PDF - Havas Worldwide ME
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PDF - Havas Worldwide ME
LUXHUB INSIGHTS 2014 LUXURY DIGITAL OUTLOOK CONTENTS 4 EXECUTIVE SUMMARY 7Introduction 10WebsiteS 20E-Commerce 24Mobile 28 Social Media 34 Search & EMail 38 The Result 2 I Luxhub Insights: 2014 Luxury Digital Outlook TRENDS 3 EXECUTIVE SUMMARY © Corbis T 4 I Luxhub Insights: 2014 Luxury Digital Outlook he Middle East is synonymous with the luxury industry. Luxury stores, products and media seem to be visually and cognitively present all around our environment, which consequently filters into every part of our lives, ethos and culture. As such, its power and importance as an industry within the region and its growth are increasing year on year, and those who play the most pivotal and powerful roles in making this happen are the high and ultra-net-worth individuals originating from the region. Ultimately, the luxury industry in the Middle East is here to fulfil their desires and, as such, luxury brands must adapt to their specific needs. Yet, while this may seem a simple task, these regional luxury consumers’ requirements and buying prowesses are in constant flux, adapting to their broadening global knowledge, their technology based lives, changing current trends and consumer habits. Thus, the Middle East’s high-networth individuals are becoming a progressively, very demanding and hungry consumer bracket. With such rapid movement in consumer trends, particularly in the context of our digitally advancing world, luxury brands, advertisers and publishers are on a persistent progression towards enhancing their digital properties, content and offerings. An industry which had once been left behind – or wanted to – from our digital age, by continuing to rely on the traditional media ‘spill-over’ from their globally branded content and advertising, is beginning to change. The luxury industry has been fearful and hesitant of the digital sphere for many reasons, from loss of exclusivity to sheer indifference, but we are now witnessing a renaissance of digital luxury marketing on an international scale. In the Middle East, as the region’s mobile and broadband penetration deepens, growing its web-based footprint and usage of social platforms, and developing homegrown e-commerce and m-commerce platforms, the demand and need for digitalised luxury is most definitely here. So, how are luxury brands adapting to this change and what progress has been made so far? Luxury brands, as a whole, have a unique position within the market, more acutely than other brand sectors, as they are subject to strict media guidelines, touch-points and methodologies from their global branding teams. In addition, because aspiration and perceived value drive purchase consideration, they are more hesitant than other categories to move into the digital space, as it means TRENDS 5 © arabianEye relinquishing creative and content control, which is required at a local level for digital best practice. Moreover, in the Middle East, they must also appeal to a market which has particular tastes, cultural differences, languages and traditions while retaining the aforementioned points. Such parameters played a defining role in this first Luxury Digital Outlook Report, where we examined how luxury brands scored across various digital marketing activities, in terms of: social media, mobile, content, website presence and content, e/m-commerce, email marketing, and digital competency on a regional, local and country specific scale. Furthermore, we have delivered a ranking of luxury brands within each category, to establish which brand(s) are leading in overall advancement and localisation within the digital space. We looked at how this is affecting the status of luxury brands, the industry as a whole in the region, and what this means for the out6 I Luxhub Insights: 2014 Luxury Digital Outlook look of the market. The future of luxury, its intricacies and development is something that we are committed to at Havas Media Middle East. While we work with a variety of brands across all our various disciplines and their numerous verticals, we hold luxury as one of our key areas of expertise, and truly understand its importance, not only within the region’s media market but as an industry to increase regional growth. This research project, carried out underneath Havas Media Middle East’s luxury intelligence group LuxHub, not only serves to guide these brands on future decisions around brand strategy, digital communication and platform development, but also as agency stakeholders, helps us prioritise those decisions by channeling and identifying gaps to build better more effective and relevant advertising solutions, with real data and insights at the core. By examining our research in comparison to global and local benchmarks, we developed a ranking system across these digital marketing categories in an effort to not only showcase where luxury brands stand regionally, in terms of the digital sophistication of their communications and platforms, but also where these brands rank against their global peers. The data that we analysed was gathered over the course of Q3 and Q4 2013 from a variety of open source data platforms and proprietary Havas tools. At the core of the data and this document lays a hard truth about luxury brands in the region, and while there are some examples of brands that are winning within a few digital platforms, by and large this sector severely lags behind in the majority of core, targeted and strategic digital communication competencies. We shall explore the data that delivered this result, and the effects this data will have on the experience and expectations of the region’s increasingly important and powerful luxury consumers. INTRODUCTION The Need for a Luxury Digital Report At the crossroads between data-driven insights, the perfect regional setting, and our passion for luxury, we as an agency found ourselves, and from all of these factors the LuxHub Insights: 2014 Luxury Digital Outlook was born. Innovation, creativity and the employment of technology to lead the marketplace is the backbone of our communications ethos. Marketing, as a whole, has changed forever, and with it the needs and questions of advertisers. Technology and communications are irrevocably intertwined, so by placing digital at the core of our agency model, it is our way to ‘Change Faster’ as an agency and be agile and quick for our clients. Change Faster in this moving environment means also providing insights in order to jump into different market realities where numerous media adoption trends are taking place. Media has never been so real-time and flexible, with ever changing digital touch points and technology as the driving force behind this. Technology and data are motoring our digitally integrated and strategic offering, which is successfully fulfilling the ever changing and developing requirements of current and new clients alike. This has never been more so, or more of a hot topic, for our luxury clients and in general for the luxury industry in the region. Luxury, in all its verticals, is an important driving force behind trade, tourism, growth and the majority of other industries in the region, not to mention its high-net-worth inhabitants. Since the inception of Havas Media Middle East, we have had a special and insightful relationship with many luxury brands, and so we pride ourselves on being at the forefront of trends, develop- ments and communications that affect and influence this industry and its consumers. As such, our aim became to not only deliver our luxury clients relevant content and strategies, but also use real data to back this up - a research project with them in mind. Our objective was to ignite change and progression in the field of luxury and also promote the Middle East as a market which should no longer be ignored. Thus, we wanted a project that paralleled global and local benchmarks which would bring to light the stark reality of luxury in the region’s digital world to its consumers, brands and marketers. The idea was simple: examine content, competency and presence across various digital channels. These were to include: websites, e-commerce, social media, mobile, search and email. We wanted to know what brands in various luxury TRENDS 7 © Corbis FASHION BRANDS Alexander McQueen Alfred Dunhill Armani Balenciaga Burberry Calvin Klein Carolina Herrera Celine Chanel Christian Louboutin Coach Dior Dolce & Gabbana Elie Saab Ermenegildo Zegna Fendi © Corbis WATCH AND JEWELLERY BRANDS Audemar’s Piguet Baume et Mercier Blancpain Cartier Chanel Jewellery Chaumet Chopard Corum Damiani De Beers Dior Graff © Corbis FRAGRANCE AND COSMETIC BRANDS sectors – fashion, watches and jewellery, and fragrance and cosmetics for both men and women – are doing within the region, and to what extent. We could then identify which brands are really owning and developing their digital properties and media mix, and those who are slipping behind this advancing pack. Using proprietary Havas research and tools, as well as our market understanding and open resources, we were then able to draw data-driven conclusions as to why this is happening and what it means in the bigger picture. The struggle for a brand to be both global and local, in terms of created media and content, is a difficult and complex situation facing luxury brands world8 I Luxhub Insights: 2014 Luxury Digital Outlook Armani Balenciaga Hugo Boss Bottega Veneta Burberry Cartier Chanel Chloé Clarins Clinique Clive Christian Creed Dior Dolce & Gabbana Givenchy Gucci Giuseppe Zanotti Hermès Hugo Boss Jimmy Choo Lanvin Louis Vuitton Marc Jacobs Miu Miu Nina Ricci Oscar de la Renta Prada Ralph Lauren Roberto Cavalli Saint Laurent Tod’s Tom Ford Tory Burch Valentino Versace Harry Winston Hublot Jaeger-LeCoultre Korloff Longines Neil Lane Omega Patek Philippe Piaget Raymond Weil Rolex Tiffany & Co Van Cleef & Arpels Zenith Watches Estée Lauder Fendi Givenchy Guerlain Hermès Jimmy Choo Cavalli Fragrances La Prairie Lancôme Marc Jacobs MontBlanc Nina Ricci Paco Rabanne Prada Tom Ford Valentino Van Cleef & Arpels Versace Yves Saint Laurent wide, and particularly here in the Middle East. With languages, cultural and lifestyle traditions varying from country to country, and even from city to city, luxury brands have been somewhat carefully generic in producing regional content, and thus far, have been treading very lightly in terms of digital presence. However, this broad positioning is beginning to cause concerns around how they are truly engaging the local consumer-population through their content and user experience, within the digital world. The acceptation that global luxury brands need not bother with localised content and media presence in the region is taking its toll on how far many luxury brands can reach into the lives of the wealthiest consumers that the Middle East has to offer. Despite the region’s efforts to ascertain original content development, and the popularity of this movement, it still seems to be falling on deaf ears. For a while it seems that we in the Middle East have been happy to accept this lack of effort and resign ourselves to the fact that we are still an emerging marketplace to these large international businesses. But times are changing, and with