Author: Mark

By Teresa van den Berg, Media Strategist at The MediaShop

For some years now I've been fortunate to work on the Louis Vuitton account. It's one of the most valuable and iconic brands in the world, with a brand value of about $47.2 billion USD in 2019. After a short interlude I'm back looking after the media interests of this client again. It naturally brought me to the question of the current luxury brand landscape and the impact of the pandemic on this sector.

The 19th edition of the Bain Luxury Study states that the luxury industry has been heavily impacted by the Covid-19 crisis in 2020. The overall luxury market shrank by 20% to 22% at current exchange rates, and is now estimated at approximately €1 trillion globally, back to its 2015 levels.

Despite the pandemic, the global Ultra-High-Net-Worth (UHNWI) population is set to grow by 22% over the next five years. Much of that growth is being driven by new generations of UHNWIs, born in the digital era. Bain & Company notes that Millennials and Generation Z accounted for 47% of luxury consumers in 2018 and for 33% of luxury purchases. Younger generations are set to drive 180% of the growth in the market from 2019 to 2025.

The turmoil of Covid-19 has been a catalyst for profound change in the way global luxury consumers live and shop. Various luxury players reported changes in buying behaviour as consumers' social routines adapted to lockdowns and physical distancing restrictions. High-end and low-end luxury items proved more resilient than those in the middle of the range.

It goes without saying that Online is set to become the leading channel for luxury purchases. But in order to remain relevant, brands need a new approach to attract luxury shoppers.

Augmented and virtual reality are digital tools utilised more and more. Other novel digital tools luxury brands are utilising is the ability for clients to try on goods digitally. Pinterest has released an AR tool for users in the US called Try On. The front-facing camera enables users to try on different shades of beauty products, while a swipe up feature takes them straight to the brand's website to purchase.

According to The Drum.com, one of the best ways to attract this market is through video, which sells a brand's lifestyle and heritage. Although YouTube has been the reigning platform for video, IGTV (an integrated platform within Instagram) is growing in popularity, as is the use of podcasts to reach UHNWIs. According to Saks' senior vice president and general manager of beauty, jewellery and home, podcasts enable them to “tell a longer and more intimate story” offering the department store the “ability to connect with guests on a very personal level.”

Influencer marketing is also still a crucial part of many ultra-luxury and mass market brand social strategies, but consumers are also experiencing influencer fatigue. In the luxury market, using influencers has always been fraught with concerns about authenticity and cheapening the brand. HNW and UHNW audiences only respond to brands that align with their values and social image. It seems that the traditional luxury influencer model isn't working anymore due to often inflated or fake influencer follower bases.

In its place, trend forecaster WGSN has coined the term Genuinfluencers in December 2020 referring to passionate individuals who are more interested in sharing advice than selling brands or products. They often identify as creators instead of influencers and would rather be noticed for their high-quality content than their follower count.

Predicted to be one of the biggest trends for 2021 and beyond, Genuinfluencers are typically topic experts in a certain niche, whose followers are genuinely interested in what they have to say, trusting their knowledge and seeing their advice as valuable and relevant to their interests. One would typically not see a Genuinfluencer promoting a wide variety of inconsistent products.

As an example, Gucci chose a retired fisherman, Gerald Stratford (pictured below), who loves gardening, especially 'big veg' to be the star of a collaborative video shoot with Highsnobiety for Gucci's Off The Grid 2021 collection. Gucci Off The Grid is the brand's more environmentally-focused collection, made mostly of ECONYL, a type of Nylon regenerated from abandoned fishing nets, old carpets and offcuts. The collaboration makes sense due to Stratford's passion for self-sufficient vegetable growing and love for nature.

On Facebook, the video got 1.2k likes, 53 comments and 89 shares, while the story about the so-called 'Veg King' working with Gucci was covered positively by a broad selection of publications including the Telegraph.

Working with Genuinfluencers allows brands to show their support of social issues through a trusted external voice, making their views seem authentic and reassuring their audience that their activism is not simply a marketing ploy to sell more services or products.

What is the luxury market outlook for the future? Bain forecasts growth that ranges from around 10% - 19% depending on a variety of factors such as macroeconomic conditions, the evolution of Covid-19 and the speed of return to travel globally.

