreover, research also shows that vertical video ads perform the best on Facebook, compared to square or landscape. According to Buffer, vertical videos on Facebook have a 68% cheaper cost per view.

It is also proven that netizens expect video ads not to be too intrusive, which means that silent video ads that are subtitled and start sound off are better received by users. When it comes to placement, in-streaming is the best way to go. More over, authenticity and immersive content are still extremely important.

4. Ad bidding is becoming smarter thanks to emerging technologies

According to eMarketer, digital ad spending is set to reach $517.5 billion in 2023. Google as the largest digital ad seller in the world in 2019, accounted for 31.1% of global ad spending, the equivalent of $103.73 billion; while Facebook as number 2, with $67.37 billion of net ad revenues, Alibaba number 3, $29.20 billion.

In this context, budget efficiency is of the essence, as brands want to choose the advertiser that delivers best results. To become more competitive, Google started implementing machine learning in the mechanism, trying to transform auction-time bidding into smart bidding by optimizing conversions.

More over, by 2024 over 50% of ads consumers will be influenced by Artificial Emotional Intelligence.

5. Chatbots bring not only responsiveness but personalization and uniqueness

According to Comm100’s 2019 Live Chat Benchmark Report, the average wait time, how long a visitor waits until an agent joins the chat, is 48 seconds. If they are told to waiter long, they tend to quit the chat. This again proves that users have been accustomed to quicker and facile communication.

In addition, since chatbots rely on complex algorithms, they are faster at searching for information and at identifying the user’s details, consumer patterns and are able to handle unlimited requests. Even more, an AI chatbot anticipates user behavior, which means that it knows when the consumer leaves your site, places an order or needs help. In this way, it is easier to place targeted marketing and improve efficiency.

Source: Sephora adopts AI Chatbot to offer quick services for multiple channels.

A chatbot offers real-time shopping assistance, just like customers receive in store. In a world where consumers have a multitude of options available at the push of a button, brand loyalty is extremely difficult to obtain and retain.

This particularly applies to the luxury industry, where companies compete on identifying themselves with a certain vision and style that need to be consistently expressed and bestowed upon their stakeholders and consumers.

Research results have revealed a rather affirmative attitude from consumers too. According to a research, 70% of millennials have had positive chatbot experiences, while 90% of businesses have registered faster complaint resolutions using bots. Over half of the companies prompted agreed that a chatbot delivers large ROI with minimal effort, while a similar percentage identifies artificial intelligence as a relevant tool for creating a “customer-first culture”.

Even more, looking deeper into its potential and focusing on conversions, Hubspot reports that 47% of respondents to a survey declared themselves open to buying items using a chatbot.

6. Marketing is shifting towards mar-tech

Today, you cannot talk about marketing without approaching a wide range of tools and channels that help engage and convert clients. Research confirms the fact that marketing technology spending increased by 22% in 2019 and that the future is looking bright.

Top three channels where marketers want to employ mar-tech are emails, social media and content and technologies that they are looking to adopt include IoT, Virtual Reality, Augmented Reality, personalization, visualization, facial recognition and so on.

Such technologies enable brands to provide an immerse shopping experience and to encourage clients to see, interact, personalize and appreciate products even before the purchase, thus increasing conversions.

As mentioned above, personalization is key to creating a memorable experience and has a direct impact on maximizing sales, basket size and profits. Therefore, an increasing number of high end brands are now joining this game, allowing buyers to customize products and leave their unique marks on the item using 3D configuration technology.

Ready to use 3D configuration technology for higher conversion rates like Guerlain, Baume, Kenzo and more? Contact Hapticmedia to get a free quote!

Ressources

https://www2.deloitte.com/si/en/pages/strategy-operations/articles/changing-consumer-digital-marketing-impact-Covid-19.html

https://www.pewsocialtrends.org/essay/on-the-cusp-of-adulthood-and-facing-an-uncertain-future-what-we-know-about-gen-z-so-far/

https://www.forbes.com/sites/pamdanziger/2019/05/29/3-ways-millennials-and-gen-z-consumers-are-radically-transforming-the-luxury-market/#36fe1143479f

https://www.youtube.com/about/press/

https://blog.hubspot.com/marketing/what-is-digital-marketing

https://www.merkleinc.com/blog/merkle-q1-2020-digital-marketing-report-released

https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/true-gen-generation-z-and-its-implications-for-companies

https://www.wyzowl.com/video-marketing-statistics-2020/

https://devrix.com/tutorial/video-advertising-trends-2020/

https://www.wordstream.com/blog/ws/2019/05/14/google-marketing-live

https://www.emarketer.com/content/global-digital-ad-spending-2019

https://www.emarketer.com/content/emarketer-cuts-alibaba-ad-forecast-search-business-struggles-amid-pandemic

https://www.emarketer.com/content/china-social-commerce-makes-up-11-6-of-retail-ecommerce-sales

https://hapticmedia.fr/blog/en/luxury-4.0/

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