the luxury market in the region growing year upon year, the necessity to focus on what the local consumer wants and how they want to be engaged by a brand is becoming more important. With the regional luxury market comprising of an estimated €6.6 billion and growing, according to the 2013 Luxury Goods Worldwide Market Survey from Bain & Company, Middle Eastern consumers have the highest per capita spend on luxury goods in the world at just over $1,900, and overall the region is the 10th largest global luxury market. Therefore, the Middle East is not so much an emerging marketplace, but a fully emerged one when it comes to luxury. Fundamentally, it has come to a crunch point for global luxury brands to firmly accept that the region’s affluent consumers are now yearning for localised, personalised and created digital content and advancement. They want to be drawn closer to the brand, associate with its superior exclusivity and, most of all, make a meaningful connection with a brand in which they can intrinsically identify themselves as an individual amongst their family, friends and peers. In another recent Havas research project on Luxury Perceptions and Habits in KSA and the UAE, we saw that 90 per cent of our luxury consumer respondents are now researching products and brands online before purchasing, hence the necessity for brands to win in digital is most definitely there. Moreover, with the local Arab population spending an average of six hours of their daily time online via their PC, mobile and/or tablet (2013 InMobi and Havas Digital Research), it is easy to see why the Middle East market is demanding more enriched content and technological advancement on these digital platforms. Research Brands As part of the LuxHub: 2014 Luxury Digital Outlook we looked at a range of luxury brands that widely operate throughout the Middle East. This list included: 36 fashion brands; 26 watch and jewellery brands and 33 fragrance and cosmetic brands. These particular brands were chosen by looking at brand perception, proliferation and physical presence in the region. Ultimately, we looked at what type of luxury products are most likely to be purchased online ranging from those at entry level, fragrances and cosmetics, to fashion and accessories, and to the higher end of bespoke watches and jewellery. Such categories also constitute those products which appeal to a wide luxury audience, and are the luxury sectors that are most likely to be followed and engaged with, because of the constantly changing trends and seasons. they portray their brand in the digital space. What they do and do not is a decision rather than a failing. This report is here to provide a digital benchmark system for luxury brands, not to criticize their brand or their respective agencies. At the end of each main section, we have served to give a recommendation as to how brands can easily fulfill these requirements and elements to truly enhance their overall digital offering and properties. Research Methodologies Due to the numerous and multiple brands examined – 95 separate brands over the three different categories – a variety of data sources were needed and used to gain the raw insights for the research. These included specific digital tools and extensive desktop research across a large variety of pages, email newsletters, platforms and applications, to individually monitor and analyse the particular elements within each of those sources. We divided the research analysis into six main sections: websites, mobile, e-commerce, social media, search and email. Within each section we examined specific elements relevant to those sections that are the foundation and universal benchmarks for digital activation and competency, as well as a particular focus on localisation. By examining these elements we developed a scorecard to measure each brand, in order to achieve the base competency. Over all the sections, we identified 117 core digital competencies for websites, social media, e-commerce, mobile, search and email. These universal benchmarks are constantly evolving, changing and becoming more developed year-on-year. Although our end result compares one brand’s score against another, the principal takeaway is that the brands are not competing against one another, but really against themselves in how © Corbis BRANDS SurvEYED TRENDS 9 WEBSITES © Corbis Introduction 10 I Luxhub Insights: 2014 Luxury Digital Outlook Websites are what we perceive to be the core digital base for any brand globally or locally. They are often the first touchpoint with a brand, and will lead to further exploration and engagement across other platforms. In addition, it is also a place where a consumer will look to find out about general brand material, a particular product or nearby store. Websites are also the point of reference for any such information because the site has been produced by the brand, and therefore it is a reliable and trustworthy source for the most up to date information. All the brands that we examined throughout this report had global websites, with the majority being in English and/or the brands’ country-of-origin language. All the sites which we analysed had the option of directly translating the content into several other languages. The majori- ty of these were from Europe with the addition of Mandarin, Cantonese, Japanese and Russian in many cases. However, we wanted to dive deeper into how website content was not only translated, but how it was adapted and curated for the regional audience. To further expand upon this examination, we looked at which brands were using localised content and/or Arabic language content on their global websites. Localised content in this case is defined as content created and written specifically for the Arab market. Arabic content, in this case, is defined as general content translated into Arabic. We then wanted to see if the brands had any regional or country specific website presence or content. Furthermore, we developed this idea by examining the websites functionality: from HTML vs. flash, social media linking and sharing, to product search and availability, to local currency conversion, customer service, and newsletter sign-up. As the first point of discussion in this research, this initial section showed the bleak reality of the absence of many basic digital communication requirements and technological competencies within the website environment, that some of the world’s leading luxury brands not only did not have in the region, but in some cases globally. Global Websites Arabic Content Upon beginning to review the websites we firstly looked at which sites gave users the option to select their region, in our case this was the Middle East, or a specific country within the region. • Out of the fashion brands only 33 per cent listed the Middle East or any of its countries as an option, followed by 27 TRENDS 11 Yes No Fragrance & cosmetic Brands with ARABIC Content 8% WATCH & JEWELLERY Brands with ARABIC content 7% 21% 92% 79% All brands with arabic content 93% REgional and/or country website 6% 8% Yes No 92% Fashion - store locator functionality Yes No 5% 95% per cent for fragrances and cosmetics and 11 per cent for watches and jewellery. • Overall, only 27 per cent of brands we looked at even mentioned the Middle East on their websites as its regional location. Out of those, we then examined which websites had Arabic content. • From the three categories we examined, the luxury fragrance and cosmetic brands had the highest percentage of Arabic content at 21 per cent. Namely, Hugo Boss, Chanel, Clinique, Estée Lauder, La Prairie, Lancôme and Saint Laurent. • This was then followed by the fashion category, which was very far behind, with only 8 per cent having any Arabic content. The fashion brands that made up the 8 per cent were Carolina Herrera, Elie Saab and Ralph Lauren. • The only two watch and jewellery brands to have had Arabic content were Piaget and Patek Philippe. Localised Content With more than 20 million Google 12 I Luxhub Insights: 2014 Luxury Digital Outlook Watches & jewellery store locator functionality 12% 88% searches in Arabic coming from the GCC every day (Source: ThinkwithGoogle. com Search Analytics), brands must fully comprehend the importance of localised content for the region’s digital users. Thus, to follow on from Arabic content, we saw the stark reality of how few global luxury brands had localised content. • Fragrances and sosmetics led with 18 per cent, compared to watches and jewellery with just 3 per cent. The fragrance and cosmetics brands that we saw leading this section were: Clinique, Estée Lauder, La Prairie and Lancôme. • The fashion category had zero brands with localised content. • The only watch and jewellery brand to feature localised content on its website was Piaget. What we concluded from the above data is that there are a small percentage of brands that realise that having at least an Arabic translate-facility and some local content is important to engaging a local consumer. The reasons behind this are Fragrances & cosmetics store locator functionality 6% 94% many: time, cost and work, but it is also the continued reliance on generic content over-spill in order to satisfy an evergrowing global audience. A large part of this may be due to global hesitation to relinquish content creation to local markets because of a perceived dilution of brand affinity and exclusiveness. In a more positive way we saw that several brands comprehended that not all of their international readers are literate in English, and would intuitively prefer to read and engage with a brand in their own native language. Fundamentally, we must consider this as the most basic step towards fully localised and original content, but one has to start somewhere. Regional and Country Websites Advancing a notch along the chain of digital sophistication, we explored whether the brands had regional websites, i.e. a website that is specific to the Middle East and in most cases had a ‘me’ in the URL. Regional websites offer brands a © Corbis 92% closer step towards engaging market-specific consumers, and allow for much more freedom of localisation and the ability to be much more targeted. However, we found that this was not the case. None of the fashion, watch or jewellery brands that featured in our research had any regional website for the Middle East. The only four brands that came from the fragrance and cosmetics category and were the French beauty-market leaders Clinique, Estée Lauder and Lancôme, and Swiss cosmetics brand La Prairie. We saw from this that it was the beauty products, i.e. products that are more accessible, who are making headway in the digital space. By having much more leeway to use digital platforms, less strict guidelines on Arabic content and branding, they have the opportunity to be much bolder when it comes to localisation so as to not affect their overall brand image or identity. We then analysed if the brands had country level websites. • The sole fashion brand to have country specific website was British-born Burberry and for watches and jewellery, Swiss luxury watch maker Piaget, both with UAE-based URLs. • However, the Burberry site was only available in English, making Piaget the only brand within our list of brands to have Arabic content