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While the world goes digital, some brands are staying in an analogue world. Businesses are expected to spend nearly $300 billion, or half their marketing budgets, on digital advertising by 2021, according to figures from MAGNA, but some companies are sticking with traditional print ads.
Those companies are the makers of high-end luxury goods, such as watches, jewelry and couture fashion, whose adverts sometimes seem to make up the bulk of glossy magazines, with many pages of ads before the actual editorial content.
Figures out today show that these "high luxury" companies around the world still spent nearly three-quarters of their budgets (73 percent) on print advertising in newspapers and magazines in 2016, with this figure set to stay high in 2017, at 72 percent.
High-end luxury goods companies spent only 16 percent of their budgets on digital advertising in 2016, followed by outdoor billboards with 8 percent and TV at 3 percent, according to the report by media agency Zenith.
Meanwhile, companies that make more accessible, "broad luxury" products, including cars, cosmetics and perfumes, are spending increasing amounts on digital advertising, with 30 percent of their budgets going online in 2016.
TV advertising made up the bulk of broad luxury ad spend in 2016, at 41 percent, but the gap between TV and digital advertising will gradually reduce, the report states. By 2018, TV ad spend will go down to 39 percent, while digital will increase to 34 percent, up four percentage points on 2016.
Luxury brands (both high-end and broad) are forecast to spend $11.8 billion globally on advertising this year, with the fastest-growing region being Eastern Europe, with 10 percent annual average growth. The Middle East and North Africa will see ad spend shrink by around 6 percent a year, due to political instability and lower oil prices, Zenith forecasts.
"Luxury advertisers are having to respond to consumers' changing expectations," said Vittorio Bonori, Zenith's global brand president. "Consumers are now looking for luxury experiences that are personal and relevant to them, and targeted brand communication is central to creating this extra brand value."
But it seems that spending on print advertising could be working. LVMH, the world's largest luxury goods group, including the Louis Vuitton, Fendi and Celine labels, saw its shares reach a record high last week, after reporting a 15 percent year-on-year increase in first quarter sales.
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