They anticipate four growth engines to profoundly reshape the luxury market by 2025:

• Chinese consumers will become a dominating nationality for luxury, growing to represent over 45% of global purchases.
• Mainland China is to become the biggest luxury market.
• Online is set to become the leading channel for luxury purchases.
• Younger generations (Generations Y and Z) will be the biggest buyers of luxury, representing over two-thirds of global purchases.

Luxury players will need to not only consider economic motivations, but social motivations as well, transforming their operations and redefining their purpose to meet new customer demands and retain their relevance, especially for younger generations, who are set to drive 180% of the growth in the market from 2019 to 2025.

There will be no more talk of the luxury industry anymore, but of the market for “insurgent cultural and creative excellence.” Bain concludes that in this space, winning brands will be those that build on their existing excellence while reimagining the future with an insurgent mind-set.

Isla Prentis, Intelligence Lead at Tirisano Consulting, a division within The MediaShop

Let’s rewind to the beginning of last year. We were living in a world of increasing information and distractions. A world where we hadn’t even really heard of Covid-19. So much has changed since then, but when it comes to attention, the fight became a whole lot tougher as distraction took a giant leap forward.

We are constantly asked for the best way to win the fight in the attention economy: there is no golden formula and no single answer to the question. As with so many things in life, we need to stop worrying about the answers and go back to the questions.

Questions lead to understanding, not just knowledge. Ultimately, we’re trying to connect with a human being. A consumer is a person before they are a target market or audience bucket and although there’s a world of information about how to build a successful brand, some of it is contradictory.

My advice is to absorb as much as possible, understand all the options and the science, and then figure out the right questions to ask. Once you know what they are, the answers will start to write themselves from the understanding that you have built. You can have the same starting point and destination, and still take a different path to get there.

My favourite word at the moment is balance. In life, we’re always told to pick a lane, pick an answer. But I truly believe that it’s all about balance. How do you balance up the different options to find the best possible answer?

There’s so much talk about engagement these days, but we need to ask ourselves what it really is. Is it a metric for your media buying? It could be, but that’s not all it is. It’s the content that determines the engagement.

In a world saturated with content, we need to make sure that our message (big or small) draws the consumer in — after all, brands no longer have the control or power.

Depending on what you’re trying to achieve, you might be trying to get the consumer to stay for a short or long while, but either way, the most important part is getting their attention. This world in which the consumer is in control demands authenticity and bravery.

Together with authenticity and bravery, this is where we introduce creativity to the conversation. There are many definitions of creativity, and so there should be given the nature of the concept. For me, creativity is finding the unexpected solution.

Everything in life starts with a question or a challenge and creativity is simply solving it in an unexpected way. Make sure that you inject creativity into everything that you do. Constantly seek to find the unexpected answer, or even better — the unexpected answer to an unexpected

Dashni Vilakazi, Managing Director at The MediaShop Johannesburg encourages companies to take a hard look at their own accountability and corporate culture.

There are many factors that could be protecting your house from coming down and not achieving real business results. I would venture that accountability and corporate culture would be two of these. Whether you’re leading a small team or a full company, the power to deliver and exceed key results really does matter and accountability is key.

A business’s corporate culture and spirit are major factors leading the accountability movement, it makes results possible and sustainable. Winston Churchill once said, “We shape our buildings and then these structures shape us” – this is indicative of the powerful resonance a good quality performance management process can deliver when seeking good results.

I believe that it should also be every employee’s ethical responsibility to take control of a certain amount of business ownership to really understand the issues at hand and the desired results.

As a media agency, clients hire us as the experts to achieve their objectives and it’s our responsibility to realise these and then weigh up the results accordingly. Once achieved, it’s time to stretch accountability in yourself and your team to adjust the end game and magnify those results even further.

How does this impact the culture when you communicate business objectives to the team? When both parties are in synergy and have a good understanding of the company’s objectives, behaviour and actions combine to steer demonstrable ownership, motivation and engagement.

