Luxury Fashion Brands Outspend Smaller Rivals On Social Media

Luxury fashion brands like Christian Dior, Louis Vuitton and Gucci are upping their social media game, especially on Instagram, and pouring real money into efforts to court young shoppers, according to a report by Reuters.

Social media has always had low barriers of entry for brands, and has historically been a good place for a small or medium-sized business to compete with legacy companies. However, bigger brands are taking notice, upping their social media budgets to spend money on lavish, eye-catching events and experiences – and it’s working.

As social media influencers are reaching mainstream status, they can ask for upwards of 20,000 euros ($22,546) per post. With cash to spend, luxury brands are flying ahead of the competition.

Kering, the company that owns Gucci, spent 50 percent of its yearly media budget on digital advertising in 2018, which is up from 20 percent the year before.

“There’s a big shift in how we’re thinking about advertising and creating aspiration,” said Kering’s Chief Digital Officer Gregory Boutte. “Now, with every type of social platform, you need different types of videos, of pictures. You don’t create content on YouTube as you do on TV.”

Kering rival LVMH upped its marketing spending dramatically as well, spending 5.6 billion euros ($5.3 billion). The only company to spend more was Chanel. Louis Vuitton, which drives LVMH’s sales, has half of its marketing costs earmarked for digital media.

Just three years ago, Valentino, a fashion brand that is about seven times smaller than Louis Vuitton, was the most popular brand on Instagram, ahead of many better-known rivals. The company paid attention to fans and mixed professional posts with personal engagement. Now, the company’s revenue has slowed, as Louis Vuitton has tripled its followers on Instagram to 32.1 million, with its revenues expanding rapidly.

“The (brands) that are suffering are those in the middle, of an average size, which are stuck between the small, innovative, pure digital players and the big groups with big means,” said Michael Jais, CEO of Launchmetrics, an outfit that measures digital data about the fashion space.