The new world of luxury brands that commands affluent consumers respect and loyalty

1. spotlight
on…
luxury
The power and promise of luxury
brands and the global consumer
www.mandmglobal.com
M&M GLOBAL Q1 2012 51

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3. spotlight on luxury
gilt-edged business
There are very few sectors that garner the same sense of emotion
as luxury. Consumers desire to own a piece of it and marketers aim
to mimic the refined, polished and aspirational tones of its brand
messaging. When Credit Suisse looked to overhaul its marketing
efforts away from images of bankers and people purchasing houses,
the luxury sector was its first point of call for inspiration. Out went the
men in shiny suits, in came dramatic backlighting and striking images.
M&M Global is kicking off its series of sector-specific Special Reports
with the topic of luxury for several reasons, the first being the power
that it holds within international media and how that is evolving. While it has
been a mainstay of the media plans of international media owners for years, as
you will read on pages 61-62, local media owners are getting in on the luxury trade
and catering to these advertisers in ways that they have never before and as a result
attracting more luxury ad dollars.
The health of the luxury market is mirroring the new world order that we
are seeing in both the global financial and advertising markets. The robust
opportunities are coming from the Far East and as a result this is where more
luxury brands are focusing their attention both when it comes to launching new
endeavours, such as Hermès and its sari collection in India, or reaching new
consumers, like Estée Lauder using out-of-home sites with Mandarin messaging to
reach travellers at London’s Heathrow Airport (p58).
The attraction of luxury marketing lies in the mystery in which it operates so
successfully and getting any glimpse behind the wizard’s curtain is sought-after.
The brands within the luxury space are notoriously quiet while at the same time
revolutionary. All brands from FMCG to B2B can and should learn from their
successes, if only on a slightly lesser budget.
Martina Lacey, deputy editor
Contents
56. Fast Facts
Read the facts on global luxury brands and the
luxury consumer
57. campaign showcase
Jean Paul Gaultier: French Kiss
58. feature
The new world order of luxury
61. feature
Regional versus local media
www.mandmglobal.com
M&M GLOBAL Q1 2012 53

4. WELCOME
TO THE
CLUB
TO ADVERTISE:
CHARLES YARDLE Y
CYARDLEY@FORBES.COM
00 44 (0) 203 178 7007
PHOTO: ANTOINE VERGLAS
A MAGAZINE THAT
TAPS INTO THE
PASSIONS
PURSUITS
OF THE MOST
POWERFUL PEOPLE
IN THE WORLD.

5. spotlight on luxury
fast facts
M&M Global gives you the facts you need to understand global
luxury consumers and the brands they covet
tOp GLOBAL Luxury BrAnds in 2011
Brand
1. Louis Vuitton
2. Hermès
3. Gucci
4. Chanel
5. Cartier
6. Rolex
7. Hennessy
8. Moët & Chandon
9. Fendi
10. Burberry
Brand value ($bn)
24.31
11.91
7.45
6.82
5.32
5.27
4.99
4.57
3.42
3.38
Brand value change (%)
23
41
-2
23
34
11
-7
7
7
N/A
Source: Millward Brown Optimor, 2011
where dO yOu purchAse yOur Luxury items?
Consumer annual gross income €100,000+
Department stores 23%
Outlet stores 22%
Speciality boutiques 18%
Brand boutiques 15%
Brand and shopping
websites 11%
Duty free 11%
BrAnd interActiOn priOr tO Luxury purchAse
How wealthy shoppers carry out their research
1. Visited company website
2. Visited retail location
3. Read online reviews
4. Via mobile phone
5. Used social media websites
6. Called contact centre
Male
69.2%
66.6%
50.7%
15.5%
12.6%
12.3%
Female
65.6%
66.9%
39.2%
12.4%
12.6%
12.2%
Total
67.6%
66.7%
45.1%
14.0%
12.5%
12.3%
Source: Empathica Consumer Insights Panel, Wave 2 2011
Source: European Luxury Survey
2011, McKinsey & Company 2012
purchAse drivers fOr chinese cOnsumers
44% In-store
7% Direct marketing
I saw an ad about this
brand on a website
11%
I checked reviews
online (eg BBS/forum)
I saw this brand’s
website
I received
recommendations
from friends/family
I saw others using
it in person
9%
2%
I read an article on this
brand in the newspaper
14% Word of mouth
I evaluated
the product
when I was in
the store
I spoke to
the in-store
salesperson
9%
I saw the
product
displayed in
the store/
store window
5%
I read an article about this
brand in the magazine
I saw a TV commercial
7% Traditional media
21% Internet
13%
12%
2%
1%
$2,545
Average ticket price of a luxury purchase
58% 53%
Are women
11%
11%
I read the
catalogue in
the store
BrAziLiAn Luxury cOnsumers
The top spenders by numbers
8%
Live in São Paulo
47% 33%
Have postgraduate degrees
Are aged 26-35
Source: McKinsey & Company 2012
Source: McKinsey Insights China, 2011
www.mandmglobal.com
M&M GLOBAL Q1 2012 56

