GLOBAL: Luxury brands may have been initially reluctant to embrace digital advertising but they are now catching up fast and will invest one third of their adspend in digital this year, according to new research.

The Luxury Advertising Expenditure Forecasts 2018 report, from Zenith, predicted that luxury advertising expenditure in digital channels will edge up from 30% of their total spending in 2017 to 33% in 2018 and 35% by 2019.

But that still leaves it lagging behind overall brand spending in digital, which Zenith said will account for 42% of budgets.

The scale of the shift becomes more evident when one considers that digital advertising in the luxury sector will grow by US$886m between 2017 and 2019, while TV advertising will increase by a fraction of that at US$27m.

And China is leading the way. Not only is it contributing the most to advertising spend growth between 2017 and 2019 at $289m – ahead of the US on $245m and Germany on $60m – it is also directing most of that into digital.

In 2017, digital already accounted for 53% of luxury brands’ advertising expenditure in China, Zenith said, but that figure will rise to 70% by 2019.

Around the world, luxury hospitality is the category attracting the greatest share of digital spending: 50% of ad expenditure will be digital in 2018.

Other categories will see a rather smaller share going on digital, with luxury automotive brands on 39%, watches and jewellery brands on 28%, fragrances and beauty on 27%, and fashion and accessories on 13%.

“After a relatively slow start, luxury advertisers are now committing to the digital future, led by luxury hospitality brands,” said Jonathan Barnard, head of forecasting at Zenith, in remarks reported by The Drum.

“Luxury brands face unique challenges online, such as the need to maintain exclusive brand values while communicating with potential customers at scale,” he added, suggesting that the use of personalised digital communications and high-quality e-commerce experiences were the ways in which such brands could generate new sales while also preserving their exclusive appeal.

Sourced from Campaign Asia-Pacific, The Drum; additional content by WARC staff