EXPLORING THE ADOPTION OF USER-GENERATED CONTENTIlluminating Best Practices in Luxury Brand MarketingAn Analysis of Survey Results from the 2016 Luxury Interactive Conference
*All photos used in this report are user-generated and are curated by Olapic.
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INTRODUCTIONTraditionally, luxury brands find success by projecting a highly cultivated brand. But disruptive technologies and new consumer habits are upsetting the methods by which luxury brands traditionally engage with their customers.
Consequently, luxury brands are reconsidering their strategies and discovering the benefits of engaging with customers in more collaborative ways. With the advent
As luxury brands begin utilizing user-generated content (UGC) for the first time, they face the complex challenge of identifying successful strategies involving user participation while maintaining a prominent brand image in an industry that thrives on exclusivity.
This industry study of 89 luxury retail executives benchmarks the maturity of the luxury industry in terms of UGC utilization, and the degree to which brands feel comfortable with the strategy. This study answers key questions, such as:
of social media, and as over 75 million digital-savvy Millennials enter their prime as consumers, luxury brands are discovering the value of promoting high-quality content that customers themselves post on social media platforms, and of supporting user-generated content like online ratings and reviews—key drivers to sales in prevailing online retail channels.
· To what degree are luxury brands investing in UGC?
· How are brands’ existing UGC campaigns performing?
· How are luxury brands measuring their effectiveness?
· Where do they anticipate the greatest amount of growth?
Most importantly, the study determines why a majority of luxury brands—some of which already utilizing UCG—plan to include user-generated content over the course of 2017, and identifies the barriers to adoption faced by 20% of luxury brands who will not adopt UCG strategies in the months to come.
80% OF LUXURY BRANDS WILL UTILIZE USER-GENERATED CONTENT IN 2017.
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ABOUT THE STUDYOn behalf of Olapic, WBR Digital conducted a survey of luxury brand leadership attending the 2016 Luxury Interactive Conference to understand luxury brands’ levels of engagement and future plans to utilize user-generated content (UGC) in their marketing efforts.
The majority of respondents have senior leadership positions within their companies. The majority of respondents have either manager (45%), or director (28%) roles. 9% are vice presidents, and 7% are C-level executives. 11% of respondents identify themselves as having some different role.
44% of respondents represent the marketing departments of their companies. Another 32% represent their e-commerce departments, while 17% of respondents represent their digital departments. 7% claim they represent some other department.
Interestingly, about the same percentage of respondents represent digital fields (49%)—meaning, e-commerce and digital—as do marketing (44%).
In terms of annual revenue, 44% of the luxury brands represented make more than $250 million—the largest of the four groups. Meanwhile, brands in the second largest group—30%—each make less than $50 million per year, placing the two largest groups on opposite ends of the spectrum.
18% of luxury brands make between $150 and $50 million in revenue annually, and only 8% make between $250 and $150 million.
7% C-Level
9% VP
11% Other
28% Director
45% Manager
44% Marketing
32% E-Commerce
17% Digital
7% Other
Slide 3
Slide 2
What best describes your role in the organization?
Which department do you represent?
>$250 Million
$250–$150 Million
$150–$50 Million
<$50 Million
44%
8%
18%
30%
Slide 1
What are your total revenues annually?
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One contributor to luxury brands’ success in utilizing UGC for marketing is the level of collaboration that exists across departments within their organizations. For example, a 2016 study by Baker Retailing Center
shows that Burberry’s nuanced user-generated content and other pioneering digital initiatives have made the brand a “digital leader in both the fashion world and beyond,” due in part to successfully integrated channels like communication, sales, and distribution.
Only 5% of respondents claim they have a siloed level of collaboration across departments at their organizations. However, a majority of respondents—56%—claim they have only a semi-aligned level of collaboration. 39% of respondents claim their level of collaboration between departments is highly aligned.
Some companies face barriers to UCG adoption, and priorities for adoption differ from brand to brand. In order to understand how and why luxury brands will adopt UGC initiatives, we must consider what are their existing marketing efforts, and to what degree existing user-generated content initiatives are succeeding.
Highly-
aligned
Semi- aligned
Siloed
Slide 4
What level of collaboration would you say exists across departments at your organization?
39%
56%
5%
A TRANSITION FROM TRADITIONAL MARKETINGTraditional content initiatives for luxury brands involve building a unique brand image, exuding exclusivity and a heightened lifestyle that is to be acquired by consumers. Consequently, custom images and video are utilized to distinguish luxury from other brands and verticals, such as mainstream retail.
