Luxury Benchmarks H1 2014

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1 Luxury Benchmarks H1 2014

2 Luxury Benchmarks H Contents Introduction The luxury landscape The stakes are high Sizmek benchmarks Value through sophistication best practices from Sizmek experts Conclusion

3 Introduction At first glance, luxury brands and the internet seem to have opposing objectives. Luxury is about exceptionality, indulgence, and scarcity, while the internet is an equalizer that anyone with a device and connection can use: Luxury brands in particular have no interest in anyone who can t afford their goods. Due to this inherent conflict, luxury brands have been slow to adopt the internet as a marketing and sales channel, sticking to traditional routes to reach known customers. Nevertheless, luxury s target customers are in fact online. And now there are tools that can create a sense of exclusivity and brand loyalty once available only via brick and mortar stores. With technologies like advanced audience targeting and cookie pooling, dynamic creative, interactive video, mobile HTML5, real-time analytics, social media, and verification, luxury advertisers can develop a valuable and lasting connection to their best customers. The following report offers tips based on Sizmek data and expertise for how to use these advanced digital features to enhance your luxury campaigns. We also highlight aggregate engagement data from more than 42 luxury brands worldwide running campaigns on Sizmek MDX from January to July of U.S. affluent consumers spent 49 hours online per week in September 2013 (Ipsos MediaCT) 48% of U.S. affluent consumers discovered new luxury products online (American Express Publishing) Flash Formats Rich Media 3.01% 2.93% 3.42% 4.41% 0.36% 0.22% Polite Banner 2.55% 1.32% 2.45% 2.34% 0.37% 0.13% Expandable Banner 4.52% 5.51% 6.43% 7.02% 0.31% 0.33% 3

4 The luxury landscape The target is defined. Traditionally, luxury brands know where to find their targets (affluents and aspirationals A&A): high-end magazines, luxury locations, exclusive events, business and finance publications, and the like. In digital, A&As are first adopters. They re mobile, cosmopolitan, and money isn t a concern. Brand is king. Luxury advertisers take their brands very seriously and will spend big money to retain their status across an entire campaign be it on a billboard at Wimbledon or in the latest tablet edition of Vogue or Esquire. Anything goes. Luxury brands will follow their consumers to the ends of the earth and are willing to experiment with new formats and features to get their attention anything that fits with the brand story and values. It has to look effortles. The key to luxury brand success is keeping the brand as a status symbol without patronizing the target. There is a fine line between a coveted accessory and over-eager aspirant. This applies to digital advertising as well luxury brands carefully select the environment, format, and style of their ads. No flashing banners here - it has to be personal and appropriate. The end game is the same. Obviously, the ultimate goal in all marketing is sales. In that, digital is unique as a channel. Not only is digital a branding vehicle, it also lets advertisers drive qualified customers to the checkout lane online (accounting for 5% of total luxury sales in ) or in-store visits. The stakes are high Worldwide, people are increasing their time spent with media on computers and mobile devices, and brands must connect with their customers in these environments. As a result, spending in these channels increased at a much faster growth rate than traditional media, overtaking print and broadcast TV in some regions. emarketer estimates digital ad spending will reach $213.9 billion by Luxury marketing spend is no different. The 2014 Luxury Interactive Benchmarking Study by WBResearch found that 97% of luxury advertisers were planning to increase their digital spending in The study went on to report that respondents were investing heavily in ecommerce, CRM, and display advertising. This data supports a 2012 survey from Martini Media and Digiday stating that 26% of luxury s digital budget went to display while 22% went to social. These responses indicate that advertisers are using display advertising to build awareness of their brands and then carefully grooming new followers via social. Allocation of Digital Luxury Ad Budget According to U.S. Ad Agencies and Luxury Brand Marketers % of total Ad agencies Luxury brand marketers Display Search Video Mobile 11% 11% 11% 9% 13% 17% 16% 16% 26% 28% Social Interactive TV 10% 22% 3% 7% Source: Martini Media and Digiday, "Engaging the Affluent Online: How Luxury Brands Are Leveraging Digital Marketing to Connect with Customers", Aug 23, Bain and Fondazione Altagamma 4

