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Instagram & Luxury Brands

Posted on August 28, 2012 by Florian Gonzalez | 0 Comments

What Instagram Means for Luxury Brands

(by Sophie Doran)

WHAT

What is Instagram?

Instagram is a free photo sharing application for mobile, which allows users to take photos, apply a filter, and share it on the service or a variety of other social networking services (CrunchBase).

Launched in March 2010 by Kevin Systrom and Mike Krieger, with seed funding of $500,000, the platform was purchased in April 2012 by Facebook for a reported $1 billion in cash and stock. The application is currently compatible with any iPhone, iPad or iPod Touch or any Android device running Android 2.2 or above.

“ In the ten days after launching its first Android App, Instagram’s user base grew from 30 to 40 million ”

Instagram photographs by Hermès & Gucci

WHO

Who is using Instagram?

Originally available only to iPhone owners, the Instagram iOS app had accumulated over 30 million users just eighteen months after it debuted. In the ten days after launching its first Android App, Instagram’s user base grew from 30 to 40 million, at a rate of over 1,000,000 new users per day.

Instagram has continued to grow at an astounding pace in the first seven months of 2012 – going from 15 million users in early 2012 to 80 million in July – an increase of over 400% in just seven months (Forbes).

According to data from appdata.com, the user base of Instagram is nearly 70% female – described by Forbes as the people who make the majority of household purchase decisions.

Number of Instagram Followers (As of 23rd August 2012)

HOW

How are luxury brands using Instagram?

40 percent of the world’s most popular 100 brands – according to Interbrand – are now active on the photo-sharing network. When it comes to luxury, the key players so far are Burberry, Gucci, Tiffany & Co., Audi, and Hermès, with follower bases between 75,000 and 500,000.

Instagram is fast establishing itself as the social network of choice for luxury lifestyle brands according to L2 because luxury brands have inherently visual stories to tell. Burberry, for example, use the platform to reinforce its ‘Britishness’, showcasing photos of the London skyline and key landmarks, alongside the occasional product shot or advertising campaign.

“ Instagram is fast establishing itself as the social network of choice for luxury lifestyle brands because they have inherently visual stories to tell ”

Hermès – active on Facebook but yet to launch an official Twitter account – follows a much more product oriented approach. Under the username Hermès Paris, the brand shares photographs of its accessories, homewares and iconic orange packaging, both as advertising images and amateur shots of products in action.

The platform is also being increasingly used for photographic competitions. Brands such as Chloé, W Hotels, Tiffany & Co. and Four Seasons have all taken to the App to encourage conversations with fans and ensure user engagement.

W Hotels went so far as to launch an Instagram exhibition at its New York City property, which showcased the work of six commissioned artists but also allowed its Instagram community to win two-nights stay when submitting photographs under the hashtag #wdesign.

Burberry use Instagram to share new products, advertising campaigns and cover events, as well as champion its ‘Britishness’ with photographs of London

WHY

Why should it be a consideration for luxury brand marketers?

“Our atomic unit of communication on Instagram is an image,” explained founder Kevin Systrom to TechCrunch. “Advertisers all around the world speak in images.” Perhaps even more compelling, is the fact that if someone opens Instagram, they’re likely to open it eight more times that day.

Systrom is confident that Instagram may be “the next big opportunity in display advertising.” And even though the app doesn’t have an ad program yet, he highlighted three ways that brands are already using it; To promote products, for live event coverage and publicity, and to create Instagram specific campaigns – such as the example with W Hotels.

“What’s really cool about this is, it doesn’t feel like advertising,” Systrom mused. “When you open Instagram, it feels like entertainment.”

“ Our atomic unit of communication on Instagram is an image. Advertisers all around the world speak in images ”

One particular US fashion brand has come forward to champion the platform’s direct impact on sales. In conversation with Luxury Daily, Rebecca Minkoff founder Uri Minkoff, explained how the brand’s Instagram community now forms an integral part of both the design process and retail mix.

Rebecca Minkoff - the designer - first started using Instagram to share “shoe of the day” images that showed her outfit from her legs down (Luxury Daily). The brand has since grown its community to 70,000+ users, where the amount of “likes” and comments that the images receive can go into the thousands.

