As Luxury Brands Adopt More Digital Advertising Strategies, China Takes the Lead

China currently holds the title of most advanced digital market for luxury advertisers.

53% of all luxury ad spend in China last year was invested in digital channels, according to the Luxury Advertising Expenditure Forecasts 2018 Report.

 

The report, which compares luxury advertising expenditures in 23 markets, also predicted that this will increase to 68% of ad expenditure by 2019. This projection comes from steady interest from luxury brands in China’s digital and e-commerce channels, such as Alibaba’s Tmall Luxury Pavilion and JD.com’s luxury experiences.

China is not the only one to see the winds change in this arena

According to the Zenith report, the shift towards digital media investment by luxury brands is global. These brands appear to be racing to catch up after being slow to adopt digital advertising. The report indicates that luxury brands will invest 33% of advertising spend in digital channels this year, an increase of 3% over last year. However, this number is still lagging behind overall brand advertiser’s, which are forecast to invest 42% of spend in digital channels.

The leading category in ad expenditure is luxury hospitality, which will go 50% digital this year. Hospitality is followed by luxury automotive brands at 39%, watches and jewellery brands at 28%, fragrances and beauty at 27%, and fashion and accessories at 13%. 

While China is the most advanced digital market for luxury advertising, it is not yet the largest. The US is leading with $5.2bn in ad spend in 2017, compared to China’s 2.1bn. Among the 23 markets included in the Zenith report, the two markets together accounted for 61% of luxury advertising expenditure. 

Overall luxury ad spend is forecast to rise 2.4% in 2018 and 2.8% in 2019.

“After a relatively slow start, luxury advertisers are now committing to the digital future, led by luxury hospitality brands, said Jonathan Barnard, head of forecasting at Zenith.
“Luxury brands face unique challenges online, such as the need to maintain exclusive brand values while communicating with potential customers at scale. By using personalised digital communications and high-quality e-commerce experiences, luxury brands can generate new sales while preserving their exclusive appeal.”
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