But while luxury brands’ existing marketing spends reflect these traditional strategies, marketing channels in which they expect the greatest amount of growth—digital and social—are also channels in which they are already seeing the greatest success in terms of user-generated content. Consequently, UGC is driving consumer engagement and generating more authentic marketing opportunities for at least half of all luxury brands.
2% Other
37% Native advertising
38% User-generated content (UGC)
42% Stock imagery
72% Branded video
85% Professional photography
2%
37% 38%42%
72%
85%
Slide 7
What type of content assets do you regularly use to engage customers?
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In terms of content assets, a majority of luxury brands regularly use professional photography (85%) and branded video (72%) to engage customers. As reported here, less than half of companies use stock imagery (42%), user-generated content (38%), and native advertising (37%).
Utilization of these assets is reflected in the marketing channels on which luxury brands are spending the most today. Collectively, luxury brands identify Websites as the greatest marketing channel spend, where almost half (46%) rate Website as their top marketing channel spend altogether. Additionally, luxury brands favor digital channels above physical ones in every case:
83% of luxury brands claim Email is a top-five spend, with the majority of brands (62%) in the ‘1’ (12%), ‘2’ (31%), and ‘3’ (19%) rankings compared to all other marketing channels on the chart.
52% of brands claim Social Ads are a top-five marketing spend, neatly stratified in terms of greatness, except where 4% of companies identify it as the greatest spend.
51% of luxury brands identify Search as a top-five priority, and they are almost evenly stratified across the five rankings.
51% of luxury brands identify Display advertising as one of the top five spends. However, 22% rank Display as a ‘5,’ the lowest priority.
44% of brands identify Mobile as a top-five spend, meaning over half (56%) of companies do not identify mobile as a current top-five marketing channel spend at all.
42% of companies identify Organic Social as a top-five spend, although most (32%) are either a ‘4’ or a ‘5,’ while 58% do not identify Organic Social as a top spend all.
Non-digital channels ranked the lowest among the options. Only 29% of luxury brands identify Print as a top-five marketing channel spend; 23% of brands identify Direct Mail as a top-five spend; and only 22% of luxury brands claim In-Store is a top-five marketing channel spend. Finally, 13% of luxury brands identify Out-of-Home, Events, and Slideshows as a to-five marketing channel spend.
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Slide 5
Which marketing channels do you spend the most on today? (Rank, with 1 being greatest)
Out- Of-Home/Events/Slideshows
Mobile
Display
Organic Social
Social Ads
Direct Mail
In-Store
Search
Website
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When asked which marketing channels they expect will provide the greatest growth for their brand in 2017, there are differences in priority when compared to luxury brands’ existing spends; Mobile, for example in which luxury brands expect a substantial amount of growth.
And while more luxury brands expect Websites will have the greatest growth for their brands than any other marketing channel, many growth channels represent where brands expect the greatest degree of success for their user-generated content initiatives as well.
60% of luxury brands anticipate Mobile will be a top-five marketing channel in terms of growth for their brands in 2017. 28% of all luxury brands claim Mobile will be their greatest marketing channel for growth.
79% of brands expect Email will be a top-five marketing channel in terms of brand growth in 2017, where almost half (48%) of all retailers rank Email as a ‘1’ (5%), ‘2’ (32%), or ‘3’ (11%) on the scale.
Another 79% of luxury brands anticipate Social Ads will be a top-five marketing channel for growth in 2017—as with Email, almost half (49%) of all retailers rank Social Ads as a ‘1’ (7%), ‘2’ (19%), or ‘3’ (23%) on the scale.
65% of luxury brands expect Organic Social will be a top-five marketing channel for growth in 2017, however most of those brands rank Organic Social as either a ‘4’ (22%) or ‘5’ (20%) on the scale.
Forty-eight percent 48% of brands anticipate Search will be a top-five marketing channel in terms of growth, evenly distributed across the five rankings.
40% of luxury brands anticipate Display will be a top-five marketing channel for growth in 2017, fairly evenly distributed across the five rankings
The marketing channels that received the least number of top-five rankings for brands’ anticipated growth are In-Store (18%); Direct Mail (16%); Print (11%); and Out-of-Home, Events, and Slideshows (9%).