The brand now uses the platform for instantaneous feedback on design and to interact with the comments that it sees on images, and steer consumers towards retail partners or brand hubs. As a result, spring shoe sales were up 100 percent, with expectations to grow by 200 percent this year. The brand also used user generated Instagram photographs as advertising, in the debut issue of Style.com/Print issue.

W Hotels launched Manhattan’s first ever social network photo exhibition in May 2012

WHY NOT

Why should luxury brand marketers be cautious?

“A poor shot of a watch on a hairy wrist,” deadpans (Franck Jehanne), co-founder of The Kalory Agency. “An un-retouched close-up of a handbag buckle showing micro scratches rather than representing its true luxury material feel. A picture of a flagship store featuring a dirty street and people’s reflections instead of carefully merchandised window displays,” he continues. “All these communications feature the wrong message and effectively kill the luxury dream.”

To avoid this, many luxury brands are using professionally shot product and campaign images on the app, before applying various filters and effects. But the one area they have little control over is user generated comments, which range from complimentary and celebratory, to – more often than not – profane and absurd.

Everything from requests for internships, to abbreviated Internet speak (LOL, G8, <3), to self promotion from followers, and what appears to be the work of Spambots. It has a similar effect to seeing a carefully styled, photographed and printed advertising campaign, covered in graffiti at a bus stop.

Rebecca Minkoff’s print campaign in Style.com/Print, using user-generated Instagram images of the brands accessories

GOING FORWARD

Where can Instagram take luxury brand marketing?

As yet, this is not deterring luxury brands. On the contrary, more and more brands are launching communities everyday. But as compared to Facebook and Twitter, Instagram is still in its infancy, both in terms of community size and sophistication. Though its growth is undeniably impressive, little is really understood as to how brands will benefit from making it a part of their marketing mix.

Parallels can be drawn to Facebook, in that until recently, luxury brands didn’t really know what to do with the millions of followers their branded content and inside access was earning them. But as that social network has become more sophisticated and collaborative, we have seen many luxury brands move far beyond consumer engagement, into crowdsourcing projects, social commerce and producing Facebook exclusive products.

The Simply Measured Instagram study estimates that use of the platform by businesses will only increase as new administrative features become available. Features that allow brands to better control their accounts, manage communities and drive deeper engagement and business value.

TO GO FURTHER

To further investigate Instagram and Photography, we invite you to explore the following Luxury Society articles:

- How Luxury Brands Are Using Photography: Diver & Aguilar
- What Pinterest Means For Luxury Brands
- Is Instagram Killing the Luxury Dream?

EDITOR'S NOTE: This article is reposted with the permission of Luxury Society, the authority on the luxury industry.

Warm thanks in particular to Sophie and Philippe.

Posted in audi, burberry, business value, Chloé, display advertising, drive engagement, facebook, filters, Four Seasons, gucci, hermes, instagram, instantaneous feedback, Kevin Systrom, luxury brands, luxury dream, Luxury Society, manage communities, Mike Krieger, photo sharing, photographic competitions, shoe of the day, social network, Sophie Doran, tiffany & co, twitter, user generated comments, W Hotels

Luxury Brands in India

Posted on May 21, 2012 by Florian Gonzalez | 0 Comments

Hermès' Saris, available exclusively in its Indian stores

EDITOR'S INTRODUCTION

Our love for India is no secret. We are often mesmerized by its culture, whether we look at music, food, crafts, textile, architecture and cinema. What is most remarkable is the awareness and pride Indian people have when it comes to their traditions and arts.

Since we attended the International Herald Tribune conference which took place in Delhi in March 2009 (it was dedicated to“Sustainable Luxury”), we have kept on wondering why luxury brands were having such a hard time entering this country, as opposed to China which has become the new eldorado.

Here we publish an article that brings some answers on this fascinating sub-continent's resistance to Western luxury.

Challenges Remain for Luxury Brands in India

India’s union cabinet is standing by its local sourcing clause when it comes to foreign direct investment, making it difficult for luxury brands to enter the market on their own terms

“These [BRICS] countries are 25 per cent of the global gross domestic product, so we have to think about them”, Missoni CEO Alberto Piantoni remarked to WWD, during a recent visit to India. “Somehow they are more open and there is a new middle class growing very fast and they are anxious to know what is going on in the whole continent in terms of fashion. It is an opportunity and we have to do something about it.”

