CPM no more: Luxury customers respond to different digital campaigns

Luxury customers respond to different digital campaigns

While customers seeking luxury goods are increasingly being targeted via digital ads, many vendors are finding they must tweak traditional strategies to effectively reach those audiences.

In many cases broad strategies that aim for a wider reach and measure impressions are less effective than plans to nurture customer relationships over time using highly segmented messaging that’s perceived as more elite.

That turnabout has become obvious in the luxury fashion industry, where traditional media buying has taken a twist. Though such vendors previously avoided investing in online ads, between September of 2014 and 2015 the number of luxury fashion brands advertising online grew by 53 percent while industry spending on print ads print ads remained steady. That doesn’t mean their digital strategies have always worked, but marketing movers and shakers are at least recognizing the potential for customer acquisition and conversion.

“Luxury marketers may be frantically increasing their digital budgets, but they are doing it wrong,” contends Ana Andjelic in “Media planning teams need to make the most out of the multi-touch point luxury decision-making journey. (They) need to peel themselves off their spreadsheets and start designing strategic, measurable combinations of smart reach, native ad formats, content, partnerships and small, passionate communities.”

In the pay-per-call world, that might mean finely segmenting luxury audiences so digital ads closely align to luxury customer desires and preferences at different stages of the funnel. And because they’re a fluid group, effective segmentation often requires continual updates. The more recent your audience data (and the more you can leverage that to predict the future), the better off you’ll be.

“Capitalizing on what the majority of average present targeted consumers declare they like today is not the route to build the future Louis Vuitton bag,” explains Vincent Bastien in Entrepreneur. “We must surprise the customer, bringing something he or she was not expecting. What luxury sells is excitement, new territories — not security, not problem reduction.”

As such, a CPM advertising model that charges by the impression is unlikely to work well with luxury customers, who often don’t respond well to mass-marketing efforts because they tend to equate scarcity or eliteness as value. Considered more effective for such audiences are models based on CPA (cost per action) or CPL (cost per lead) models.

“Small, intimate and curated relationships are more viable for luxury business than the mass awareness-seeking media buy,” Andjelic explains.

Two other marketing points about luxury customers:

  • They compare multiple products and prices less often than others, looking to friends and influential figures in their cultural and social spheres when making choices.
  • They’re increasingly using social media for product discussions, particularly Instagram, Snapchat and Twitter. That’s convenient, since created content and native ads work well when placed on social media.

Reaching luxury customers through digital is still somewhat untapped territory, but savvy companies can combine audience data with demographic research to work toward appealing to that often profitable market.

RingSquared can help you customize your PPC campaign to reach any kind of customer. Contact us at 1-800-700-1987.