The practice of partnering with employees to define key results timeously and positively also impacts a company’s ownership culture. When the process and result is congruent, there is a systemic response that compounds trust, aggregation of ownership and a clear sense of accountability. An ownership and response culture then begins.

Engagement with employees is often overlooked but your frontline team should never be excluded as they need to be aware of key objectives so that they can shape the customer brand experience, which will positively reflect on the bottom line.

Sometimes however, this can go awry. A disconnect materialises when the performance management process fails to link up the macro key objectives to an individual’s key performance indicators in an understandable and customised method.

Accountability must be tracked consistently through weekly and monthly tracking metrics that presents a triage in the dashboard of delivery. This enables the employee’s productivity to run in tandem to the macro business objectives. Every piece of work should be connected to the company’s organisational imperatives. Repetition is vital until the message reaches home.

When strength and tenacity is injected into a muscularly strong management process that is being tracked consistently, it allows for adjustments to be tailored more easily to address a changing business environment. This will positively and proficiently impact action.

When the key primacy for results change, so should the company’s tactics. The resultant effect of not modifying these dashboards and project plans immediately, drives experience dissonance from team to customer, allowing the big bad wolf passage into your structure.

Engagement across the whole value chain when leading this adjustment is so critical as it supports the value system of trust and partnering with your team. Ownership, greater engagement and leadership will drive better management control for resolving business achievements.

To maximise business efficacy, defend and protect your company’s vulnerability - create an authentic open-door culture that speeds up the ability to solve problems and deepen real engagements.

Protect your house from the big bad wolf and cement your brick force structure so solidly so that he cannot even get in through the chimney of discord.

By Muhle Hlabano, Business Unit Manager at The MediaShop

We all know that 2020 was a disruptive year due to the Covid 19 pandemic. Varying Lockdown Levels resulted in a contracted SA economy, a significant drop in advertising spend and several sectors completely shut down, not unlike what we’re experiencing now during adjusted Level 4.

Last year, most sectors operated online, and many began the move to work from home. This shifted a lot of consumer behaviour habits and media consumption patterns as people lived, shopped, worked and entertained themselves differently. Behaviours that would have taken years to change literally happened overnight.

Advertisers had to adjust their marketing strategies constantly to adapt to this new norm, and according to AC Nielsen and IAB, the total ad spend for South Africa in 2020 was just over R41 billion, based on rate card values. This represents a 7% decline overall due to the pandemic and lockdowns interruptions.

Table 1. Spend Report 2018 -2020 Growth Rates

Sources AC Nielsen and IAB

The real decline is actually greater as these amounts reported do not account for the discounts on rate card rates negotiated. The fall was noted across all ATL (above the line) media channels with the exception of TV that flat lined and digital which posted a significant growth of 21%.

The growth in digital is an indicative shift in most strategies by advertisers aligning their marketing efforts with the shifts in consumer media habits. Where did most of the ad spend in digital go? From table 4 below you can see that paid search and social made up 75% of the digital spend.

Nielsen and IAB

Table 2. Digital View in South AfricaSources AC

Table 5. ATL Spend Report 2020 vs 2019 spend Variance

Sources AC Nielsen

Doing a deep dive going into 2020, ATL compared with 2019 month by month, we can see that in the first two months most media was on track to be better than 2019 but 2020 had other plans.

The first hard Lockdown had a significant impact across all media types, all reporting a negative growth in this period. Electronic media started recovering with TV becoming positive in the fourth quarter only when the country entered Level 1.

The top three categories in 2020 were FMCG with 26% share of spend, Retail (22%) and Financial Services with 18% share of spend.

And how did the top advertisers adjust?

Table 6. Top 15 ADVERTISERS

Sources AC Nielsen

The top advertiser changed with Unilever taking over from Shoprite who had been dominant in previous years although Unilever has been steadily increasing their spend over the past three years. This shows the resilience of the FMCG category during the lockdowns especially since we were all at home more and sanitizing everything in sight. This result is also not surprising considering the toilet paper shortages in the initial lockdowns…

The question becomes whether we will see this carry over to 2022 and onwards or if we’ll experience more dramatic shifts in advertising media spend patterns across media platforms?

We at The MediaShop are definitely keeping our eyes on all development.