Luxury: The Shift from Paid Media to Earned Media
By Caroline Brown
Luxury brands have begun to move from more traditional/paid media outlets such as magazines to owned and earned media such as Facebook and Instagram. In the US, approximately 35% of a luxury brand’s media budget is now spent on digital.
Social media engagement is typically termed earned media. It is the measure of the traction of social media content created outside of a brand and its own platforms. Influencers have a key part to play. Millennials and Gen-Z are looking for a higher level of authenticity and transparency from their chosen brands and influencers are considered more trustworthy due to their detachment from the brand.
Fashion brands such as Gucci and Louis Vuitton, some of the most traditional brands in the luxury industry, were slow to adopt a social media strategy, compared to newer more dynamic brands. Traditional brands were worried that the inclusive nature of social media would damage their exclusive image.
In 2009, Burberry launched its first major online campaign: the ‘Art of the Trench.’ The campaign was the first of its kind, inviting customers to post pictures online of themselves in their Burberry trench coats. Burberry found a way to be innovative and aspirational for young consumers, without jeopardizing its exclusivity.
Luxury brands, including Burberry, have further enhanced their online presence in recent years by live streaming their latest fashion shoots and announcing launches for exclusive products on social media.
In March 2018, Business of Fashion wrote that “the cost of placing an advertisement on a page of British Vogue starts at £28,000, an influencer with over 1 million followers — with a measurable ROI and a more engaged fan base — charges around $15,000 per Instagram post.” Aside from being a cheaper form of advertising, social media could be considered more valuable than traditional media outlets.
Consumers are increasingly flocking online for their inspiration of the next luxury goods to purchase. In 2014, McKinsey reported that 40% of luxury purchases are in some way influenced by consumers’ digital experiences. Nielsen estimated in 2018 that young adults (18-34) spend approximately 43% of their time-consuming media on digital platforms. This means that a digital media strategy is extremely important to stay relevant and prominent in consumers’ minds.
Despite the late start in developing their digital strategy, Gucci has created a strong presence online through their own channels. In 2016, the 98-year old Kering-owned brand made a ground-breaking move by creating memes to promote their watches on Instagram. Investing heavily in their own content has intensified their social media engagement, such that Gucci was named the top brand in a study of social media influencers in 2016.
Gone are the days when we would wait for the reviews of the latest fashion shows in the next day’s newspaper. The reviews are instant. WWD reported that during the Spring 2019 fashion show, Dior had $3.7 million in earned media value, attracting over 7 million likes and 1,260 mentions by influencers with more than 15,000 followers.
Earned media has, in the past, been difficult to track. Brands have begun to realize the power of social media traction and have called for the use of analytics to measure content creation and its impact. Executives going to expect internal and external PR teams to know exactly who the brand is reaching, its impact on revenue, and which content is generating their big ‘wins.’
The power of social media has also led to the threat of new entrants, and rivals to traditional luxury brands, who have seen exponential growth because of very little investment required to create social media traction. Brands such as Kylie Cosmetics and Huda Beauty have been valued at just under $1 billion less than three years after launching.
Earned media has become a key metric for luxury brands and an important consideration when searching for potential targets for acquisition. Large conglomerates have begun to specifically acquire small, privately-owned brands that are favorites among influencers. For example, in 2016 Estee Lauder acquired Too Faced Cosmetics and L’Oréal acquired IT Cosmetics, due to their innovative and iconic images.
Luxury brands need to ensure that they stay innovative, transparent and provide a quality customer experience through social media to stay relevant with consumers.