1 3 2 4 5
Slide 6
What marketing channels do you anticipate the greatest growth for your brand in the next year? (Rank, with 1 being greatest)
In-Store
Out-Of-Home/Events/
Slideshows
Direct Mail
Organic Social
Display
Social Ads
Search
Mobile
Website
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THE EMERGING SUCCESS OF USER-GENERATED CONTENT
As stated, a majority of luxury brands anticipate substantial growth in Websites, Mobile, Email, Social Ads, and Organic Social, among others. Departures from existing spends suggest that luxury brands currently utilizing UGC are setting trends in terms of identifying which channels produce the best results.
Among all of the brands polled, luxury brands are using user-generated content (UGC) across at least a dozen marketing channels, the most popular of which are Websites (44%), Social Ads (39%), Organic Social (37%), Email (29%), and Mobile (17%).
Meanwhile, less than 10% of companies are utilizing print (8%); direct mail (8%); search (8%); display (6%); out-of-home, events, or slideshows (5%); and in-store channels (5%). 1% of companies claim they are using UGC in other marketing channels.EMERGING TRENDS IN
ORGANIC SOCIALOrganic Social Marketing—content marketing across social channels without using paid advertising—demands a value-added approach to content development. This can mean humor, or providing consumers with information, which can lend itself to user-generated content when managed appropriately.
Marketing this way is a departure from traditional advertising for luxury brands. But while the majority of luxury brands (58%) currently do not prioritize Organic Social as part of their marketing spend, a majority anticipate Organic Social will be a growth channel in 2017.
37% of all luxury brands are setting the trend, currently using Organic Social for user-generated content—the third-greatest channel among brands using UGC; and 88% of luxury brands already consider Organic Social a top-five marketing channel in terms of UGC success.
In which marketing channels are you currently using UGC? (Select all that apply)
Slide 8
Other
In-Store
Out-Of-Home/Events/Slideshows
Display
Search
Direct Mail
Mobile
Organic Social
Social Ads
Website
1%
8%
29%
5%
8%
37%
5%
8%
39%
6%
17%
44%
8
1 3 2 4 5
Slide 9
In which channels are you seeing the most success with UGC? (Rank, with 1 being greatest)
In-Store
Display
Mobile
Out-Of-Home/Events/Slideshows
Social Ads
Organic Social
Website
Many of the most popular channels—Websites, Social Ads, Organic Social, and Email—are channels in which luxury brands anticipate growth or are seeing the most success with UGC:
73% of luxury brands are seeing success with UGC in Website marketing, where 29% of retailers identify Website as their most successful channel—the largest among the ten channels. Over half (51%) of brands gave Website marketing either a ‘1’ or ‘2’ ranking.
91% of luxury brands are seeing the most success with UGC in Social Ads, where more than half (66%) of brands rank Social Ads as their first-, second-, or third-greatest channel.
88% of luxury brands are seeing the most success with UGC in Organic Social, where 18% rank it as their most successful channel, and more than half (59%) of brands rank Organic Social as their second-, third-, or fourth-greatest channel.
86% of luxury brands are seeing the most success with UGC in Email marketing, where more than half (56%) rank Email as their first-, second-, or third-greatest channel as such.
Currently, 41% of luxury brands are measuring the effectiveness of their user-generated content using engagement metrics—the most popular method. 26% use brand awareness and publicity to measure their UGC effectiveness, while 22% use sales and conversions.
Meanwhile, 15% of companies are not measuring UCG effectiveness.
47% of luxury brands are seeing the most success with UGC in Display marketing; however, most of them—38% of all brands—rank Display as their fifth-greatest channel as such.
33% of luxury brands are seeing the most success with UGC in Mobile marketing, stratified across all five rankings.
The marketing channels that received the least number of top-five rankings for greatest success with UGC are Out-of-Home, Events, and Slideshows (18%), Print (12%), and In-Store (11%).
OUTCOMES AND BENEFITS OF UGC STRATEGIES
2% Other
15% We are not measuring its effectiveness
22% Sales and conversions
26% Brand awareness and publicity
41% Engagement metrics
Slide 13
How are you measuring the effectiveness of your UGC? (Select all that apply)
2%
15%
22%
26%
41%
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REINVENTING LUXURY FOR MOBILEIf so few brands are investing in mobile for UGC, why do so most brands consider it one of the greatest marketing channels for brand growth?