on their country site. • The brands that had regional sites did not appear in this country section, leaving the fragrance and cosmetics category with no country websites at all. Website Functionality Introduction Expanding upon regionally specific content and website presence, we also included website functionalities to highlight the functional and user-experience competencies of the brands’ digital properties. The ability for a local consumer to be able to locate a store near to their home or office, see what a product costs in their native currency, to merely having a country specific customer service, are © Corbis Fashion Brands with ARABIC content really the foundations for any brand to have in a global market, never mind in the world of luxury and the region, where a high level of service is always expected. Of all of these functionalities, it is perceived that customer service is the most important part of a luxury brand’s consumer relationship – holding in its grasp the personalised quality of service, the aftercare and fundamentally the loyalty of a customer. Store Locator • Of the brands examined from the fashion category, 95 per cent of global websites had a store locator, for watches and jewellery 88 per cent, and from fragrance and cosmetics 94 per cent. It is interesting to see that watches and jewellery had a significantly lower percentage which is most likely due to the fact that they are present in many local concessions which may not appear. However, we would also assume this is also very much the case for fragrances and cosmetics, as until recently with Burberry and Chanel in London, for example, there have been no specific beauty stores for luxury brands. Moreover, due to the mass nature of their products and their presence at multi-brand outlets, they may not be able to be specific about store locations. And yet we could surmise that perhaps due to their products being readily available and sold by international retailers it is probably easy to place their locations. Products The next most prevalent point of information which online consumers will look for are specific products. • 89 per cent of luxury fashion brands featured their products for users to browse. • For watches and jewellery this number goes up to 96 per cent, which is interesting when compared to the smaller percentage of brands with store-locators – more products to view, but less option to see where they are held. TRENDS 13 t Fashion - websites with Products overview Yes No watches & jewellery websites with products overview 4% 11% 89% 6% 96% Fashion - websites with Products prices in local currency Fragrances & cosmetics websites with products overview 94% watches & jewellery websites with Products prices in local currency Fragrances & cosmetics websites with Products prices in local currency 5% 3% 100% 95% 97% Websites with newsletter Localised and/or regional websites with FaceBook sign up functionality social sharing 29% 46% 37% 54% 63% © Corbis 71% GLOBAL websites with facebook social sharing • For fragrance and cosmetics, 94 per cent had products featured on their websites which we consider low for this category. In fact to not have 100 per cent of websites with such basic information is somewhat akin to having a physical store with less than full shelves. It could be argued that this type of product needs to be tried and tested in store, which is particularly true for the Middle Eastern consumer, and therefore there may not be much point displaying them in the digital realm. But this does not hold logically as the website is an informative base that will hopefully lead to trial. In-Store Availability From the websites that had product viewing functionality and store-locators, we then examined those that showed ‘instore availability.’ 14 I Luxhub Insights: 2014 Luxury Digital Outlook • For the fashion brands 95 per cent showed availability, for watches and jewellery 93 per cent and fragrance and cosmetics 97 per cent. Such high percentage scores in this section clearly shows the relevancy of e-commerce, and even if not, that brands should have this functionality to drive consumers to store. Prices in Local Currency In terms of localisation, it is important for regional consumers to see their own currencies and/or exchanges, especially for the Middle East where prices can vary largely from country to country. • Out of the websites which did show products online, 95 per cent of the fashion brands researched did not have local currency prices, no watches and jewellery brands had them and 97 per cent of fra- grance and cosmetics brands did not. • Those brands which did show a local currency in this category were Burberry, once again, and American luxury accessories brand Coach – both showing prices in local Arabic currency. Country Specific Customer Service Delving deeper into localised website features and functionality, we looked at the important necessity for any luxury brand, especially in the region, its customer service. This could be a local telephone number or email that is specific to a country and their consumers. • For fashion, half the brands had this service, 62 per cent did for watches and jewellery and slightly lower was fragrance and cosmetics with 61 per cent. From this we could surmise that those products which need the most attentive customer care, due to their long-term wear and cost, came from the watch and jewellery category. Fragrance and cosmetic brands also had with a very high percentage – although it seems unlikely that a customer would return or exchange a beauty product. The feature of customer service also bears weight on what levels of importance, or lack thereof, brands give to e-commerce, digital communication, and the local purchase habits and needs that the Middle Eastern consumer has. Newsletter Newsletters, as a form of email-based communication, is a topic that we will go into in detail later in this document. For this sub-section we examined newsletter sign-up and availability on websites. Newsletters have been a traditional cornerstone for brands as part of their digital marketing arsenal for a long time. Luxury brands globally have not shied away from email-marketing either, especially as they have globally rolled out e-commerce as a channel for sales. Apart from acting as a trigger for e-commerce, newsletters are also a branding and promotional device for new launches, events and brand ‘news’, especially for the latter. There was a significant level of newsletter use and integration across the brands investigated, it was surprising, however, and we believe an obvious gap, that not all brands are active with email-marketing in the region. In addition to their global websites, we have seen a few leading brands launch smaller micro-sites to elaborate upon the brands’ storytelling, to go in-depth into current collections inspiration or cover special events/exhibitions. Evidence of this can be witnessed with the ‘Inside Chanel’ site and Dolce & Gabbana’s Swide.com, a blog-style universe of the brand. Yet another method for brands to drive storytelling and create a reason to connect online with their customers is via an e-newsletter. E-newsletters provide a direct response mechanism to brands by delivering a highly segmented and content-targeted vehicle to drive both awareness and conversion within their consumer groups. • In the fashion category, the only brand not to have a newsletter was Dolce & Gabanna – although its blog-site Swide.com did, which linked from its homepage, making it only 3 per cent to not have this functionality. • For watches and jewellery a much greater number did not have a newsletter signup functionality at 30 per cent, and for TRENDS 15 © Getty Images fragrance and cosmetics it was slightly lower at 17 per cent. In general we could consider that fashion brands have more events, fashion-shows, and lifestyle/entertainment news to convey to their loyal audience. However, for watches and jewellery the changes in collections and styles would not update so much, and nor would the purchase of such items be as frequent. It is, however, surprising that fragrances and cosmetics is low when the demand for new and novel fragrances and products is so high – particularly in the Middle East – and due to their price-points, a higher volume of their products are sold. There is a large opportunity here for luxury brands to 16 I Luxhub Insights: 2014 Luxury Digital Outlook develop localised lifestyle content which they can leverage across channels such as email to drive engagement and brand affinity Website Social Integration Social media for the majority of luxury brands remains a daunting prospect and an underutilised channel. The lack of content control; the mass media ethos; the fear of losing one’s exclusivity and perceived touch-points to massification, we see are the key drivers of lack of uptake. But when properly managed there can be no doubt that it is just as important as other traditional and digital mediums. Strategically, we firmly believe that a lack of focus and underinvestment in locally relevant social channels by luxury brands will be at their medium to longer term detriment. Consumers are continuingly evolving, and while this is a cliché, it is an ever relevant cliché supercharged by social. Use, initiation, management and consistent strategy on social at a local level, for the brands we looked at were nowhere near the levels they should be at. To ‘brand-proof’ themselves and their future, even luxury brands must play a more proactive role to assess and activate relevant social footprints. If not only for the significant levels of their current consumers who Social Media Links and Sharing • Overall, 62 per cent of the localised, Arabic and/or regional websites had social media links available, compared to 91 per cent of global websites. • Of these socially linked Arabised sites, all had a YouTube link, although only 69 per cent of global websites had this channel available to view. • Overall, 54 per cent of localised, Arabic and/or regional sites had a Twitter link, which is significantly lower than global sites at 77 per cent. When we discuss these channels in much more detail in the social media section, starting on page 28, we will see whether these social channels are in fact regional or global pages, and how localised their content sharing is. • 54 per cent of the brands which had localised and/or on their global websites, or had regional websites, also had a Facebook link from the website and had their pages enabled for Facebook sharing, which is quite close to the 63 per cent of global websites that had this facility. • Consequently, only 46 per cent of these local, Arabic and regional sites, which had Twitter links, also had Twitter enabled sharing available. • Moving to the other social channels of Instagram, Pinterest and Google+, we saw that only 31 per cent of local, Arabic and regional websites had these channels available on their homepages compared ©Getty Images have integrated social in their day-today lives, but especially for their consumers of tomorrow where social channels will be their default information, engagement, discovery and brand inspiration platforms. While we will go into much more detail on this subject and its various and numerous platforms later, in terms of website functionality