Over 90 Percent of Millennial OOH Viewers Act After Ad Exposure
Even though the US economy is navigating uncertain territory, the luxury goods market remains solid. Sales for luxury goods have already surpassed pre-pandemic highs, online sales have almost doubled in recent years, and younger generations, Gen Z and Millennials, will make up more than 60 percent of the market by 2025.
Given the rare, stressful world events of the past few years, it’s no wonder many consumers are willing to treat themselves to luxury goods. OAAA and The Harris Poll’s latest consumer research analyzed the impact of OOH ads in the luxury apparel sector and found the ads reached almost half of US adults (47%), with even higher rates among Millennials (59%), Gen Z (64%), and urban residents in cities of one million plus (61%).
Even more impressively, almost nine-in-ten (86%) of the luxury OOH ad viewers took an action as a result of the ad exposure. The chart below details the many consumer actions OOH ads generated with the most popular being visitation of a luxury brand’s website (49%).
For additional insights on luxury apparel OOH ad messages most likely to engage consumers and drive action, OAAA members can access the full Harris Poll study, along with the supporting Infographic here.
Vivvix ad spend analysis shows very strong OOH growth in luxury goods in 2022 with OOH spend growing 75 percent over 2021. Last year’s spending was so large it represented one-third of the all OOH investment from 17 key luxury goods brands during the period 2018 – 2022. The 17 luxury goods brands include (ranked in order of OOH spend): Chanel, Hermes, Gucci, Cartier, Christian Dior, Tiffany, Van Cleef & Arpels, Ralph Lauren, Celine, Saint Laurent, Prada, Louis Vuitton, Balenciaga, Dolce & Gabbana, Fendi, Armani, and Coach.
Examining OOH ad spend by individual advertisers, the chart below details the top twelve brands who each invested at least $2 million last year. Chanel was the clear leader with over $12 million in OOH advertising.
An analysis of Vivvix data detailing media share reveals the importance of OOH with this category. In 2022, OOH captured six percent of spend share among the 17 luxury goods brands previously noted.
To assist OAAA members in leveraging opportunities in the luxury goods category, here are several additional insights about the state of the sector.
From WARC:
Personal luxury goods sales exceeded their pre-pandemic level, and online sales have almost doubled. This has been driven by younger customers – Gen Z and Millennials are set to represent more than 60% of the luxury market by 2025, according to Boston Consulting Group. Wunderman Thompson Intelligence says this demographic shift will require luxury brands to rethink their strategies to connect with younger buyers.
Key points
- Luxury is no longer defined purely by label, material or craftsmanship—it is defined by the impact that the product or brand has on individuals, society and the environment.
- The global market for pre-owned luxury goods is worth between $30 and $40 billion and is expected to grow by 15% to 20% annually over the next five years, according to research from Boston Consulting Group.
- Sixty-two percent of luxury customers worldwide say they would be more inclined to buy from a high-end brand that offers resale, luxury brands and retailers are introducing their own resale platforms.
Luxury shoppers increasingly desire brands that reflect their values
New consumer attitudes and cultural movements are reflected in four key themes that embody the new codes of luxury:
- From buying more to buying better – sustainable, ethical, responsible brands that reflect who you are
- From ordinary to authentic – everyday products elevated through local origin, traceable provenance or being wrapped in emotion
- From consuming to connecting – tactile, ergonomic product experiences that evoke harmonious emotions
- From exclusive to inclusive – playful informality and subversive mashups that appeal to a younger generation
Luxury brands are adapting to the increasingly omnichannel post-pandemic world
Successful luxury players have deployed some or all of these strategic omnichannel levers:
- Digital storytelling – While many other brands still focus digital spend on transactional, performance-led activities, luxury maisons – such as Louis Vuitton – have ramped up digital storytelling. With strong heritage and often close connections to creativity and artistry, they can create fascinating, immersive stories within their own universe.
- Experiential marketing – The luxury industry is ideally suited to be at the forefront of experiential marketing innovation. During the pandemic, brands such as Burberry and Dior shifted to virtual stores and fashion shows or created personal online shopping experiences. The next challenge is to lift the personalized digital experience to the same level of quality as in-store service.
- Flagship stores – Large flagships stores are part of the luxury experience. Some luxury brands reacted to restricted movement by reinforcing their presence in major cities to speak more to the local clientele, offering more local merchandise and spending more on local marketing within their flagship stores. This not only drove in-store sales, but also positively impacted online sales channels.
- Long-term influencer marketing – Influencers have proven to be a strong marketing tool for many luxury brands, with many building long-term strategies with their portfolio of influencers – from micro-influencers to celebrities. This provides engaging stories for young, high-net-worth consumers that they can actively follow over time.
Luxury and its ecosystem are becoming more diversified
The definition of luxury is evolving as younger consumers have more diverse needs and tastes. The solution for luxury brands is more psychographic targeting so they can appeal to their target with a positioning which addresses a specific mindset or behavior. Brands should take an audience-first approach. For example, to target Millennials and Gen Z, luxury brands need to focus marketing on video and images and find ways to promote experience sharing on social media and review sites. Brands should also set their own definition of luxury to specify their place within the market, e.g. super-luxury, mid-luxury, personalized luxury, or ethical luxury. Social media is a must, but brands must take care their presence is authentic, consistent and portrays an image in keeping with their identity. Brands should also invest in experiences younger consumers will want to share such as pop-up shops, storefronts and interactive Instagram-worthy DOOH.
Source: OAAA, The Harris Poll, Vivvix, WARC
Published: May 24, 2023