Luxury brands increase spending on digital platforms eyeing Instagram

Luxury brands such as Gucci, Louis Vuitton and Christian Dior are increasing their spending on digital platforms in the hunt for young shoppers.
technology-for-fashionCash rich luxury goods groups like LVMH and Kering have increased their social media budgets and one of their targets is Instagram.

Bloggers and influencers with four million followers charge over 20,000 euros or $22,546 for sponsored post, Reuters reported quoting marketing experts.

Kering – owner of fast-growing Gucci, which scored the highest level of publicity impact on social media last year according to data trackers Tribe Dynamics – on Friday said that half its 2018 media budget was spent on digital advertising, up from 20 percent only three years earlier.

“There’s a big shift in how we’re thinking about advertising and creating aspiration,” Kering’s digital chief Gregory Boutte told journalists on the sidelines of an investor day.

“Now with every type of social platform, you need different types of videos, of pictures. You don’t create content on YouTube as you do on TV.”

Its rival LVMH increased its total marketing spending at the fastest rate in seven years in 2018 to 5.6 billion euros or $6.3 billion, reaching 12 percent of group revenues.

Louis Vuitton, LVMH’s major sales driver, now allocates half its marketing costs to digital media, the brand’s CEO Michael Burke said at a closed-door briefing this week, according to Citi analysts.

Vuitton, as well as LVMH’s Christian Dior, Marc Jacobs and Givenchy labels were among Tribe Dynamics’ top 10 brands last year, with Kering’s Saint Laurent and Balenciaga also making the cut. The firm quantifies how much social media buzz is worth, including non-paid for content.

Rewind three years, and Italy’s Valentino, seven times smaller then than Vuitton, outflanked peers in the Instagram stakes, coming first in a listing by Engagement Labs which measured the most effective brands on social media.

Valentino’s formula was simple, mixing content generated by fans with its own professional photos, while answering online comments – a standard approach for labels now, but which helped fuel a sales spike at the Mayhoola-owned firm at the time.

Valentino’s Instagram followers have doubled to 12.4 million since, though revenue growth has slowed; Vuitton’s followers have almost tripled to 32.1 million, and revenues are still expanding at a robust pace.

Just over 10 percent of social media influencers earned $100,000 or more a year in 2018, according to a Launchmetrics report, compared to 3.7 percent in 2017, though hiring the most popular bloggers is only one of the costs involved.

“The big groups understood they had to invest more in experiences – what happens around a catwalk show, exhibits, store openings,” said Uche Pezard, CEO of Luxe Corp, which advises brands on strategy.

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