Don't Miss the Digital Transformation in Luxury Brand Marketing

The global nouveau riche aren't wedded to old money brands and that's creating big opportunities for niche status symbols.

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By Rohan Ayyar

Opinions expressed by Entrepreneur contributors are their own.

While nearly every industry across-the-board, from banking to real estate to automobiles to retail, suffered debilitating cuts in their growth trajectories with the financial crisis of 2008, one industry did swimmingly well, against all expectations.

Contrary to what one would expect, the luxury goods never really saw gray days during the financial crisis, thanks the slow but steady transformation that has been going on in that market.

Related: How Online Direct Sales Saved This Luxury Business

Changing customers. A typical luxury goods customer used to be "old-money,' middle aged and bourgeois. Today, there is a huge paradigm shift happening in terms of who the luxury customer is.

The sheer numbers of luxury customers have tripled in the last twenty years and stand at 330 million in 2013. Of these, a third come from developing economies, with 50 million from China. By 2015, China is expected to become the world's largest consumer of luxury goods.

Today's luxury customer is savvy, well-informed and does not mind traveling for a great deal. The long queues of Chinese luxury shoppers outside chic stores in France and Italy are evading China's punishing import duties on luxury goods while on foreign jaunts.

Changing media consumption patterns. Luxury brand marketing traditionally brings to mind glossy fashion spreads in magazines, upmarket events, or celebrity endorsers paid to enhance brand's desirability factor with their charisma.

The market was long dominated by print, in-store advertising and event marketing but tech-savvy luxury brand consumers are going digital like there's no tomorrow.

While pure "online only' sales account for 4 percent of the luxury market, according to a study by McKinsey, 20 percent of all luxury sales are now influenced by digital media. At least 70 percent of all luxury goods customers carry a smartphone, opening up new platforms for brands to reach out to them. Over half of all luxury customers use the Internet on their mobiles to carry out product research, hunt for store locations and find the cheapest prices (shhh!) before heading to the showroom.

Luxury brands have taken note of this. The top five spent a combined $22 million on search marketing via Google Adwords in 2013.

Unlike in the past, when an endorsement by Leonardo DiCaprio made Tag Heuer watches the ones to wear, today over 55 percent of all the buzz and desirability around luxury purchases come from a customer's network of friends and acquaintances on social media.

New competition. Until a few years ago, there were a handful of European brands like Louis Vuitton, Chanel, Armani, Prada and their ilk that defined luxury. Those were the gold standard against which all other brands were measured.

That old guard is fast losing their holy spots in the luxury brands' pantheon, challenged by rising niche brands that offer exclusivity, style and sometimes – hold your breath – a lower price tag. These new brands come under two distinct categories.

Related: Advice for Making the Luxury Sell

They are small, existing luxury goods sellers with a low-key marketing style but offer the same heritage, styling and opulence of the marquee brands. For instance, President Obama's favored Italian shoe brand, Silvano Lattanzi, does not have large global marketing campaigns. They don't even have a logo on their shoes. Instead, they spend months hand-crafting each shoe they make. The customer's name is imprinted on each pair, once they have completed a certain minimum number of purchases.

The second category, local luxury brands, is gaining traction. The rising prominence of German bag maker Bree, now-international clothing chain Shanghai Tang that rose from Hong Kong's Central business district, and Shang Xia, a local luxury brand launched by Hermes in China, points to loyalties shifting toward local and niche luxury makers.

The way forward. A good brand goes where its customers are. If it means taking your luxury brand online, on social media or on mobile – be it.

A key element of luxury marketing is keeping the brand aspirational and exclusive. That's tough to communicate when retargeting ads follow customers around the Internet. The right platforms on digital include email marketing, a well-designed website, social media by invitation only, one-on-one customer care and so on.

Get the entire team invested in the "go digital' initiative. Assign projects that will be solely managed by each team, allocate targets and stay on top of all the various projects with team collaboration tools such as WorkZone.

Don't repackage old wine in new bottles. This generation has far too much information at their fingertips to buy that. Rebuild your strategy from scratch and sell the new, digital-savvy customer a dream that resonates with them, in their own environment.

Related: Selling Luxury Items Online

Rohan Ayyar

Regional Marketing Manager

Rohan Ayyar is the  Regional Marketing Manager India, SEMrush. He is an avid blogger, with posts featured on MarketingProfs, Social Media Today and Business Insider, among other places.

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