6. spotlight on luxury
Jean Paul Gaultier:
‘L’Art du French Kiss’
K
isses have been part of Jean
Paul Gaultier’s (JPG) DNA for a
long time. This year, the French
luxury brand has decided to teach its
fans a lesson in what it knows best: the
art of French kissing.
JPG’s latest marketing effort aims to
promote its range of ‘his and hers’
perfumes, blurring the lines between
masculine and feminine. Exclusively
online, ‘L’art du French kiss’ invites
users to select the type of kiss they find
most inviting, choose who they would
like to share that kiss with, generate a
customised video using data gathered
from Facebook, and share the link with
friends via Facebook, email or Twitter.
“The French kiss reflects sensuality,
boldness and transgression of some
taboos, just like the JPG perfumes
brand,” says Denis Quimbrot,
vice-president, international
communications, Beauté Prestige
International (BPI), the company
behind the marketing, production and
distribution of JPG perfumes.
“The animation highlights the codes
of the JPG brand: boldness, freedom,
humour, creativity and erotic tension,”
adds Quimbrot. “JPG is an accessible
and unconventional luxury/fashion
brand. Some people are big fans, some
are curious about the designer, and
others appreciate his perfumes. We
want to reach both the fans and the
people curious about the brand.”
Created by Isobar, the ad was written
by Pierre Duquesnoy and art directed
by Laurent Nuyen and Kevin Vevé. The
campaign kicked off just in time for
Valentine’s Day and will continue to run
throughout 2012. ○
“The French
kiss reflects
sensuality, boldness
and transgression of
taboos, like the
JPG perfumes
brand”
2-ongoing
e DATE: February 201
rfume REGION: Europ
CATEGORY: Luxury/pe
ultier
BRAND: Jean Paul Ga
DIA CHANNEL: Online
AGENCY: Isobar ME
www.mandmglobal.com
M&M GLOBAL Q1 2012 57