we looked at whether there were firstly social media links from the websites and, secondly, whether brands enabled direct social sharing of product pages, specifically from their localised, regional or country sites. Fashion Flash only vs. html Watches & jewellery Flash only vs. html 7% 11% 89% HTML fragrances & cosmetics Flash only vs. html 99% 9% 91% Flash to almost double that for global sites. These local and global gaps were clear and must be addressed in line with developing their owned social media channels and enhancing their website’s digital competencies. Website Technology Flash vs. HTML With 77 per cent of local mobile users accessing the web via their device daily (Source: ThinkwithGoogle.com Mobile Planet UAE) Flash is becoming a platform of the past and should not be used within the website space. This, combined with the drawbacks of Flash with search optimisation, make the use of the technology in web environments a symbol of a brand’s slow uptake and adaptation into the digital sphere. HTML is the most basic and standardised technology through which websites are indexed by all web browsers, and particularly search engines for SEO. So, while Flash may make a website look creative and interactive, it does not work well with many browsers and can be extremely slow to work and upload. Moreover, it disables any search indexing possibilities, so engines like Google and Bing etc. will not be able to read the site and rank it within their search result listings. • Overall, a high majority of fashion brands at 89 per cent had HTML webTRENDS 17 Website Results Brand Elie Saab (F) Armani (F) Lancôme (F/C) Clinique (F/C) Estée Lauder (F/C) Score out of 34 19 18 18 18 18 Overall website scores 30 25 20 15 10 5 ©Getty Images 0 sites, whilst the remaining 11% used Flash platforms. These Flash sites included brands such as Chloé, Elie Saab, Lanvin, Nina Ricci, Ralph Lauren and Tom Ford. • An even greater majority of watch and jewellery brands (93 per cent) used HTML, with Corum being the only brand website to use Flash. • Comparatively it was slightly lower for fragrances and cosmetics, when compared to watches and jewellery, with the category having just 91 per cent of brands using HTML. Those which used Flash were: Chloé, Guerlain, Nina Ricci and Tom Ford. Conclusion A website fully represents a brand online, it is often the brand’s first ‘door’ online and a consumer’s first port-of-call. And yet, with some of the findings we have 18 I Luxhub Insights: 2014 Luxury Digital Outlook discovered above there seems to be a major gap in some of the most rudimentary digital competencies, but particularly the amount of locally based content, presence and functionality. The reality is that global luxury brands have yet to invest in optimising their website properties in order to more effectively engage the local consumer on a more personal and contextual level, and this could be for many reasons. First, and foremost, their perception of the market’s consumers’ habits and needs, followed by general unwillingness and apathy towards earned engagement via social channels because of loss of exclusivity in the digital world. The idea that the Middle East is still an emerging market also means that many brands believe the region’s luxury market is still young and behind the times when it comes to e-commerce, online media and engagement. While shopping in a mall remains a popular social activity enjoyed by the Arab population, according to Internet Word Stats the Middle East’s internet penetration is at 40.4 per cent, and with the rest-of-world average being 34.1 per cent it clearly shows the absolute importance of digital in the region. That said, this figure is typically only considers PCbased access. Therefore, when we consider smartphone penetration as an additional proxy for internet access above desktop, this figure is arguably much higher as smartphone penetration is over 74 per cent (Source: Google Mobile Planet, January 2014 Middle East) compared to the world average of 44 per cent (Source: Google Mobile Planet, January 2014 All Countries). In terms of luxury brands, it is a clear indication that they must see and accept that the online world in the region is a golden opportunity for their brand to invest in. The first to market with a more advanced website strategy in the region will be able to leap-frog the competition and become a category leader very quickly. With more people in the Middle East who are spending time on digital channels, brands need to ensure a localised web presence and content to remain relevant. Saudi Arabia is by far the biggest luxury market in the region, followed by the UAE, Qatar and Kuwait, so we must surmise that this is where the luxury brands are focusing their time. Interestingly, therefore in Saudi, where English is not widely spoken to a proficient level (Source: English Proficiency Index – KSA ranking 41.19), local and Arabic content would be a priority of these brands wanting to engage the luxury consumer, this is clearly not the case. However, at this current point in time we would be quite wrong. Website Results Overall, the highest scoring category, in terms of website competency and technology, was fragrances and cosmetics with 10, followed by fashion with nine and watches and jewellery with eight. However, if we only consider the elements which were based on localisation of the websites, the leading category, by a long way, was fragrances and cosmetics with the most Arabic content. Recommendation In the 2013 Luxury Brand Perception study by Havas, we found 95 per cent of the regional respondents researched luxury products online, and no doubt websites would have been their first point-of-call. While some in the Arab World do read English, many do not, and therefore it is imperative to have at least an Arabic translation available. Localised content Fashion Watches & jewellery Fragrances & cosmetics is also crucial, as the region continues to become a hungrier consumer of the written word in their own language and needful of personalised and engaging content that is relevant to their context, culture, habits and lives. Excellence in customer service is also something that is demanded and desired, as throughout the Middle East service is at a very high standard. The user experience and functionality of website properties is also a key factor as the sophistication and expectations of the Middle East consumer continue to evolve. Therefore we strongly recommend a continuing march towards enhancing Arabic content towards localised content, as well as making sure the user experience on a website is of the same standard as a physical store to maintain a brand’s luxury benchmarks. TRENDS 19 E-COMMERCE Introduction E-commerce, for the many markets around the world, is part of everyday life, and for luxury e-commerce international companies, such as Net-A-Porter.com, mywardrobe.com and mytheresa.com have definitely shown how luxury can be purchased online, without losing a brands’ exclusivity or succumbing to massification. The carefully selected collection pieces and brands propose a boutique-style digital offering which maintains that luxury shopping experience. This is also combined with very acute guidelines on their customer service, shipping and returns policies, as well as beautiful packaging. Shopping online for luxury must not just seem to be a quickclick purchase, but an easy experience which can be just as exclusive as buying in-store. Companies such as the above have helped to guide individual luxury brands to change their perception of e-commerce, to 20 I Luxhub Insights: 2014 Luxury Digital Outlook show that there is a demand for it and that brands and their products can continue to remain just as elusive in the digital world. What we must bear in mind, at this current time, is that e-commerce in the Middle East is hindered at the point of delivery and payment. This is particularly true in KSA, where cash-on-delivery models are a favoured payment method and are consequently plaguing growth, which is contributing to high levels of cancelled transactions. However, we do foresee an inevitable change. As online payment becomes more trusted, as delivery assurances become more robust, and as ever-demanding consumers gravitate online to access the hard-to-secure pieces which often sell out quickly in-store, luxury e-commerce in the region will grow. Underpinning these structural and consumer realities and inevitabilities is that e-commerce enables greater ease, efficiency and choice. While the region is typified by a ‘mall culture’ as a social cornerstone, and this will not change, it will be enhanced via enabling out-of-mall purchasing online. E-commerce and Functionality • Of the brands we researched across the three categories, we found that a substantial 70 per cent did not have e-commerce available on their global websites. • Of those that did have this available, only 5 per cent offered shipping to the region, these included: Alexander McQueen, Giuseppe Zanotti, Jimmy Choo, Roberto Cavalli and Tory Burch. • 75 per cent of brands that offered e-commerce also offered a ‘Wish List’ or ‘Favourites List’ option, which is a positive for future e-commerce growth and sophistication. • 26 per cent of the brands that offered e-commerce also offered an ‘Others TRENDS 21 Yes No E-Commerce services with others also viewed function Yes No 25% 26% 74% 75% E-Commerce services with abandoned cart notification Yes No E-Commerce services offering customers promotional codes Yes No 30% 26% 74% 70% E-Commerce Results Overall E-commerce scores BrandScore out of 12 Jimmy Choo (F) 9 Ralph Lauren (F) 9 Saint Laurent (F/C) 9 Versace (F/C) 9 Tory Burch (F) 8 12 also viewed…’ or ‘You may also like…’ function on their product pages, to enhance greater usability and increase in time and money spent online. They were: Jimmy Choo, Ralph Lauren, Versace, Saint Laurent and De Beers for watches and jewellery. • At check-out, 74 per cent of e-commerce enabled brands offered a discount/promotional code option. With the majority of luxury brands not very akin with discounting their items it was not an expected feature. Those which did not were: Burberry, Lanvin, Prada and De Beers. • 70 per cent of enabled brands also had an ‘Abandoned Cart’ notification for the user, i.e. a message to notify the consumer when they had tried to navigate away from the site without purchasing items in their bag. This is a basic e-commerce functionality and it was not universal across sites that did have e-commerce. • All the brand websites that offered e-commerce sent a personalised confirmation email to the consumer after purchase, but only 52 per cent of them offered a shipment tracking service. 