It seems that high street stores are having one continuous sale these days. Spring sale, mid-season sale, buy now pay nothing until 2013 - the push to get us spending and the economy rolling again is making very slow progress.
So, as we keep tightening that shrinking belt, what about the market for high end luxury goods? Surely that’s taking a hammering too?
You’d think so, but in reality the figures paint a very different picture. The demand for luxury goods has never been higher.
Estimates vary, but some reports value the luxury market at between US$60bn and $20trn, including consumers who are trading up. That’s big by any standards.
Where are these big spenders? And how do you reach them?
The fact is that affluent shoppers have never stopped searching online for luxury products.
Luxury brands may not have been early adopters of ecommerce, but now that they’ve seen that it doesn’t damage brand value they’re embracing technology and everything it has to offer. Online, mobile search, apps and VoD are all being explored by the world’s biggest names.
The key to commercial success with any of these platforms is, as ever, in the targeting.
It is difficult to discriminate against lower-income consumers with search engine marketing as the keywords they use to search are usually very similar. Keyword searches don’t reveal incomes so you have no way of knowing if this person is looking to buy a bag for £50 or £500.
However, by targeting geographical areas you can see that users in high income regions tend to display a higher conversion rate than those in lower income regions. By splitting the campaigns you can use different bidding strategies for each group.
There is a big market in developing countries like Kazakhstan, and again you can tap into this market by targeting specific regions where wealthier people tend to live.
In developing world cities such as Almaty, the centre of the Eurasian continent, we create campaigns that only target iPads. Why? Well iPads are a luxury product and they cost considerably more in developing cities than the UK. We use this as a way to segregate higher income users. Results have been significant, with iPad users converting at a much higher rate than PC users.
Consumers looking for luxury products take longer to convert, engaging in many more interactions before finally converting. You need to understand user conversion and develop growth strategies by building attribution models.
That means looking deeper into the path a buyer takes and dynamically awarding proportions of commission to partners who have led the buyer to the sale. The path to conversion can be a long one with luxury brands so it’s important that you get this right.
My point is that the market for luxury brands is out there and ready to spend. With some creativity, combined with the best use of technology available, you can reach them no matter where they are.
Farhad Koodoruth, managing director, Blowfish Digital
This article was first published on brandrepublic.com