But as CPP Luxury’s Oliver Petcu recently asked, how do major international luxury brands evaluate the potential of a certain market? How do they decide when and if to enter emerging territories? And what is the basis of their decision-making in pursuing a wholesale or mono-brand distribution strategy? He asks these questions as he believes luxury brands are making slow inroads into BRICS countries and repeating their own mistakes.

“Proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian craftsman.”

“Legislation, real estate, taxation, human resources, logistics, counterfeiting and marketing are among the most important challenges faced by luxury brands in major international luxury markets, especially in emerging ones” he reveals. And with recent legislative changes in India and China, impacting both the price of the goods and the way in which they can be distributed, these complex challenges show no signs of abating.

In November 2011, India’s union cabinet agreed to allow 51 per cent foreign direct investment (FDI) in multi-brand and 100 per cent FDI in mono-brand retail. At the time this meant that luxury brands were finally able to open directly owned, operated and controlled boutiques, but since, political pressure has forced the addition of a local sourcing clause for mono-brand retailers.

In respect of proposals involving FDI beyond 51 per cent, mandatory sourcing of at least 30 per cent of the value of products sold would have to be done from Indian small industries/village and cottage industries, artisans and craftsmen. So for Louis Vuitton to set-up shop in Mumbai, they would need to source a certain percentage of products from India and further support the Indian local economy.

“From India’s perspective, this is an admirable commitment to local industry but it presents clear & present danger for luxury brands that rely so heavily on provenance.”

From India’s perspective, this is an admirable commitment to local industry but it presents clear and present danger for luxury brands that rely so heavily on provenance. Whilst India is well known for its textiles and hand embroidery, ‘Made in India’ carries significantly different connotations to ‘Made in France’ or ‘Made in Italy’. And when being French or Italian is a major part of your marketing mix and value proposition, is brand integrity at risk if some of this is lost?

“The new regulations in FDI are a joke in the perspective of the luxury goods industry” remarked executive director of the Fondazione Altagamma, Armando Branchini, to WWD. “Thirty per cent of what is retailed in luxury has to be made by cottage industries and local craftsmen in India; it will be impossible for luxury goods, which represent a culture, a philosophy, a heritage, a DNA of a brand and a product line to move to change the business model to multibrand to fit into these markets.”

Brands of course can choose to enter the market with a local distributor or continue to supply multi-brand boutiques in a wholesale capacity. Missoni are said to be in serious talks with the Infinite Luxury Group, Christian Louboutin has launched in New Delhi’s DLF Emporio luxury mall. Genesis Luxury Fashion services the Indian market for Burberry, Paul Smith, Canali, Kenzo, Bottega Veneta and Jimmy Choo through branded stores.

“The government needs to attract foreign investors in different cities to improve the standard of living. But a lot of de-regulation needs to happen.”

Challenges aside, the outlook for India is optimistic. India was the second most attractive FDI destination in the world in 2010, according to the World Investment Prospects Survey 2010-2012. The country’s growth rate is expected to sail well above 8 per cent this year, in a bid to overtake China as the world’s fastest growing economy.

The Qatar Investment Authority, the Gulf state’s sovereign wealth fund, would be more than happy to invest up to $10 billion in India every year if the government moved to better facilitate foreign investors.

“It is a very promising market” according to QIA’s executive director Hussain Al Abdulla. “The size of the middle-class is not less than 300 million, almost as big as Europe. The government needs to attract foreign investors in different cities to improve the standard of living. But a lot of de-regulation needs to happen. A lot of efficiency needs to come in.”

TO GO FURTHER

You can read Luxury Society article dated 28 Nov. 2011: "A New Wave of Opportunity for Luxury Brands in India?" which is still very relevant.

We invite you as well to download their Market Guide for India

http://luxurysociety.com/articles/2012/03/luxury-society-market-guides-brazil-russia-india-china

EDITOR'S NOTE: This article is reposted with the permission of Luxury Society, the authority on the luxury industry.

Warm thanks in particular to Sophie and Philippe.

Jardins Florian usually publishes original and exclusive content. However we are happy to make exceptions when we find content that is relevant and deserves more visibility.

Posted in Alberto Piantoni, Bottega Veneta, BRIC, BRICS, Burberry, Canali, Christian Louboutin, CPP Luxury, DLF Emporio, Genesis Luxury Fashion, Hermès, India, Indian brands, Indian luxury, Indian market, Indian stores, Jimmy Choo, Kenzo, Luxury Brands, luxury mall