22 I Luxhub Insights: 2014 Luxury Digital Outlook 8 4 0 Fashion Conclusion Watches & jewellery ©Getty Images E-Commerce services with wishlist/ favorites list function Fragrances & cosmetics Upon consideration of this analysis, what we must bear in mind throughout is that none of the brands offered any regional e-commerce, and that neither did those brands which we previously saw had regional or country websites in the Middle East. All e-commerce that we analysed came from the brands’ main global websites. This is most likely the case because the majority of items will be coming from their central distribution houses in the brand’s country of origin. However, we can also conclude that e-commerce does not seem to be a priority for the region. Yet, when considering what other research has told us (Luxury Brand Perceptions and Habits 2013), that 50 per cent of respondents in KSA and the UAE are now buying luxury brands online, e-commerce is a real opportunity for these brands to capitalise on. Moreover, if regional or local distribution is an issue and reason behind this absence, there is nothing to say brands cannot ship from their central distribution house as it seems to be no issue for several brands who are already shipping to the Middle East. In addition, this line of thought can also be taken when considering the problems surrounding online payment and delivery – albeit that KSA is a separate situation altogether. Therefore, it seems that e-commerce is perhaps a platform which brands globally remain indifferent to, and that without local content there is not the incentive or motivation to enhance their e-commerce channels to a market-specific level. E-Commerce Results For this section the scores on global e-commerce properties in general were quite high, a promising sign indeed for luxury digital growth and the regional market of a zero base locally and a minuscule base globally. Across the section we examined 12 e-commerce elements that the brands should have on their websites. • None of the 95 brands investigated had any form of regional e-commerce. • For the fashion category there were several leaders with the same score, they were: Jimmy Choo, Ralph Lauren, Saint Laurent and Versace with nine, followed by Tory Burch, Giuseppe Zanotti and Alfred Dunhill with a score of eight out of a possible 12. • Within the watches and jewellery category, the only brand that qualified into having a score was De Beers, as it was the sole brand to offer e-commerce on their global site, and therefore the rest of the brands in this section scored zero. With six points out of a possible 12, the result for De Beers was fair when compared to those in the fashion category, but within its product and pricing context and peerage, it was a sole example for the watches and jewellery category. • For the fragrances and cosmetics sector, it was the leading Fashion house fragrances that scored the highest with nine points. These were Jimmy Choo, Versace and Yves Saint Laurent who also offered their fragrances and cosmetics for purchase on their global websites. Aside from these, we then saw Balenciaga and Burberry score relatively highly with seven. The leading category for e-commerce was fashion, with an average score of nine, and with only one brand qualify- ing, watches and jewellery scored a seven, as did fragrances and cosmetics. Recommendation Whilst shopping in the region remains a very social activity, with local consumers usually shopping with groups of friends and family, we are seeing a continuing march by the Arab World to shop online and as part of their daily routine. Quite similarly to the websites, the more localised and luxurious the e-commerce experience can be the better. Brands should also pay much more attention to local and easy payment options, up-to-date currency conversions for specific countries, tracking, shipping and return services, as well as the packing of the product upon delivery. Local customer service is, again, very important at this stage and should always remain prevalent throughout the entire purchase process. TRENDS 23 MOBILE ©Corbis Introduction 24 I Luxhub Insights: 2014 Luxury Digital Outlook In our increasingly digital world, many brands are progressing towards enhancing their digital properties, content, and offerings in the region, albeit at a slower rate than we would argue is necessary. Mobile penetration, growth and usage in the region is leading this march, and is putting even greater demand on luxury brands to become more digital and mobile focused. It can safely be said that mobile will become the digital window into the luxury world for consumers in the Middle East in the coming years. We are systematically seeing a steady growth in not just the size of brand investments into mobile channels and platforms, but also the increasingly centralised role these platforms are playing within a brand’s overall marketing plan and media mix. The Middle East certainly has a unique position within the mobile space, with the proliferation of smart mobile devices now over 74 per cent, and over 94 per cent of users accessing the web daily (Source: ThinkwithGoogle.com Mobile Planet KSA and UAE). Therefore, for the mobile section we looked at the brands’ websites from a mobile perspective in terms of responsiveness and user experience, the ability for m-commerce, applications, and what types of devices were able to access them. Optimisation and Responsive Design • We saw a slight majority of global sites were optimised for mobile viewing at 54 per cent, which showed some steps taken towards the mobile frontier. • After this, 33 per cent of the sites were purely desktop versions of the original global website . • 7 per cent of the brands had responsive designs and this included brands such as: Chanel, Fendi, Miu Miu and Tory Burch for fashion. However, those sites which we saw were Flash and not HTML in the previous website section were not able to be viewed via mobile at all. Another reason why Flash websites should be avoided at all costs even if there is a perceived benefit to aesthetic value. These were: Givenchy, Tom Ford, Korloff and Guerlain. Subsequently, it was only Chanel to offer a responsive design and the option to view the content in Arabic, although only for its fragrance and cosmetics lines. M-Commerce Although growing of a low base, e-commerce is increasing in the region and it is hopeful that m-commerce will follow in step. None of the brands in our research had any form of regional m-commerce and the only brand who offered global TRENDS 25 Type of Mobile sites Mobile Optimized Desktop Version Responsive Broken/Flash m-commerce was Burberry, a strong digital brand throughout this research. However, as with their e-commerce site, they did not offer shipping to the Middle East, even though prices were shown in Emirati dirhams and products could be added to your cart. Applications With Andriod phones dominating the region’s mobile and smartphone market, we firstly looked at Android applications. • A minuscule 4 per cent of brands researched had a native Android application, thus making the outcome of our study in this area unpromising. Only Dolce & Gabbana for the fashion brands, Audemars Piguet, Jaeger LeCoultre and Van Cleef & Arpels, Mont Blanc for watches and jewellery, and Lancôme for fragrances and cosmetics had Android applications. 26 I Luxhub Insights: 2014 Luxury Digital Outlook It is interesting to see within this mobile application section that the watch and fragrance category had the largest propensity of brands feature, while elsewhere in the research they have fallen well behind in several major sections and competencies. In terms of content, none of these applications were in Arabic. Consequently, we then analysed iOS products with Apple’s iPad and iPhone. • 22 per cent of brands did have an iPad app, and 23 per cent had an application available for iPhone. • While there was as nascent level of applications across all platforms, none of the brands had any regional or localised application. Further to this, we looked at what devices were able to view these applications. • While the majority of the brands did not have an application, we saw that iOS dominated with 28 per cent of the share, only 5 per cent of the applications were optimised for both iOS and Android, and just 3 per cent for Android only. With Androids leading the region’s smartphone and mobile market, it is interesting that these global luxury brands have continued to stick with the iOS platform for their applications, which is most likely the product of choice in their brand home country and the Western market. There is a perception in the region that iOS attracts a more premium consumer, however pure penetration figures for Android in the Middle East does not support this. The propensity for users in the region to have multiple handsets also suggests that even regional high-net-worth consumers are very likely to be on Android. While there may be an association of ‘coolness’ associated with iOS, the business rationale for not being on Android is questionable. Conclusion Mobile and tablet usage in the Middle East is growing at a rapid rate. We are seeing a proliferation of tablet devices and the eclipse of desktop by mobile for online content consumption. We can attribute this to the expanding and maturing mobile services from ISPs, greater accessibility to smart devices, and a young and growing tech-savvy population in the region. An interesting trend that we are witnessing in the region is the growth of m-commerce. As e-commerce platforms hopefully continue to grow in localisation, presence and sophistication within the region, m-commerce is surely set to expand in step. While we can see that it is still very much in its infancy regionally, we foresee that m-commerce will serve as a catalyst to create more sophisticated mobile requirements for brands across owned digital properties. However, little at the moment seems to Mobile applications’ operating systems 7% 33% 6% Neither IOS IOS and Android Android Only 54% 3% 5% 28% 64% Mobile results Overall mobile scores BrandScore out of 12 Dolce & Gabbana (F) 6 Chanel (F/C) 6 Tory Burch (F) 6 Cartier (W/J) 6 Lancôme (F/C) 6 10 have been done by luxury brands to understand the Middle East’s mobile-user in terms of brand usage and consumption of mobile content. Yet, with Burberry leading the way in this category, in design and enhanced user experience, it is evident that a few principal international players are realising the importance of mobile and tablet platforms to enhance their overall digital and integrated offering. The leading category in this section was, in fact, watches and jewellery with an average score of three. Fashion, as well as fragrances and cosmetics both averagely scored two to fall just below. periences that are specific to the region’s consumer. Arab users will continue to own and use more than one device, with tablet devices set to lead this change. Luxury brands, therefore, must take advantage of this movement and pay increasing attention as to what devices the Arab world are using, as well as when and how they are using them too. Responsive UX and design solutions will be more pivotal than ever to ensure that a luxury brand’s content and messages reach their relevant mobile audience. A significant movement to responsive design thinking is the next evolution of this, and will become an absolute necessity for luxury brands to ensure they are mobile and tablet ready. Poor web experiences, as we have seen for luxury brands in the region on mobile, will be punished by users as a larger percentage of browsing, and eventually shopping, happens on mobile and tablet devices. Recommendation Over the next year or so we will see continued and escalated demand for all types of connected content and experiences via mobile and tablet platforms. In turn, this will create a greater demand