I’m Alexander Skibinskiy. I’m 27 years old entrepreneur, owner of ALLDGT a digital marketing agency and I proud myself being a member of the London YBC (Young Business Club).
I started doing marketing at the age of 15 and achieved my first success at the age of 18 when I started working with Google Adsense and managing a team of five people. We all worked together to promote an online magazine with more than 2 million views per month.
At this moment, I and my team are engaged in consulting and implementing omnichannel digital marketing strategies to ensure profitable business growth and a positive return on advertising spend (ROAS).
I decided to share my thoughts regarding advertising during the crisis and I will answer the question I’m frequently asked by our clientele.
Is it worth investing in digital marketing for luxury brands now and how fast you will get results?
If you have financial possibilities, my answer is YES. However, everyone should understand that even in good times, miracles happen rarely – 90% of cases many years of hard work and continues investing in your marketing infrastructure.
Let’s take a look at the images below. They are demonstrating a 4 years of marketing progress and brand development in the luxury segment. At the same time, please pay attention to the ROAS indicator. We started promoting the brand in the summer of 2016 and our first 3 months were at the break-even point.
However, by the end of 2016, the situation had improved, and we reached a positive level. Since traditional marketing tools do not provide such fast data and understanding of how to properly invest in marketing, this motivated us to invest more.
We see good growth in 2017:
During 2018-2019, there is also a business growth with a very positive ROAS.
Undoubtedly, ROAS depends on many factors, especially the cost of the product or service. And of course how many years you are continuously advertising online. There are marketing campaigns where our ROAS reaches 171. For every $1 invested in advertising, we earn $171. Let’s look at the example in the picture below:
If we compare advertising prices during the quarantine period, they felt by 20-50% depending on the niche, which is seen from the figures above.
In other words, now are good times for building your marketing infrastructure for years to come. Everyone is sitting at home, so definitely you are able to catch and kept a big part of your audience, with less money. When the situation backs to normal, you will be able to sell efficiently and grow your ROAS faster. Moreover, you will be a few steps ahead, leaving your competitors behind, if this is important to you.
Retail sales are at zero for everyone. The only way to survive is online sales. Even now we see a positive result coming from Ecommerce. Although I thought they would fall in the luxury segment as well. I consider this as a positive outcome of consistent investing during the past years in digital marketing.
I don’t promise a miracle to anyone, but if the business is ready to follow the investment plan in building marketing infrastructure, then the result will come even in difficult times.
Sometimes, magic happens, and you can start with incredible results. For any marketer, this is an occasion to boast. For instance, when you set up a Google Campaign for Phone calls for a B2B luxury manufacturer, the client gets 20 calls and 3 of them converts into customers with a total value of £60,000 in just 7 days. If we calculate the ROAS for this example, it will be 236. That is, for every pound invested in advertising, we get £236 of profit.
Definitely there are situations when you must be stubborn and do thousands of experiments to achieve positive growth. The more you experiment, the more data you get. The more information you have, the better you understand where, how, and what strategy to invest in. The image below demonstrates a 1525 advertising tests done to figure out what strategy and creative brings higher ROAS.
Which one will work better: Selling Luxury Retail vs Selling Luxury Online
As a marketer, it is always a pleasure to outperform retail sales, but my task also involves increasing retail sales through digital marketing. And make retail and eCommerce to work together like a charm. When you invest in marketing infrastructure, you also invest in retail development. It means that online strategies will always support retail sales.
I see many examples where customers are buying after seeing consistently our marketing campaigns for years or two in a row. We all do this, we see ads for a long time and then after a year or two we decided to buy. Actually 40-60% o sales in a high-end niche are coming from marketing campaigns that follow the clientele during a long period of time. And if they don’t see your advertising, they may forget about the company and the product.
That is why ads should never pause your marketing campaigns. You should always make yourself known by using all the marketing channels where your clients are spending their time.
How should we perceive marketing digital marketing for luxury brands
There is no doubt, a beautiful and amazing advertising is cool. But we should look beneath the surface. Marketing is primarily a huge amount of data that needs to be processed and analyzed. Data is your most valuable marketing asset.
