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Luxury brands shift ad focus to digital

News, 01 June 2016

GLOBAL: Digital will become the largest single advertising medium for luxury brands during 2017, a new report has said.

The latest Luxury Advertising Expenditure Forecast from Zenith Optimedia predicted that digital media ad spend by luxury advertisers would increase by $837m between 2015 and 2017 and overtake print and TV for the first time.

Over the two years, The Drum reported, print advertising is set to shrink by $150m and OOH by $10m; the combined total of television, radio and cinema will increase by $26m.

By the end of the period, digital will account for 32.1% of total spending by luxury brands, compared to 30.7% for TV (down from 32.7%) and 28.6% for print (down from 31.9%).

But even with that decline, print remains particularly important" to luxury advertisers, specifically those in the fashion and accessories and watches and jewellery sub-categories," the report said.

To quantify that assertion, fashion and accessories advertisers spent 83% of their budgets in print in 2015, while watches and jewellery advertisers spent 60% there.

Zenith noted that glossy magazines in particular offered high‐quality and immersive yet relaxed reading experiences, which it said were a suitable environment for luxury advertisers wishing to showcase their brand values.

Most of the net growth of $705m will come in just two markets: the US ($347m) and China ($228m).

Zenith predicts that Asia will return to 2.9% growth in 2016, while the decline in Eastern Europe slows to 2.8%. North America will remain relatively strong, with 3.9% growth, but Western Europe will slip back to 1.7%.

Total luxury adspend is projected to increase 3% in 2016 to reach $10.9bn across 18 key markets. That is rather less than the 4.6% being forecast for the advertising market generally, MediaPost reported, although the gap has narrowed from 2015, when luxury advertising rose at just 1.9% compared to 4.1% in the wider market.

Data sourced from MediaPost, The Drum, City AM; additional content by Warc staff