5 Sizmek benchmarks What works in lux? Sizmek Research built custom rich media and HTML5 benchmarks with data from 42 luxury brands and advertisers from January to July of Below, we built out comparison tables using the H Benchmark Data Book to see how they performed against the benchmark average. Flash Formats Rich Media 3.01% 2.93% 3.42% 4.41% 0.36% 0.22% Polite Banner 2.55% 1.32% 2.45% 2.34% 0.37% 0.13% Expandable Banner 4.52% 5.51% 6.43% 7.02% 0.31% 0.33% Luxury s polite banner interaction rates were almost twice that of the benchmark number worldwide, hinting that great creative and imagery grab the viewer s attention. Dwell rates, which are only counted once, were in line with other rich media units. Click-through rates (CTR) were higher for rich media on average and almost three times that for polite banners. Polite banners with video clips showed a 40% increase in interaction rate and a 10% higher CTR vs. all polite banners (both video and non). Rich Media Polite with Video 3.60% 2.81% 2.05% 1.66% 0.39% 0.17% In-banner video units also performed very well compared to the benchmark in all categories, suggesting that video strikes a chord with affluent targets. Both interactions and dwell are proven indicators of increased brand awareness. Luxury advertisers deployed a large number of HTML5 expandable banner formats. Luxury HTML5 expandable banners performed more than twice than the benchmark in terms of CTR and almost doubled interaction rates as well. While interaction rates for polite banners might not have hit the benchmark, dwell rates were higher and the CTR was equivalent at 0.35%. HTML5 Formats HTML5 Polite 0.61% 3.14% 3.98% 2.87% 0.35% 0.35% HTML5 Expandable 8.06% 4.58% 2.11% 4.79% 0.81% 0.37% HTML5 Standard % 0.31% In addition to added performance with HTML5, Sizmek's internal research shows that default delivery rates for HTML5 (when an impression fails to render on a user s screen and they are shown a static image backup) are significantly lower than Flash rich media. 5

6 Value through sophistication best practices from Sizmek experts Jaime Singson, Director of Product Marketing Driving users to stores: Use geo-targeting and a simple call out to push people to their nearest luxury brand location. Even listing just the neighborhood or store will do wonders especially since so many luxury advertisers don t have e-commerce capabilities. Retarget luxury users: While typical retargeting techniques (such as following users around with the products they looked at) are ill-suited to luxury brands, other retargeting strategies are ideal. Showcase featured items, personalize items based on categories the user enjoys, highlight new arrivals, etc. Complement rich ad units with engaging shopping experiences: You ve filled that large, lavish space with rich brand imagery and a great story so why not let your users fall in love with your products as well? Users can browse the latest collections directly with carousels or other ad units featuring products. Tailor your message and images: What gender do they buy for? Do they buy mostly gift cards or spend thousands of dollars every month? Consider shaping the experience with lifestyle photos tailored to your audience. "Glocalize": Think global and local simultaneously. Some things must remain consistent to provide a coherent brand experience around the globe, but other things like copy style or holidays can be localized. Leverage dynamic creative to build out the global template and let your individual markets localize elements within it. Lauren Gonzales, Senior Manager at Peer39 by Sizmek Peer39 by Sizmek is the industry s largest provider of data for ad decisions. By processing more than 60 billion ad impressions every day, we classify nearly 95% of all real-time bidding (RTB) inventory at page-level. Protect the brand: Luxury advertisers need to create custom safety profiles to avoid negative content around their brand and the industry at large. For example, a luxury retailer may want to avoid content around child labor or unsafe working conditions. Quality over quantity: Luxury brands should demand transparent inventory that has a low ad count and is content rich. Target, target, and target some more: Align content environments for your ads with demographics that make the most sense, but do so contextually. For example, a high-end clothing brand might target content such as sailing, international travel, or investing, all of which are read by users in higher income brackets. King of the mountain: Use contextual targeting to target content around your own brand on blogs or trend sites. Better yet, target those of your competitors to stay top of mind with their target consumer set. Think global, execute local: Find tactics that work in one country or region and then employ them across the globe. Think about a chic sportswear brand targeting tennis content in the United States during the U.S. Open and then apply those parameters to Asia Pacific, Europe, and Latin America during local Grand Slam tournaments. Targeted reach can be instantly localized programmatically. 6

7 Michael Lamb, Director of Product Marketing Make the most of location data: Luxury marketers typically know down to the zip code level where their customers live and work. Take advantage of deep geographic reports to drill down through the engagement data of your campaigns to find new pockets of customers. Who saw what? Digital ads and conversion tracking: Luxury brands build shopping profiles of their best customers online and off, thus figuring out which ads drove the purchase is key to planning future media investments. Attributing the right purchase to the right conversion in the path (was it a search ad, followed by display, followed by a social ad?) is vital to proving return on investment. You built it, they came, now close the deal: Take advantage of the data produced by visits to your luxury website, where your brand has complete control of your customer s experience. Use that data to inform your digital marketing campaigns. Linking your campaign to a single tag tracking solution can dynamically update the copy or featured products in your ad and improve the productivity of your existing website. Tell your story, with a purpose: Luxury brands often lead with excellent storytelling. Use sophisticated digital campaigns to tell beautiful stories over multiple ad impressions and customize that story based on scripted logic tied to site interaction, ad interaction, location, content, and other data inputs. Local campaigns roll up to global insights: While messaging and media strategy may be dictated locally, monitor trends across the globe. Collate local, country, and regional insights into a single reporting structure to make smarter creative and media decisions. Conclusion According to the Luxury Institute survey, 97% of luxury advertisers increased their investment in digital initiatives in the past year. However, every advertiser must have a strategy to go along with that investment. Actionable information from Sizmek such as by-format comparisons and recommendations from product experts can help guide your investment. For more information and/or recommendations, contact your Sizmek representative today, or us directly. If you d like more information about the benchmarks or more detailed data, and request the full Sizmek H Data Book, with stats broken out by country, vertical, and format from the first half of sizmek.com 2014 Sizmek, Inc. All rights reserved. 7

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