for highly customised content and mobile-led ex- 8 4 0 Fashion Watches & jewellery Fragrances & cosmetics TRENDS 27 SOCIAL MEDIA ©Getty Images Introduction 28 I Luxhub Insights: 2014 Luxury Digital Outlook Luxury and social media channels have never been comfortable bedfellows. But in a rapidly evolving social landscape, brands should be targeting their audience to increase earned and shared loyalty, without losing their brand integrity to massification. With word-of-mouth being said to be the most popular source of trustworthy information by the region’s local consumers (Nielson 2013), social media must play an integral and inevitable role in this engagement cycle. In recent years, the concept and ethos of luxury has dramatically changed, and we have witnessed a shift in media and brand strategy to embrace the diversification of media touch points. As a more advanced emerging market, the Middle East has been at the forefront of these changes, with local consumers having buying power, the time and the hunger for copious product consumption. In terms of media, this approach to consumption has also filtered down into the region’s digital space, indeed because of its inherent accessibility and sociability – a very important part of the region’s culture. With time spent online among the highest in the world, brands are looking to the social digital sphere to target this audience. However, it’s still very much in its early stages. Facebook • Predominantly all of the brands we looked at had official global Facebook pages at 97 per cent. Those which did not were Celine for the fashion category and Clive Christian for fragrances and cosmetics. • We then looked at all the brands with global Facebook pages that had either localised posts. Across all categories the brands scored a zero. • Out of our 95 brands only 4 per cent had regionally specific Facebook pages, which all came from the fragrance and cosmetics category. These were: Clarins, Clinique, Estée Lauder, Guerlain and Lancôme, who were also the only brands that had country specific websites, and posted in English and Arabic. • None of the brands examined had a country specific Facebook page for the region. • The fan-base size of Facebook pages varied greatly: • 4 per cent of them had over 10 million fans • 5 per cent had between 5 and 10 million • 18 per cent had between 1 and 5 million • 25 per cent had between 250,000 and one million fans • Burberry with over 15 million fans led the way, followed by Louis Vuitton with over 14 million, Dior with over 12 milTRENDS 29 luxury brands with regional facebook pages Yes No 25% global facebook pages with over 10 million fans 4% 4% Yes No 96% 75% luxury brands with global twitter handles Yes No 96% luxury brands with regional twitter handles Yes No 24% 30% 26% 70% 76% Results ©Getty Images Brand Clarins (F/C) Burberry (F) Lancôme (F/C) Louis Vuitton (F) La Prairie (F/C) lion, Gucci with more than 11 million and Chanel with over 9 million, were the fashion brands with the highest number of fans. • Tiffany & Co. was the leader for watches and jewellery with more than 4 million, followed by Cartier and Rolex, both with just over one million Facebook fans. • Clinique had the highest amount of fans with over 6 million for fragrances and cosmetics, followed by Lancôme with more than 5 million and Clarins with more than 1 million. • The rest of the brands fell much lower on the scale with less than 50 thousand fans in most cases. It is interesting to see here, that the brands which had Arabic posts and regional Facebook pages also had the largest amount of fans in their category. • Chanel, Louis Vuitton, Longines, Cla30 I Luxhub Insights: 2014 Luxury Digital Outlook rins, Estée Lauder, Lancôme and Tom Ford were the only brands which we saw had used paid media on Facebook. • Lancôme, Clarins and Clinque were also the only brands to have had run Facebook competitions for the fragrance and cosmetics category. • Piaget and Longines were the only two brands for watches and jewellery to have had Facebook competitions. • Once again within the fashion category it was Chanel, Louis Vuitton and Tom Ford to have used Facebook applications on their pages. • Facebook applications were used by Harry Winston, Longines and Piaget for Watches and Jewellery. • Clarins, Clinique, Estée Lauder and Lancôme for fragrances and cosmetics also used Facebook applications. Another issue, which arises from the lack of local Facebook presence, is brand rankings when it comes to search within the site. Facebook search is now carefully monitored by geo-locators, so if a brand does not have a local page it will not appear in a Facebook search, only the top 20 per cent of similar local pages will appear. Therefore, this also means that any suggested posts or ads, even from a brand’s global page, will not appear in the search because they do not have a local presence in the region. Conclusively, without a local page, brands are simply not reaching all of their possible consumers outside of their central hub market. Even so, the whole ethos of social media is sharing – sharing content, sharing ideas, sharing images and thoughts with friends and family – so, if all the content is in English or there is little or no content relating to the Middle East’s consumers’ daily lives, the potential benefit of engaging a local audience is minimised. Twitter • Of all the brands we examined, 76 per cent had current global twitter accounts • Only a very small proportion at 3 per cent had regional Twitter handles, which were: Burberry and Clarins. • Burberry, Chanel and Dior, with over 2 million, had the largest amount of followers, trailed by Dolce & Gabanna, Marc Jacobs, Louis Vuitton and Saint Laurent with just over 1 million. • Burberry was, again, the only brand to have owned hashtags. Consequently, out of the aforementioned brands with regional handles, we looked at the amount of Arabic posts on their feed over a six-month period. • We saw that Chanel had the highest 3% 97% Overall social media scores Score out of 40 30 22 19 10 10 amount of Arabic posts across all of the brands that were part of our research, with over 17,000. Chanel was then followed by Rolex, Dior, Giuseppe Zanotti, Burberry and Prada. • Within the Fashion category the demographic split of followers was fairly even with 52 per cent being female and 48 per cent being male. • The split was reversed for watches and jewellery, with males comprising 53 per cent of the share and females at 47 per cent. • For beauty and fragrances the split was unsurprisingly female dominated at 65 per cent We then examined what language followers were mentioning the brands in, by looking at the most recent 200 mentions. • Out of that number, 74 per cent were not in English. 20 15 10 5 0 Fashion Watches & jewellery Fragrances & cosmetics • When we filtered this down and looked at the Arabic mentions, of that non-English percentage, a large 58 per cent were in Arabic. With this insight, we then decided to look at the previous 300 mentions before the last 200. • When combined, a staggering 94 per cent were not in English, and 22 per cent were in Arabic. • Consequently, looking back at the last 1,000 twitter mentions, 15 per cent were in English and of the remaining 85 per cent which were not in English, 14 per cent of those were in Arabic. • From the last 10,000 mentions altogether, 5 per cent were in Arabic. • Finally, in all historic tweets mentioning researched brands on Twitter, Arabic comprised 12.5 per cent of the overall share. TRENDS 31 the other major social media channels in terms of users, we saw that no brands that we looked at had any regional presence on Google+. ©arabianEye.com Conclusion Instagram and Pinterest Although Instagram is very much an upand-coming platform for luxury brands, no brands that were part of our research had any regional account specific to the Middle East. This was also true for Pinterest across the board. Yet, with Instagram generating 15 times the level of luxury brand engagement as Facebook in the region, despite having only onetenth Facebook’s reach, it is a platform of increasing importance. Interestingly for the regional market, we have witnessed Instagram beginning to take a share away from traditional media within a brand’s media spend. We have also seen that many local consumers like to stay updated on luxury brands via Instagram, with the majority of them following the brands themselves, as well as the fashion bloggers, leaders, icons and designers that surround them. Yet, with no 32 I Luxhub Insights: 2014 Luxury Digital Outlook Instagram regional presence and the proliferation of Arabic on mobile and search, luxury brands are missing out on a significant engagement opportunity throughout the Middle East. Pinterest however, while it is a suitable platform to generate awareness, does not have the ability to engage and earn followers that Instagram, Facebook or Twitter has, nor does it have the same ability to control how content is shared, and in general its proliferation as a channel is not as high as these other social platforms. YouTube and Google+ Online video has become an increasingly central component to the digital media scene over the past decade, with almost all luxury brands having global YouTube channels. With television commercial clutter increasing, luxury brands are now using online video to continue the story online. Moreover, online video has the ability to truly tell the story of a brand more than print or written content. Over the last few years we have also witnessed the rising popularity of live streaming fashion shows, as well as recording the shows to later display on their YouTube channels for all to view. With nearly all the brands researched having global YouTube channels, those who had Arabic content on these were Jaeger Le Coultre and Piaget. Similar to our findings on Facebook the only brands that had regionally specific YouTube Channels were Clarins, Clinique and Lancôme, and were the only brands, when compared to Jaeger Le Coultre and Piaget, to update their channel on a weekly basis. There was no localised content on any global or regional YouTube channel that was analysed. With Google + still very much behind No doubt, consumers today want to be engaged. With the younger generation having more buying influence and fearlessness to try new forms of communication, brands must not forgo social channels. The key focus, therefore, must be to build brand desire for both current and new consumers, without becoming too accessible to the mainstream. By sticking to strict content and strategy rules, the online consumer experience and brand perception can be exactly as it is in-store or at VIP events – exclusive and personal. In doing so, the brand also becomes more engaged with the consumer and thus more meaningful. So, where a media strategy was once linear (brand-media-consumer) in the digital world and especially with social media, it can become circular (brand discovery-engagement-immersion-validation) a total 360-degree approach, and still remain as elusively powerful. In another proprietary Havas research study we saw that over 90 per cent of luxury regional consumers used a variety of social media sites each day (Luxury Perceptions and Habits in KSA and the UAE 2013), and with the Middle East having over 