Luxury brands are spending more on marketing, defying economic uncertainty
Many luxury goods sellers aren’t feeling the same pressure to cut marketing budgets that has hit other categories in recent months, thanks to a booming market for luxury cars, travel packages and more. high-end products.
Luxury brands are benefiting from the growth in net worth of wealthier consumers in the pandemic era, as well as the emergence of millennial millionaires and an increase in so-called revenge spending, or consumers spending more than they normally would as they emerge from the pandemic.
Global luxury goods revenue will rise from $309.6 billion last year to $349.1 billion in 2022, according to market research firm Statista Ltd., on its way to $419 billion in 2027 .
“At the high end, life is good and demand is robust,” said brand consultant Simon Sproule, who previously held senior marketing and communications roles at Tesla. Inc.
and Aston Martin Lagonda Global Holdings PLC.
““As wealth increases, people tend to accumulate high-end experiences over time.””
Companies ranging from social media company Meta Platforms Inc.
at Gannett publishing conglomerate Co.
Inc. have seen their revenues plummet in recent months as overall advertising spend has fallen.
Some once-hot startups have cut both headcount and marketing budgets, while big spenders in sports betting and cryptocurrencies have had to recalibrate their spending.
Luxury marketers make different calculations.
Most luxury brands could theoretically stop marketing because they can’t produce goods fast enough to meet current demand, but smart marketers are spending more to build long-term equity, Sproule said. .
Marketing budgets for luxury brands were much higher in 2022 than in 2021 and show no signs of slowing down as planning for 2023 begins, according to Julie Michael, chief executive of Publicis Groupe. HER
the advertising agency Team One, which specializes in working with luxury brands such as Toyota Motor Body
Lexus and Marriott International Inc.
St. Michelle Wine Estates Ltd. increased its marketing budget by 15% year over year, due to growing demand for premium varieties, said Toby Whitmoyer, Chief Growth Officer. “Lower value wine is in decline, while the $15+ price category is showing growth,” he said.
Marriott has increased 2022 marketing budgets for upscale names including the Ritz-Carlton and St. Regis, also driven by increased demand for upscale hotels, said Chris Gabaldon, senior vice president of luxury brands. of the hotel chain.
“As wealth increases, people tend to accumulate higher-end experiences as they go along,” Gabaldon said.
And the paid media budget of Four Seasons Hotels Ltd. will grow 300% year-over-year in 2022, according to Marc Speichert, executive vice president and chief commercial officer of the luxury hotel chain.
Four Seasons launched an advertising campaign in August with the theme “Luxury is our love language”, which it says will be the most expensive in the company’s more than sixty-year history. The ads depict scenes that Four Seasons says are based on real-life examples of high-profile guests being looked after by hotel employees, such as an executive receiving monogrammed bathrobes, lattes and steaks. .
The decision to base the campaign on individual guest experiences was informed by Four Seasons’ work over the past year, in addition to expanding its internal data analytics capabilities and developing the profiles of some two million customers, in part to better target high earners who provide a disproportionate share of the company’s revenue, Speichert said.
“I have their email; I have their address; we have a profile. As soon as they walk through the door, I know these are the guests I should pay special attention to,” he said.
Some brands go to great lengths to reach the jet set with events.
Electric vehicle maker Lucid Group Inc. has just launched a city-by-city “Dream Ahead” tour where people who have booked but not yet purchased cars – as well as other interested parties like journalists or email subscribers Lucid – can test its high -priced cars.
“There’s no filtering, it’s direct-to-consumer, and we believe that’s how consumers want to hear from luxury brands,” said Jeff Curry, vice president of marketing, communications and products, describing Lucid’s marketing strategy.
In May, around 300 people who had pre-ordered limited-edition Aston Martin 2023 V12 Vantage sports cars traveled from as far away as Australia to attend a black-tie dinner inside the automaker’s main factory. automobile in Warwickshire, England, where they saw the cars unveiled on the same floor where they were assembled, according to a company spokesperson. Models cost around $300,000.
Executives said these events for existing customers and even ticketed events double their marketing functions, as they have the potential to raise the profile of luxury brands among affluent consumers.
Later this month, Four Seasons will launch a program in which a small number of guests will take a week-long drive through the Tuscan countryside in the luxury sports car of their choice. All parts of the trip, such as visits to exclusive locations and interactions with area chefs, are organized by the chain, with pricing starting at around $35,000 per guest.
Four Seasons has also expanded its 24-day international private jet experience program, with the cheapest “around the world” trips starting at $190,000 per person. Mr Speichert said the program is 90% complete until the end of 2023, with the company currently selling tickets for 2024.
A number of brands lured by the luxury sector’s profit margins have also started trying to enter the category, leading some more established luxury names to try and climb even higher up the ladder, Sproule said. , the consultant.
Last year, Aston Martin began to describe itself as “ultra-luxury” and launched a rebranding campaign in July to emphasize the exclusivity of its products, said Renato Bisignani, head of global marketing and communications.
It has diverted money from outdoor billboard advertisements, as well as mass gatherings that are not targeted at the very wealthy, Mr Bisignani said.
“Luxury is probably one of the most abused terms in the industry right now,” he said.
Write to Patrick Coffee at [email protected]
Corrections & Amplifications
Julie Michael is the managing director of advertising agency Team One. An earlier version of this article misspelled his last name as Michaels. (Corrected September 14)
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