According to L2’s 2015 Fashion Digital Report, Burberry outdid 82 other brands in digital performance, in large part because of its mobile platform, social engagement, and brand visibility. One of the first luxury brands to turn user-generated content into its own social media platform, Burberry tripled its mobile revenue in 2014, giving customers access to the brand “in a way that was previously unheard of in the luxury world,” according to Digiday.
Many companies have struggled with fears of breaking into digital and diluting their brands in the mass-market; following industry trailblazers like Burberry, more are building top-down strategies for breaking into the space.
User-generated content provides opportunities for measurable impact and business outcomes. As 41% of luxury brands use engagement metrics to measure the effectiveness of their UGC, most luxury brands (51%) are noticing increased engagement from their customers. 17% of luxury brands claim UGC is driving new or increased sales of their products as well.
But in addition to customer-related metrics, luxury brands are discovering new business benefits, opportunities, and qualitative advantages through UGC marketing initiatives.
For example, 50% of luxury brands claim their UGC is generating more authentic marketing opportunities. Another 29% of all companies surveyed claim UCG improves their customer feedback loop for more effective communication with their customers.
Greater presence and engagement in channels adds new perspective to brands’ positions in the market. 23% of luxury brands claim UGC gives them a more complete picture of their brands’ impact on social media.
UGC strategies allow for content development benefits as well. 15% of luxury brands claim they have opened up new marketing opportunities for them because they now have more fresh, relevant content. Another 23% claim UGC reduces the amount of new content they have to create themselves.
Only 5% of all companies claim they are not seeing measurably positive results from their UGC campaigns.
5% We are not seeing measurably positive results from our UGC campaigns
15% It has opened up new marketing opportunities for us since we now have more fresh, relevant content
17% It is driving new or increased sales of our products
23% It reduces the amount of new content we have to create ourselves
23% It gives us a more complete picture of our brand’s impact on social media
29% It improves our customer feedback loop
50% It generates more authentic marketing opportunities
51% It is getting consumers to be much more engaged with our brand
5%
29%
15%
50%
17%
51%
23% 23%
Slide 12
How are you measuring the effectiveness of your UGC? (Select all that apply)
10
1 3 2 4 5
Slide 14
What are your aspirations for using UGC in marketing efforts? (Rank, with 1 being greatest)
Reduce cost and time of creating content
Introducing brand to a new audience
Personalization of the shopping experience
Brand awareness and publicity
Engagement Metrics
Sales and conversions
Luxury brands have additional aspirations in terms of how they use UGC in their marketing efforts. Brand Awareness and Publicity, Engagement Metrics, and Sales and Conversions rank highest as luxury brands’ aspirations for using UGC in marketing efforts. Personalizing the shopping experience is a strong aspiration as well.
In fact, almost half (49%) of luxury brands consider it one of their top three greatest aspirations among the six options available.
In addition to adding new formats and channels to marketing strategies, UGC initiatives provide opportunities in terms of new, quality content that can be used or repurposed to learn more about the market and to help the brand.
When asked what are the biggest opportunities for UGC in future marketing efforts, 43% of luxury brands claim personalizing the marketing experience with images representing each relevant audience segment—including customer demographics, values, and lifestyles—is the greatest opportunity for UGC marketing efforts in the future. In fact, a majority of brands (72%) give this opportunity either a ‘1’ or ‘2’ ranking.
Similarly, most brands (59%) rank helping to improve brand messaging and to create more impactful brand experiences as either a ‘1’ or a ‘2.’
Brands are evenly distributed in terms of identifying the creation of a scalable, cost-efficient source of high quality images and videos for users across channels as a big opportunity for UGC in future marketing efforts.
Almost half (48%) of luxury brands claim identifying new customer audiences is a ‘4’ or ‘5’ as an opportunity for UGC in future marketing efforts; meanwhile, a majority of brands (69%) claim uncovering additional potential uses of a product is the least -greatest opportunity for UGC marketing efforts in the future.
Slide 11What do you believe are the biggest opportunities for UGC in future marketing efforts? (Rank, with 1 being greatest)
1
2
3
4
5
To personalize the marketing experience with images representing each relevant audience segment, including customer demographics, values, and lifestyles
To help improve brand messaging and create more impactful brand experiences
To create a scalable, cost- efficient source of high-quality images and videos for use across channels
To identify new customer audiences
To uncover additional potential uses of a product
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5 BARRIERS TO ADOPTION OF USER-GENERATED CONTENT
The evidence suggests that user-generated content is gaining traction as luxury brands prioritize it in unique ways across their marketing channels. However, a majority of brands identify five specific barriers to their adoption of UGC as part of their marketing efforts.