90 million unique internet users (Source: InternetWebStats.com), it seems unjustifiable that brands are not there to engage with them. From the luxury consumers in our Luxury Perceptions research, 58 per cent of respondents followed luxury brands to keep up with trends, fashion and would like to see more local content on social sites. We could also infer that this percentage would be higher if more brands were present on social media to be followed at a local level. Results Across all of the social media platforms we looked at a very large number of digital competencies in this field. We saw Clarins, Burberry and Lancôme steaming ahead of the pack, particularly for localisation. Comparatively, the other brands across all categories scored very low within this platform. For Facebook, Lancôme, Clinique and Guerlain were the firm leaders for fragrances and cosmetics in terms of regionalisation, scoring three out the possible four localised elements. However, in terms of overall Facebook usage the Fashion brands were ahead with Louis Vuitton getting a score of six out of 10, followed by Tom Ford with a score of five and Chanel with four. All other brands’ scores were extremely low; particularly for the fashion-fragrance brands, as they all only had one Facebook page to cover all their various lines and categories. Watches and fragrances also scored very poorly, with only Piaget gaining a noticeable six points. Across the other social channels, aside from YouTube, all brands scored a zero for regional social media competencies. Jaeger Le Coultre, Piaget, Clarins, Clinique and Lancôme all scored four points out of a possible 10 for YouTube. Overall, the results for the social media section were quite mixed; particularly due to the fact the major fashion houses had only one page or account to cover all of their category lines. By looking at the content on the pages – which was not a part of this report – we saw that the majority was always about entry-level products from the Fragrances and Cosmetics category. Recommendation Being social and socialising is an integral part of the region’s culture and with mobile and internet platforms taking this into the digital space, social media must play a pivotal role with a brand’s digital properties and media mix. Content is at the heart of social sharing, whether it is written, a video or an image, and therefore it must be contextually relevant to the region’s consumer. As we see Arabic becoming more digitally spoken language, brands must continue to infiltrate this knowledge into all their social channels, from owned hashtags, to applications, region-specific pages and localised content. TRENDS 33 SEARCH AND EMAIL Introduction Luxury brands must approach their digital presence as an integrated offering. Therefore, while websites, mobile, ecommerce and social media dominate as digital touchpoints, we need to ensure that inbound channels to the brand’s properties are also developed and catered to a local audience. Search and email marketing boost and drive traffic to a brands digital platforms, content, and overall business in an extremely competitive market. Search is the first battlefield for a brand in digital, and can deliver the healthiest ROI through organic and paid engagement in both the very short term and long term. With almost 80 per cent of the local population using search to find information and content daily on both their mobiles and PCs (Source: ThinkWithGoogle.com: Mobile Planet), search plays an integral role in how consumers find, discover, and engage with a brand. 34 I Luxhub Insights: 2014 Luxury Digital Outlook Paid Search Search is often overlooked within the context of digital competency, giving way to mobile and social media being more visible platforms. Yet, with competition higher than ever in the digital world, it is something extremely necessary, especially for those brands with a regional presence, or those trying to establish one. With more than 20 million Google Searches in Arabic each day (Source: ThinkWithGoogle.com), Arabic content and search optimisation is an increasingly important activity across a brand’s digital properties. • A substantial 23 per cent of brands that we looked at were undertaking SEM in the region. These were Burberry, Chanel, Coach, Dior, Gucci, Oscar de la Renta and Ralph Lauren for fashion; Audemar’s Piguet, Cartier, Chanel Jewellery, Dior, Jaeger LeCoultre, Omega, Patek Philippe, Piaget and Tiffany & Co. for watches and jewellery; and Burberry, Cartier, Chanel Beauty, Dior, Estée Lauder and Lancôme for fragrances and cosmetics. It is important to point out that Burberry, Chanel and Dior, who appeared in each of our three categories, were actively targeting each of those categories via SEM. Email After looking at the newsletter availability and functionality on the brands’ websites, we then probed deeper into the newsletters and other email communication platforms (such as email direct marketing), to discover how brands were communicating with their audiences. • The greatest percentage of brands, were not sending out any newsletters at all. • The most active brands were commuTRENDS 35 Brands undermarketing search engine marketing (SEM) SEM No Sent newsletters frequency 5+ a month 23% 3-5 a month 10% 1-2 a month 11% Less than 1 a month 77% 8% 7% 68% 0 newsletter sent international newsletters VS Promotional Newsletters 64% Informational and promotional newsletter SEARCH Results nicating one to two times per month via email. For the brands that were sending newsletters, we investigated the features and the content. • Almost 80 per cent of the newsletters had a call to action defined by calls to visit the website, or click though for further content and information. • With the calls to action mostly being a link to a brands’ website, of that number 96 per cent took users to a relevant content page. • 10 per cent of newsletters from brands contained Arabic language content. • 28 per cent had social media links to their global social media channels: We then compared the newsletters con36 I Luxhub Insights: 2014 Luxury Digital Outlook 4 2 0 tent as to whether it was information or promotion based. • Over 60 per cent of newsletters featured both information and a promotion with an even split between the two. Conclusion Upon our analysis in this sections, a remarkably low number of luxury brands were engaged in paid search activities within the Middle East. Given this lack of competition, the development of even a small SEM plan will allow for ownership of generic keywords on search across the category. This shortfall is most likely a symptom of the lack of regionally relevant website and social properties in the Middle East, in terms of language and content; and the complete lack of any regional website presence or e-commerce facility of many brands. In terms of email marketing, luxury brands’ approach to content was also poor. Although, some brands seem to be leading the way with Arabic language content and relevant calls to action, email marketing was generally simple in its approach. With poor content, users will look elsewhere for engaging information and visuals which will ultimately lead to brand-consumer disassociation and apathy, something that we are sure that luxury brands do not want to happen. Fashion Watches & jewellery 18% Promotional newsletter 19% EMAIL 6 Score out of 6 6 6 6 6 6 ©Corbis Brand Jimmy Choo (F) Gucci (F) Miu Miu (F) Dolce & Gabbana (F) Chanel (F/C) Overall SEARCH scores Informational newsletter Fragrances & cosmetics Results Across Search we had six possible elements that brands could score in. Overall, the results were quite high, with the majority of all brands covered scoring five points. Therefore it was the major fashion houses with the highest average score in this section with four, and watches jewellery and fragrances and cosmetics both with two. If the content of these e-newsletters were taken into account, we would have seen that much of the content covers all of their various lines, particularly for fragrances and beauty. Recommendation Search activity must be done by any Brand Louis Vuitton (F) Ralph Lauren (F) Dolce & Gabanna (F) Burberry (F) Gucci (F) Overall EMAIL scores Score out of 15 12 10 9 8 8 brand, particularly for those which are not using paid media. Platforms which continue to reuse generic global content will be scored poorly by both the search providers and the consumer in mind. As with mobile and social media, it is clear that with search there is a great opportunity for luxury brands to very quickly leapfrog their competition and achieve a high level of short and medium-term success in an uncluttered search environment. Email should also follow suit, with relevant and targeted content to the end luxury consumer. There should be a good mix of promotion and information-based content, with intui- 15 10 5 0 Fashion Watches & jewellery Fragrances & cosmetics tive calls to action, a good media mix of video and visual imagery, as well as keeping in line with their website and social media branding and voice. There is a large opportunity in email-marketing in terms of segmentation and contextual relevancy to the Middle Eastern market. The curation and creation of luxury and lifestyle content within the email newsletter approach is also missing, with most content being around products and brand communication. As with web, mobile, paid search, and social media, our data shows a relatively low competency level for luxury brands in the region, with the exception of a few leaders. TRENDS 37 WATCHES & JEWELLERY BrandScore Audemar’s Piguet 24 Baume et Mercier 21 Blancpain17 Bulgari19 Cartier26 Chanel Jewelery 24 Chaumet21 Chopard18 Corum14 THE RESULTS The final part of our LuxHub research was to provide an overall score, taking into account the individual scores in each core section. Each brand was given one point for each of the base digital competencies that are considered as the universal elements that all luxury brands’ digital properties should include. Throughout this scoring system our focus remained on those elements which most greatly affected a brand’s regional and local presence and content, and within that, the digital sophistications which were used. As we have seen during this research, regional presence and content is almost non-existent for many brands. Therefore, when we consider that the brands were scored out of a total 117 points, the stark reality of this lack of local and regional content affected the overall scores considerably. Moreover, it is also clear as to the small importance given to digital properties and platforms by these brands and global category leaders, as well as how they are globally slipping behind in the sophistication of these properties – when ultimately they should be at the forefront of innovative design, innovation and technology. It is interesting to see from the above that it is the fashion brands dominating the top scores. However, as we know, because they have lines across all the categories they are able to spread themselves as a brand across all platforms simultaneously. Although the subject of the content that we researched was not a governing factor in this research, it may well show that the majority will be mostly covering their fragrance and cosmetics lines, which we generally