Luxury brands failing on digital media in China

21 June 2010

BEIJING: Most of the largest luxury brands in China are failing to exploit the opportunities offered by digital media to connect with consumers. 

According to L2, the consultancy, the prolonged economic boom in China has yielded millions of shoppers that have a sizeable disposable income and a "voracious appetite" for high-end products.

It also suggested the companies which demonstrate considerable "digital aptitude" have the greatest chance of long-term success in the country.

To determine whether 100 leading luxury firms were achieving this goal, it assessed their corporate websites, search engine strategies, social media activities and digital marketing.

Lancôme led the way with a score of 167 points, and was credited for the local relevance of its online hub, leveraging services like Baidu and managing its own community, which has four million users.

BMW claimed second on 157 points, having created a "drivers' club" drawing together 150,000 owners of its vehicles, alongside running competitions on social networks like Renren to spread word of mouth.

It shared this position with Estée Lauder, which has combined a dedicated forum to engage its target audience with an official website centred on Chinese celebrities and goods developed for this market.

Audi was in fourth on 150 points and boasted a particular strength on social media, with fifth-placed Clinique on 146 points only being held back by its comparative weakness in this area.

Mercedes-Benz and Clarins took the next two spots, followed by Acura, the Japanese carmaker, and Cadillac, its US counterpart.

Alcoholic drinks manufacturer Wuliangye completed the top ten and was also the Chinese company that finished highest in the table.

Lexus, Cartier, Porsche, Louis Vuitton and Land Rover were among the other multinationals which delivered impressive figures.

With regard to firms headquartered in China, Moutai, Shanghai Tang and Luk Fook performed relatively well, although the last two members of this group were rated as "average" by L2.

In all, 37% of the sample were awarded a ranking of either "average" or above, with 63% - from Hermès and Ferrari to Marc Jacobs – were described as "challenged", "feeble" or "luddite".

Elsewhere, only ten of the brands featured in the study enabled consumers to buy products on the internet, with players in the beauty and skincare segment displaying the most substantial uptake.

Turning to social media, BMW posted over 90,000 "mentions" on Renren in May and nearly 180,000 on its rival platform Qzone.

Mercedes generated an overall total of around 200,000 mentions, ahead of Louis Vuitton, which was the subject of approximately 130,000 interactions.

More broadly, Johnnie Walker and Lancôme both have official groups on Kaixin001, the latter of which has 250,000 members.

Looking at search, while 94% of prestige brands came out at the top of organic listings on Google, just 39% did so on Baidu, indicating that site design remains "Google-centric".

Moreover, a 30% minority of brand portals were in the first three results when their names were entered in Chinese, which often results from the difficulty in translating these trademarks using a very different set of characters.

On mobile, Shanghai Tang launched a Chinese-language iPhone app in April, making it an early mover on this emerging channel.

Data sourced from L2; additional content by Warc staff