7. spotlight on luxury
Industry view
the new
world
order of
luxury
Seraphine
Money
UK managing
director,
Inflight Media
Marketing
(IMM)
The Chinese traveller,
a passenger of choice for
luxury brands
Chinese carriers are expected to
transport 320 million passengers
in 2012 – registering a doubledigit growth rate this year (+10%),
according to figures from the Civil
Aviation Administration of China.
Beijing is predicted to become the
number one airport worldwide,
eclipsing Atlanta, the leader for
many years.
As Europe’s economies continue to struggle, luxury brands are directing
their marketing efforts on new consumer groups in emerging economies.
Amanda Saint finds out more about these premium customers
D
espite the endless economic doom and gloom
stories that dominate the media, the market
for luxury goods continues to grow. Consumer
groups in the West may no longer have quite as
much disposable income, so premium brands are
targeting the new luxury consumers in the emerging BRIC
economies: Brazil, Russia, India and China. The new cashrich consumers that these fast-developing economies have
created not only spend online but are prepared to travel the
globe to source authentic luxury goods. As a result, brands
are adapting their marketing strategies to capture their
attention as they travel.
The rise of The airporT consumer
JCDecaux Airport manages all the advertising
“There’s no
space at London Heathrow, and marketing
one-size-fitsdirector Steve Cox has certainly seen an
all strategy, so
increase in adspend as well as renewed
adapting the media interest in airport retail opportunities. “The
fastest-growing category for us in 2011 was
environment in
luxury brands, and we forecast that it will be
each market
the same again for 2012,” he says.
is key”
Luxury brands that increased their airport
adspend in 2011 include Mulberry, Dior, Gucci,
Chanel and Burberry. But it’s not just the amount
of advertising these brands are placing that’s increasing: a
growing focus on Asian, particularly Chinese, consumers is
becoming an integral part of their strategy too.
Estée Lauder ran a campaign at Heathrow in 2011 that
appeared in English and Mandarin concurrently, while a
Harrods spokesperson confirms that: “The Chinese customer
has become increasingly important for Harrods. The trend
is for the highly brand-conscious Chinese shopper to seek
58 M&M GLOBAL Q1 2012
t
M&M Viewpoin
out the very latest, limited edition and exclusive products.
Fine jewellery, fashion and accessories from well-known
luxury brands, including Chanel, Burberry, Cartier and Louis
Vuitton, are among the preferences.”
However, it’s not just the Chinese who have money to
splash on luxury brands. Cox confirms that the Russians run
a close second and that shoppers from Japan, North America,
Indonesia and Brazil are also becoming key players in the
luxury retail market.
Big brands are increasingly recognising the unique
opportunities they have when these consumers are in transit.
Research has revealed that people are in a different frame of
mind once they reach the airport and that they feel they can
shop differently compared to when they are at home. Focus
groups show that people see spending on luxury items as
being a key part of the experience, and that the holiday mood
and tax-free status makes them feel as if they can spend more.
GeT The messaGe
As the opportunities to reach luxury consumers at airports
grow, demand for ad space is high, but Cox believes that
the way brands interact with these consumers will change
completely in the next two to three years. He says: “We will
see brands moving to a dialogue rather than a monologue.
Asian consumers have the most advanced personal
technology of any consumer group, so advertising will move
towards more interaction between posters and handhelds.”
Managing director of Blowfish Digital, Farhad Koodoruth,
is already aware of a rise in interactive advertising, with
digital billboards and QR codes being increasingly used in
South Korea and Japan. “There’s no one-size-fits-all strategy,
so adapting the media environment in each market is key,”
he states. The brand message needs to fit just as well as the
www.mandmglobal.com
media via which it is delivered. For
instance, the World Duty Free outlets at
Heathrow have been running Chinese
language ads in the digital billboards
in their shop windows. These are timed
to tie in with arrivals and departures to
destinations in China and have proved
very successful in luring Chinese
visitors into spending in these stores
while passing through.
With the number of passengers travelling through
Heathrow reaching an all-time high of 69.4 million in
2011, the London 2012 Olympic Games will give luxury
brands at airports even more opportunities to reach
global consumers. As the hunt for exclusivity becomes
almost as prized as the brand name for many shoppers,
the opportunities are especially great for the new brands
that are social media and digital-savvy, and can engage
with this new audience in innovative ways to give their
messages a local touch, no matter where they deliver it.
local focus
As luxury brands fight for the attention of these new
consumers and try to grow their market share in the
emerging economies, Koodoruth believes that they face a real
challenge to maintain and develop the brand image they have
created while increasingly fitting it to the local environment.
If they can meet this challenge, then the 2012 predicted
growth of 16% in China’s luxury market could feasibly be
even bigger than that.
Despite Estée Lauder’s recent Heathrow ads, and Harrods’
introduction of Mandarin-speaking staff and store guides,
Koodoruth feels that the big luxury brands are very reliant
on the reputation they have already developed, with a little
localisation thrown in for good measure. Many believe
that the real opportunities with these new consumers lie
more with the smaller, niche players, rather than the wellestablished luxury brands.
“Niche players have an opportunity to develop a market
presence and brand reputation among the luxury consumer
demographic,” says Koodoruth. He adds: “Innovative use of
social media to localise their messages will be key to them
gaining a foothold.” ○
www.mandmglobal.com
Quick
Insight
11% How much the Savigny Luxury
Index gained in January 2012,
outperforming the benchmark MSCI
World Index by 6%
40% The increase in adspend at
In 2011, 60 million Chinese tourists
travelled abroad, spending more
than $50bn. According to the World
Tourism Organisation, there will
be 100 million outbound travellers
from China by 2020. The Chinese
are consumers to cherish, as 80%
of their travel budget is dedicated
to luxury shopping and buying
presents and souvenirs.
Research gives us an insight into
their demographic and behavioural
profile. Of the travellers originating
from China, 51% are financially
independent females, while 40%
are between 25 and 34 years old.
Their top destination in Europe is
France. They also like to visit the
UK, where buying jewellery, leather
goods, perfumes and ready-to-wear
from luxury and department stores
is a must. By 2015, Switzerland is
forecast to be the second shopping
destination for the Chinese tourist,
especially for luxury watches. The
Chinese are the biggest consumers
of Swiss watches.
London Heathrow in 2011
$4.8bn The 2011 net profit for
French luxury goods giant LVMH,
which owns brands such as Louis
Vuitton and Givenchy
To reach this amazing fast-moving
audience, think inflight media.
Find out more by visiting us at
www.imm-international.com
$7.2bn The amount Chinese
consumers celebrating New Year
overseas spent on luxury goods in 2012
M&M GLOBAL Q1 2012 59

