Report: One-Third Of 2018 Luxury Ad Spend Earmarked For Digital

Although some luxury brands have been slower to adapt to digital advertising than many brands, the luxury category is steadily increasing its investment in the medium, according to a new report from Zenith. 

This year, 33% of luxury brand advertising will be placed in digital channels -- up from 30% in 2017, according to Zenith's Luxury Advertising Expenditure Forecast 2018.

This digital spend will be led by hospitality brands, which will devote 50% of their respective media budgets to digital advertising in 2018, followed by luxury automobile brands (39%) watches & jewelry brands (28%), fragrances & beauty (27%) and fashion & accessories (13%). 

“Luxury brands face unique challenges online, such as the need to maintain exclusive brand values while communicating with potential customers at scale," stated Jonathan Barnard, head of forecasting, Zenith. "By using personalized digital communications and high-quality e-commerce experiences, luxury brands can generate new sales while preserving their exclusive appeal.” 



Notably, what Zenith describes as "high luxury brands," such as watches and fashion, tend to support their most exclusive and iconic images by advertising in prestigious media with limited reach. As a result, these brands spent 57% of their budgets on magazine advertising in 2017. By comparison, more mass luxury categories, such as automotive, targeted a wider range of consumers by allocating 41% of their budgets on television in 2017, more than any other medium. 

Upscale advertisers will help digital luxury advertising grow by $886 million between 2017 and 2019. 

Meanwhile television advertising will grow by $27 million, cinema advertising will grow by $21 million, and radio advertising will grow by $2 million. And despite the support by higher-end affluent brands, luxury advertising in newspapers, magazines and outdoor advertising will shrink by $305 million in total. 

Zenith expects total luxury ad spend to rise 2.4% in 2018 and 2.8% in 2019. That’s below the growth rate of advertising in general, forecast across all categories to reach 4.2% in 2018 and 3.6% in 2019. 

The largest market for luxury advertising is the U.S., by some distance, followed by China. Luxury brands spent $5.2 billion in advertising in the U.S. in 2017, and $2.1 billion in China. These two markets accounted for 61% of luxury ad spend across the 23 markets included in the luxury report (Australia, Brazil, China, Colombia, France, Germany, Hong Kong, Italy, Japan, Malaysia, MENA, Mexico, the Netherlands, Peru, Russia, Singapore, South Africa, South Korea, Spain, Switzerland, Taiwan, United Kingdom and the U.S.).




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