comprehend to be more suitable for digital because of their mass nature and entry-level luxury prices. This point is particularly interesting and for the next LuxHub Luxury Digital Outlook is something that we will look into further. Dior30 Dolce & Gabanna 35 Elie Saab 32 Ermenegildo Zegna 21 Fendi25 Givenchy21 Gucci33 Guiseppe Zannoti 21 Hermes21 Hugo Boss 23 Jimmy Choo 29 Lanvin35 Louis Vuitton 34 Marc Jacobs 32 Miu Miu 26 Nina Ricci 17 Oscar De La Renta 21 Prada22 Ralph Lauren 38 Roberto Cavalli 26 Tods22 Tom Ford 16 Tory Burch 36 Valentino27 Versace27 YSL33 38 I Luxhub Insights: 2014 Luxury Digital Outlook Neil Lane 20 Omega21 Patek Philippe 12 Piaget40 Raymond Weil 21 Rolex30 Tiffany & Co. 20 Van Cleef & Arpels 22 Zenith Watches 8 Creed18 Dior30 Dolce & Gabanna 24 Estée Lauder 21 Fendi25 Givenchy21 Guerlain19 Hermes21 Jimmy Choo 27 Cavalli Fragrances 16 La Prairie 20 Lancôme25 Marc Jacobs 23 MontBlanc24 Nina Ricci 18 Paco Rabanne 19 Prada24 Tom Ford 14 Valentino23 Van Cleef & Aprels 23 Versace27 YSL32 Fragrances & Cosmetics BrandScore Armani40 Balenciaga30 Boss20 Bottega Veneta 24 Burberry40 Cartier13 Chanel26 Chloe27 Clarins41 Clinique22 Clive Christian 10 OVERALL SCORES Overall SCORES ©Corbis FASHIONScore Alexander McQueen 31 Alfred Dunhill 26 Armani36 Balenciaga29 Burberry48 Calvin Klein 21 Carolina Herrera 19 Celine13 Chanel33 Chloe26 Christian Louboutin 18 Coach25 Damiani20 De Beers 23 Dior20 Graff16 Harry Winston 26 Hublot18 Jaeger-LeCoultre26 Korloff21 Longines19 110 100 90 80 70 60 50 40 30 20 10 0 Fashion Watches & jewellery Fragrances & cosmetics TRENDS 39 ©Getty Images Top Five Scoring Brands Total Digital Competency (117) Burberry (F) 48 Clarins (F/C) 41 Piaget (W/J) 40 Armani (F) 40 Ralph Lauren (F) 38 CONCLUSION Luxury and the Digital Space Luxury brands can no longer ignore the power of the digital sphere and must certainly harness its reach and integral importance to secure and enhance their brands’ future. As we have seen, many brands are leading the pack and trying new digital platforms and advancements to improve their properties, and yet for the majority it still remains a daunting prospect. Nevertheless, while luxury brands may have fears about the digital world, it has many opportunities. It allows for instant and relevant engagement 40 I Luxhub Insights: 2014 Luxury Digital Outlook that is audible, visual and interactive, while remaining aspirational. It also offers brands platforms on which they can create original content that is specific and targeted for a market, a space in which to develop e/m-commerce and where everything can be easily and affordably changed – per product range, season and region. For the ever-changing habits and developing desires of the luxury consumer, particularly here in the region, this can no doubt be the most effective way to generate and sustain relevant connection. This is, of course, not to say that luxury brands should forget traditional advertising mediums and other forms of engagement. An integrated, non-linear strategic approach is consistently the best way for deeper brand enrichment, and to keep up with their consumers’ rapidly developing buying, research and media behaviours which are spanning all platforms simultaneously. Across and throughout everything that luxury brands do and produce in the digital space, it is imperative for them to remember their end consumer and their context, to ensure that that it is relevant to the consumer and also that their brand message remains consistent and aspirational. It is important to remember that it is always the brand that is the luxury, and not always the inherent product itself. All too often enough for many luxury brands, doing something worthwhile on digital means building an ‘immersive experience’ through augmented reality, or ‘creating engagement’ through a social-media voting activity. Such examples as these are not appropriate for a desired luxury consumer or for a luxury brand to hold on to its premium positioning. When digitally communicating luxury propositions, brands should only communicate relevant value to their consumers that deliver strong brand values and don’t go too far as to become diluted or damaging. Indeed this effort is slowed by brands within the luxury category globally, who continue to generate generic content, deploy Flash websites, which also lack e-commerce, fail to provide segmented and targeted email programmes, and in many cases are without any social platform. What remains to be true is that many luxury brands continue to see the Middle East as an emerging market, and therefore do not see it as an important place to consolidate their efforts. Content is King This is exasperated by a desire for central governance and control of their brands communication and content, in fear of deviation from carefully planned brand strategy and tone of voice. However, as brands become instinctively more global and as consumers’ tastes continue to evolve, demand for relevant content will undoubtedly grow and this control will TRENDS 41 APPENDIX ABOUT LUXHUB LuxHub began in 2012 and has since set out to become the regional voice for luxury intelligence and media insight. From the latest in luxury and media news to insightful interviews and hot topics and trends, our aim is to provide the region with locally produced, original content that specially has the Middle Eastern luxury industry as its focus. At Havas we pride ourselves on being at the forefront of trends, developments and communications that affect and in- fluence the luxury industry as a whole and its consumers. So, for us, LuxHub is a digital representation of our passion to achieve this and a space on which we can express and share our expertise, our thoughts and our creativity for both our clients and the wider luxury and media communities. Updated on a weekly basis and with a monthly newsletter from the Editor, we hope that LuxHub can generate change and ignite passion for local content and thought leadership in the region, and will ultimately deepen digital, luxury content engagement with the region’s users – which is at the heart of this first and annual Luxury Digital Outlook. The Luxhub Insights 2015 Luxury Digital Outlook will start in Q4 of this year. It will not only begin to compare 2014 results against this report, but also look further into the content itself – what is says, how it is written and how far it goes into engaging the region’s local consumer. services. Our commitment to a digitally integrated operating model is represented by Havas Digital Middle East, which operates across both media and creative, and reflects Havas’ continued commitment to ‘digital at the core model.’ As a result of our simple corporate structure, we ensure our clients’ needs are met by creating a unified culture of teams that can focus on delivering client value rather than reporting into large brand hierarchies. By placing technology and data at the heart of what we do, we are ready for being “change agents” for our clients. ABOUT HAVAS MEDIA MIDDLE EAST no doubt have to loosen. In terms of local content, advertising and product purchasing many brands still do not take into account the cultural differences and traditions compared to the West. Moreover, they continue to believe that because English is spoken so widely, they do not need to have Arabic content. But consumers are demanding it, and we can see that through more time spent online, product research, social media and the rise of e-commerce that the priority and desire is here. From another proprietary Havas study, (Luxury Brand Perceptions and Habits 2013) we discovered that a resolute 84 per cent of respondents would prefer for global brands to use local media content to carry their global brand message and image to the region. Therefore, we must have more Arabic content, media and sources for luxury brands to fully engage the luxury consumer and, advance the luxury market in the Middle East to the next level. The Arab world is an increasingly hungry consumer of content, however, as we have 42 I Luxhub Insights: 2014 Luxury Digital Outlook seen, luxury brands do not seem to be producing much that is regionally specific, and therefore leaving globally generic content continuing to consume the digital space. From websites where we saw poor regional presence and minimal localised content, to many brands failing to have even the most basic of website functionalities, it is a stark reality to face. E-commerce will undoubtedly increase, but is, however, hindered in the region by several payment and delivery issues. Social media, again, will play a more important role for luxury clients, but until the brands begin to engage in Arabic, progress will surely be slow. The same issue arose across all the sections that were analysed, yet it was a few leading brands in mobile that really showed the most promise for the local consumer and regional content. Perhaps mobile and tablet platforms will show the fastest increase in regional content, commerce and technological advancement for luxury brands, maybe with brands altogether passing over webbased content and commerce. Although this is purely conjecture, what we must understand throughout this paper is that luxury brands are on a continuous journey towards enhancing their digital properties, albeit slowly in the region, and at the heart of this is the realisation that the production of local content and relevant value is pivotal. Content is key to driving creative and meaningful advertising, and should always be seen by luxury brands within a context – specifically that of the Arab world. To harness and control this, brands must contextualise their global content and media, to make it relevant and engaging for the local regional consumer, to maintain a brand’s, a consumer’s and the media’s environment identities in this ever-growing mass world. Specifically for the Middle East, brands need to communicate with modernity and cultural thoughtfulness, to develop original content and contextually driven advertising that isn’t globally generic to ultimately ensure the growth of the luxury industry and the growth of the region altogether. Havas Media Middle East is living a great momentum. Our mission is to ‘Change Faster’ for our clients and our industry, and over the past several years many changes have happened, both in terms of our company structure, our ideologies and methods, but also in the clients we handle. We are a hub of international talent which plays a pivotal role not only within the region but also with our extensive Havas Media Group global network – the world’s fastest-growing media group, operating in over 126 markets around the world. As a company, our unique, simple and agile structure is created to promote integration, digital expertise and fluency at the core of all our operations and ACCREDITATIONS Strategy and Development Piero Poli, General Manager – Havas Digital Middle East Houda Tohme, Deputy General Manager – Havas Media UAE Darius LaBelle, Client Services Director – Havas Digital UAE Content and Written Analysis Amelia Priday, Marketing Executive – Havas Media Middle East Creative and Production Ciaran Bonass, Creative Director – Havas Digital UAE Aldar Kurdi, Interactive Senior Art Director – Havas Digital UAE TRENDS 43 LUXHUB INSIGHTS 2014 LUXURY DIGITAL OUTLOOK