8. THE LUXURY
MEDIA BRAND
2 035 000
PREMIUM INDIVIDUALS
reached every week
Source : Audipresse Premium 2011 – brand audience over 8 days
Contact FigaroMedias : Flore PILZER +33 (0)1 56 52 23 31 fpilzer@figaromedias.fr

9. spotlight on luxury
zooming
in and out
The playground for luxury advertisers has just got a whole lot bigger as brands tap both local and regional media and spark
publishing initiatives in their quest to reach new communities with high-end products and propositions, reports Jenni Baker
w
hile global food prices rose, banks crumbled
and governments around the world instilled
austerity measures, sales of global luxury
goods expanded by 10% to $257bn in 2011,
according to Bain & Co’s tenth Luxury Goods
Worldwide Market Study.
Despite the recent instability of the global economy, the
luxury market has not been affected. Top-end brands have
remained on track, becoming savvier in their marketing
efforts and working harder than ever to win over cashstrapped consumers.
Luxury advertisers have a wealth of choice when it comes
to choosing the right media, and media owners across
the globe are on alert to be that medium of choice. Panregional media has historically been hailed as the exclusive
playground for luxury advertisers, but now local media
owners are keen to grab their own slice of luxury ad revenue.
Nicola Chatterton, international client services director
for Initiative, manages the account for Swiss luxury watch
advertiser Patek Philippe, a brand that uses both local and
regional media in its advertising strategy. “Patek is positioned
and perceived in the same way from one country to another,
so we will use the same ads,” says Chatterton. But for other
www.mandmglobal.com
luxury advertisers, ads may need to be adapted.
“What local brings you is the local language,”
she says. “There are very affluent people in this
world who speak English, but there are also a
large number who don’t.”
“When people
discuss luxury,
they talk about the
brand and its value,
but ultimately
advertisers want to
sell products”
Local expertise
When people discuss luxury, they talk
about the brand and its value, but ultimately
advertisers want to sell products. And that’s
where local media presents its case. It can target
audiences geographically, while advertisers can
include local retailers and concrete sales information.
So what are local media owners doing to attract luxury
dollars? In the Netherlands, publisher NRC Media has created
an ‘intelligent luxury’ platform by launching a magazine called
DeLuxe. It is distributed six times a year as a supplement to the
daily newspaper NRC Handelsblad.
“We needed to have a surrounding of luxury,” says Dylan
Schuitemaker, NRC Media’s international sales manager
and manager of the luxury and lifestyle sales department.
DeLuxe attracts advertisers such as Chanel, Hermès and
Louis Vuitton. It has also worked with brands for specific
M&M GLOBAL Q1 2012 61