Olapic provides solutions to help luxury brands overcome these barriers and both strategically and effectively adopt this new marketing paradigm. Here are some common rationalizations for avoiding UGC adoption:
“WE DON’T HAVE THE PROPER TECHNOLOGY TO COLLECT UGC FROM OUR CONSUMERS.”
“WE DON’T BELIEVE UGC WOULD FIT OUR BRAND TONE AND PERSONALITY.”
“WE DON’T HAVE A COHESIVE USER-GENERATED CONTENT STRATEGY TO MAKE THE MOST OF OUR EFFORTS.”
“OUR CONSUMERS DON’T REGULARLY CREATE USER-GENERATED CONTENT FOR OUR BRAND.”
Leading visual content and marketing platforms like Olapic are setting standards in terms of trust and transparency in the use of user-generated content, championing the rights of consumers, creators, and photographers, as well as the luxury brands who work with them. These companies are helping brands acquire permissions from consumers in order to maximize the high conversion and engagement rates of UGC across all of their channels.
As a method, the utilization of user-generated content is an inevitable opportunity in the evolving, consumer-driven digital environment. As leading luxury brands like Burberry are discovering, the question is not whether or not brands should adopt UGC; the question is, ‘which of these strategies are going to deliver the greatest ROI for my brand?’
As fashion brands struggle to create enough high-quality content to fill their new and emerging channels, consumer-generated or “earned,” content has reached a maturity level to help with that effort without diluting the tone or personality of their brands.
Luxury brands have taken longer to recognize the full value of the social web and engaging customers in a two-way dialogue. But customers are increasingly calling upon luxury brands to do more than provide a certain appeal—they want ways in which they can connect with other customers, relate to them, and continue conversations about the brand. UGC enables companies to engage with loyal fans in an entirely new way, and earn the loyalty of others.
“WE DON’T HAVE A STRONG ANALYTICS PLATFORM TO MEASURE UGC EFFECTIVENESS.”
With more powerful cameras on mobile devices, and the proliferation of visual platforms like Instagram, average consumers are creating an incredible amount of high-quality imagery and sharing it across their networks. In fact, there are now more than 500 million users on Instagram alone, sharing over 95 million photos per day. With the right strategy, luxury brands can readily tap into this stream of content resources.
Marketers can tie each piece of earned content to an analytics platform that can help them understand which content has the highest engagement rates, conversions, and increase in average order value. Luxury brands can also utilize analytics to directly track revenue aligned with user-generated content.
Ultimately, this enables brands to identify the content that best impact overall sales and yield a better return on investment—while helping marketers build trust and inspire action from consumers at every touchpoint.
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ABOUT Olapic Earned Content Platform amplifies brands’ engagement
and performance across every channel using moderated, rights-approved, high-converting images and videos taken by real people. We pioneered the earned content industry in 2010 and are proud to work with nearly 400 of the world’s leading brands to supercharge every marketing touchpoint with consumer content that is proven to perform. With more than 50 million data points being analyzed on a daily basis, Olapic has influenced more than three million transactions and nearly $600 million in e-Commerce revenue in 2016.
Visit www.Olapic.com to learn more.
Luxury Interactive was created in 2007, in response to a tremendous growth opportunity in the luxury space, and a widening gap of understanding how luxury companies can fully take advantage of opportunities in the digital marketplace. Now in its 10th year, Luxury Interactive is the leading omni-channel & digital marketing event for luxury brand innovators. 300+ luxury executives come to this “safe haven” to network and idea-share around challenges and opportunities in the digital luxury space. Industry innovators from the most respected luxury brands offer insights and solutions for the most pressing issues facing the industry.
Learn more about Luxury Interactive here: luxury.wbresearch.com
WBR Digital connects solution providers to their target audiences with year-round online branding and engagement lead generation campaigns. We are a team of content specialists, marketers, and advisors with a passion for powerful marketing. We believe in demand generation with a creative twist. We believe in the power of content to engage audiences. And we believe in campaigns that deliver results.
To learn more about WBR Digital’s full suite of content, lead generation, and digital branding services, click the link below. digital.wbresearch.com
20% OF LUXURY BRANDS DON’T HAVE THE PROPER TECHNOLOGY TO COLLECT UGC
FROM THEIR CUSTOMERS.
