Luxury Brands – Slow to Go Online
July 11, 2007CNNMoney’s Jessica Dickler wrote an interesting article about why luxury brands have been slow to sell online. So what has held luxury brands back?
Among other things, one of the main reasons is that “…luxury brands have long been concerned that an online presence cheapens their image. It’s a perception rooted in the early days of the Web, when bargains at retail sites like eBay (Charts, Fortune 500) and Amazon.com (Charts, Fortune 500) were the norm, said Matt Marcus, Gucci’s worldwide director of e-business. Luxury brands have been concerned about their brands at the cost of making their services and products less accessible to consumers. “Luxury firms are afraid to provide that convenience online because they don’t think it’s a luxury experience,” added Milton Pedraza, chief executive of the Luxury Institute, a research firm based in New York. “But what they don’t realize is that wealthy consumers don’t want the in-store experience, they want convenience.”
Luxury hotels have been more aggressive than most luxury brands in selling online. Virtually all of the major luxury hotel websites, including luxury chains like the Four Seasons and Ritz-Carlton as well as independent hotels and small groups like Bacara Resort, Meadowood and Aman Resorts allow online booking. Of course, unlike many luxury brands, luxury hotels have always sold directly to consumers in addition to selling through a variety of wholesale and agency channels. However, even luxury hoteliers have been relatively slow to market their online websites as aggressively as non-luxury hotels. They seemed reluctant to acknowledge that consumers of luxury travel were online and wanted to book luxury travel online.
Most luxury hotel marketers are now keenly aware that luxury travelers are researching and booking travel online. As such, luxury hotel marketers are seeking to expand their online presence beyond search engine optimization and keyword advertising. They are however having a difficult time identifying online solutions that deliver a compelling ROI while being protective of their brand. Why? Because sites that reach a highbrow audience are in high demand and tend to charge eyebrow raising prices; many luxury publications that have moved online charge CPM’s of $85-$260 online. Whew, at those rates, it is a good thing luxury hotel marketers can occasionally sneak into their spas for a little stress relief. Oh, and that there are great performance-based online marketing solutions available to them via Perfect Escapes too.
what about luxury brands using social media for brand building? See my new post on http://thefunkybusinessclub.wordpress.com
Good question and nice post. As you can see, this post was written in July 2007 and at the time, the world was a different place and things have definitely changed. I think there are numerous brands out there that have stepped up their online marketing and media solutions, although not too many are doing a fantastic job. But they are getting better.
Since July 2007, Facebook has opened up and grown and developed their ad and app platform; iPhone has taken over; Twitter has become more accepted although maybe not mainstream; Starwood launched their more integrated and developed user generated community; NYTimes launched TimesPeople; the economy has plummeted and luxury retailers are hurting; and many have realized that online is not a way to cheapen their brand but actually to enhance their brand.
So I agree with most of what you said in your post although I still think there is ways to go. We are just at the beginning of the next wave. Time Magazine picked the user as the person of the year for 2006. Is that the direction it will continue? Or will it now be the retailer and brand who figures out how best to incorporate, integrate, and harness the “you” to promote their brand?
We shall see. Thanks for reading and if you want to see more, please visit and subscribe to our active blog at http://www.perfectescapes.com/thesuitelife