10. spotlight on luxury
their local counterparts, what pan-regionals offer
is an umbrella presence. “With pan-regional
publications, you get a homogenous approach,”
says Chatterton. “With Patek, we’ve built up a
portfolio of eight outside back covers in The
Economist. The fact its readers trust it creates a
positive association.”
campaigns, such as Marni’s collection for H&M, to attract a
specific type of audience.
But Schuitemaker says luxury advertisers are now seeking
more than just a print ad. “The major fashion brands are
forming shopping areas on their websites, and you see that in
their advertising,” he says. Local media offers access to a vital
market. “It helps an advertiser to understand how the locals
are consuming and what they are looking for.”
With competition heating up from local rivals, panregional media owners are striving to protect the luxury ad
revenue on which they are dependent.
This year, Bloomberg launched a luxury magazine,
Bloomberg Pursuits, as an offshoot of Bloomberg Markets. By
attracting advertisers such as Hermès, Chanel, Cartier,
Porsche and Ermenegildo Zegna, it hopes to connect
these brands with new audiences. Bloomberg
“Local media
Markets director for EMEA, Laurie Benson, says
helps an advertiser local media owners are not considered a rival to
pan-regional giants but an opportunity. “Most
to understand
luxury advertisers will use pan-regional media
how the locals are
to do branding to the highest level and local
consuming and
media to heavy-up or do store promotion.”
As a premium local media brand in France,
what they are
Groupe Figaro is also catering to its luxury
looking for”
clients. In 2011, it unveiled channels focusing
on affluent points of interest such as golf, boating,
auctions, wines and spirits. “Local media understands
local tastes and brands’ popularity, and it can dose its editorial
content and portfolios accordingly,” says Groupe Figaro vicepresident of international, Eileen Le Muet.
With Chinese visitors to Paris regarded as important
buyers of luxury goods, Groupe Figaro has developed two
initiatives targeting this audience: a Chinese edition of
Madame Figaro in China and a high-end Paris city guide in
Chinese that circulates in France and China. While they
may not have as high a circulation in certain markets as
62 M&M GLOBAL Q1 2012
The right mix
BBC Global News commissioned research
through Toluna in May 2011 that confirms
television has a strong affiliation with luxury
goods advertising. When asked: “Which
media gives you ideas for luxury products or
services?” 35% of women agreed magazines
gave them ideas for luxury purchases, while
40% agreed online media was the most
effective, with 54% saying TV was the most
influential platform. “The biggest difference
between a mass local and a mass pan-regional
strategy is the association of brand and quality
the advertisers are looking for,” says BBC
Advertising senior vice-president for EMEA
and the US, Carolyn Gibson.
Over its 18-year history, The Financial Times’ core luxury
proposition, How To Spend It, has branched out beyond core
watches and jewellery, accessories, handbags and leather
goods. “Luxury now touches so many areas of people’s lives,
and we have adapted How To Spend It to feed into those
levels,” says FT commercial director Dominic Good. As
well as developing its print product, the FT has also tapped
into the digital space, beginning with a flash-based desktop
website and expanding it to the How To Spend It iPad app.
key role for digital
Print has established itself as the medium of choice for
luxury brands. But local and pan-regional media owners are
also selling mobile and iPad apps and websites, which means
a rise in ad revenue. Groupe Figaro’s Le Muet says digital
should play a key part in sales, and local media owners need
to keep up with multi-platform communications.
The luxury sector is becoming the fastest-growing area in
international media. With the range of platforms available,
advertisers have more choice than ever to reach their
audience. The affluent will continue to spend on luxury
goods and services this year, so luxury brands need to
ensure that they are connecting and interacting with these
consumers across all platforms. ○
t
M&M Viewpoin
Local media is truly establishing itself on the luxury scene
and has some advantages over pan-regionals to really tap
into the immediate market. But rather than battle it out,
both platforms have a different part to play in the mix.
Branding and perceptions may seem more effective via a
pan-regional approach, but when it comes to consumers
making a luxury purchase, local media offers a personal
connection between advertiser and consumer.
www.mandmglobal.com