What should you pay attention to when investing in marketing in digital marketing when selling luxury goods
I will present some examples of data relevant for different types of business. There are hundreds of metrics or key performance indicators, but these are the most important ones:
PPC – Pay Per Click
You can reduce the costs on attracting customers by optimizing the cost per click. Usually a more attractive creatives will decrease cost per click.
ATC -Add To Cart
This is a very important sign that makes you aware that you are wasting money and something wrong with your marketing, it can be a website issues, product page issue, or the way the product is presented.
IC – Initiate Checkout
Initiate Checkout processing is the next step after ATC. If your products receive both ATC and IC, then you are in the right direction.
CPA – Cost Per Action
You should test various products, target audiences, and creative ideas, both in the ad itself and on the product or service page to optimize the CPA. It takes time, it’s expenses, but in the end, it’s worth every penny invested in the tests.
CR – Conversion Rate
The conversion rate starts with your ad and finishes with your order page. In many cases with the same marketing budget, you can double your revenue by simply increasing your conversion rate. This is why conversion optimization is so crucial as key performance indicator.
ROAS – Return On Ad Spend
Return on advertising spent is another indicator that you should take care of. If your marketing infrastructure is good, it should grow month by month.
CLV – Customer Lifetime Value
If ROAS is not positive at first, think about CLV. For instance, your product cost £10,000 with a profit margin of £4,000. The same amount (£4,000) you spent on to acquire a customer, it means that you are at the break-even point. However, you know that the customers will continue buying in the future, which will make your marketing campaign profitable in the long run. It’s a crazy example and the worst-case scenario.
AOV – Average Order Value
AOV plays a key role, and it can increase your revenue by 10-20% at the end of the year. In online it is usually done via up-sales, cross-sales and post-purchase up-sales – the person pays for the purchase and then you make him a special offer which is difficult to refuse. One more example: when you offer a free delivery for orders over a certain sum of money, which also increases AOV. Different businesses have their own strategies for AOV enhancement.
Digital Marketing for Luxury and Mistakes to avoid when investing in luxury marketing
Make sure that you have a marketing structure that synchronizes all your marketing channels and makes them work together so that your would-be customer sees your ad campaigns every time and everywhere on the Internet.
These include Facebook and Instagram ads when prospects scroll the feed, banners in online resources when they read the news, Youtube ads when potential client are watch videos, etc. You should manage the data obtained from your marketing campaigns, correctly. You should store and use data with the help of modern tools offered by marketing channels.
On Facebook it’s called Facebook Pixel tool, for Google it is Google Remarketing Tag, as for LinkedIn it is Insight Tag, and others. Only with these instruments you will be able to create marketing infrastructure allowing you to get every data you need to succeed and follow your customers everywhere on the internet.
Diversity your Luxury Marketing Strategy: don’t focus on one Ecommerce marketing channel only
Diversify your marketing channels, determine the one with the best return on investment, and adjust your budget accordingly.
- Facebook ads
- Instagram ads
- Youtube ads
- Linkedin Ads
- Twitter Ads
- Tik Tok Ads
- Snapchat Ads
- Reddit Ads
- Google Search ads
- Google Display ads
- Google Shopping ads
- Pinterest ads
- Content marketing
- Amazon ads
- Affiliate marketing
- Influencer marketing
- Native Advertising
- Microsoft Ads
For example, sometimes a product is not working well with Facebook ads, but it’s doing well on LinkedIn, especially for B2B. There are cases when Facebook brings a low return on investment for a product, then we test it with Google Shopping and we get high ROAS.
The Ecommerce Luxury way of thinking to cope during the difficult situations
In marketing, you can get impressive results at the beginning of the marketing campaign started. But in order to achieve stable and positive results, consistency is necessary. Remember what I said about CLV, the customer’s lifetime value? Always keep this indicator in mind when investing in marketing. If your marketing campaigns are at the break-even point and you know you have a good customer retention rate, be assured your marketing investment will be positive with time.
Few conclusion about marketing luxury brand online
Diversify your marketing channels
Use modern marketing technologies to build your infrastructure.
Invest, stock, track and optimize your marketing data.
Learn more about marketing analytics.
Test and experiment with everything you can to improve small details.
Make fast decisions based on received data.
Don’t forget CLV.