Monthly Archives

July 2018

Luxury in Flux.

Mark Walker

 

FROM LUXURY PEAR TO SOMETHING YOU ‘SMASH’.
WHAT THE AVOCADO TELLS US ABOUT THE WAY AFFLUENCE IS CHANGING.

We’re used to standards of living rising. It’s widely regarded as an inevitable consequence of increasing technological development – one that is arguably intensified by the spread of global trade. Yet disposable incomes still vary wildly throughout the developed world. And despite the general trend towards people getting richer, there will probably always remain some sectors of modern society that are more affluent than others.

For brands that target these affluent consumers, the constant shifts in their tastes and attitudes – especially regarding what is considered a premium product or not – must be closely monitored. As luxury cars, haute couture and private jets will always be the preserve of the extremely wealthy, many of the luxuries enjoyed by today’s mass affluent consumers are destined to become everyday products, and conversely, some of today’s most mundane consumer goods might one day be considered objects of desire.

In examining these shifts, it’s worth considering what makes a luxury product different from everyday produce and, in particular, why two perennial characteristics of luxury goods – scarcity and authenticity – have such an important part to play.

First, however, I’d like to take you on a trip back in time.

Welcome to the 1980s
Growing up in the UK in the 1980s, I recall with great clarity the moments that defined the era. Maradona’s Hand of God in the 1986 soccer World Cup. Ghostbusters. The Garbage Pail Kids and mobile phones so big they would be rejected as hand luggage on any commercial flight today. I also remember mealtimes – or more specifically, the way the food we ate changed. While my brother and I enjoyed the orange and beige diet of many western youngsters of the day, our middle-income mother and father were beginning to explore an entirely new culinary universe.

Coq au vin, Stroganoff, Duck à l’Orange. Today it all sounds rather hackneyed, but back then, such dishes had long been associated with the wealthy. In Britain, it had been believed until then that fine wine and foreign food were only truly understood by those with the money to travel abroad – and before the 1980s, only a small proportion of British consumers could easily afford air travel. But with rising living standards came foreign holidays – and an increasing awareness of food products from overseas. The stage was set for the introduction to the UK of a food item unlike any other.

Enter the avocado pear
The ‘avocado pear’, so called because it was foreign but pear-shaped, was a new savoury kind of fruit. It was so exotic it came encased in the skin of an alligator, yet its contents felt like edible velvet. To Britain’s aspiring middle classes, this was luxury made flesh.

Across the country, special occasions would be marked by the deployment of this astonishing new pear as a starter (something you only normally got in upscale restaurants). It would be sliced in half, de-stoned with a spoon, filled with prawns and topped with Marie Rose sauce (often made by cunningly mixing ketchup with mayonnaise until an emulsion of the desired pinkness was achieved ).

Thirty years on, however, the avocado has evolved. Gone is the word ‘pear’. That suffix brought familiarity when we needed it but, once that familiarity was established, the lustre of luxury was lost.

Smashed avocado on toast is now the breakfast du jour of the liberal metropolitan elite . Millennial interns survive on it. My vegan friends might starve without it.

Luxury doesn’t last forever.
Rising living standards have played an important part – as has the arrival in the British mainstream of Mexican food – a cuisine long confined to the Americas. Economies of scale and globalisation of supply chains have also helped spread the word, as retailers and importers have realised they can satisfy our boundless desire for avocado more and more cheaply. Scarcity matters enormously in luxury marketing, after all – it’s simple supply and demand. However there’s more to this story than incomes and product availability.

Because it’s not just the avocado. It’s not always a shift in the same direction, with sometime luxuries undergoing an inevitable Newtonian fall in status until they are finally commoditised. Sometimes the journey takes an everyday product in the opposite direction.

Yesterday’s news
For many years, the newspaper was a cornerstone of life in the developed world. There was a time when a working day without reading at least one was inconceivable, with evening editions also available, for the truly news-addicted. Then came the information superhighway, which replaced or improved on printed news in every way.

Or did it? Because for some reason, the printed newspaper still has a story to tell. While it’s no longer a necessity for everyone, it has recently resurged as a daily luxury for some. There is a sense of sophistication that physically reading a broadsheet paper conveys; something that feels good about sitting outside a café with a cappuccino and a copy of the Times. Like wearing a tie, the paper has gone from something you do because there’s no alternative, to something you do to tell the world something about yourself.

Which brings me onto another example: vinyl.

On the record
In the Sixties and Seventies, a home was incomplete without the wall of sound that can be generated by dropping a stylus onto a spinning, twelve-inch black disc. The likes of ‘Frampton Comes Alive ’ and ‘Boston’ were luxuries that powered the parties of the Baby Boomer generation. However, in time they were outperformed by the digital quality of Compact Disk. In turn, the CD would be replaced by the MP3 and the wonders of streaming. Napster opened the door to unlimited music. Apple kicked it off its hinges and then Spotify stormed in. Why would anyone pay £20 for an LP when you can access thirty million tracks a month for less than a tenner?

Throughout this tumultuous period, vinyl sales dropped a little further every year. In 2006, less than a million vinyl records were sold in the entire United States . Yet the ageing format refused to roll over and die. Driven by the passion of its aficionados, sales have begun to increase again, with 14.3 million vinyl records sold in 2017. And it’s not just those of us who remember buying ‘Thriller’ first time round. It’s an audience too young to remember leafing through album sleeves in local record stores that catered to every mass-market music buyer, rather those with special interests.

But today, that’s exactly who the vinyl buyer is: a discerning, expert audience that sees this aged format as a premium product; an example of analogue authenticity to be cherished in a world of disposable digital noise.

Change is the new normal.
So what of the future? In a world where artificial intelligence attends to my every desire, will brands and products hold their status any better? Or will this flux continue with luxury products drifting into the mainstream while the opposite occurs in other categories?
Inevitably, it seems, these shifts will continue. We will always desire the things that make luxurious things so luxurious: not just scarcity and authenticity but also craftsmanship and personal service. In a fast moving world dominated by digital technology, we’ll seek them out more enthusiastically and it’s possible that, as fashions move faster, brands and products will see their status change more suddenly than they have in the past. And don’t forget: not every failing product can expect to be reincarnated as a luxury. For every vinyl, there is a VHS. For every Polaroid, a Sinclair C5.

There is one more twist in this ongoing tale. The humble avocado, the fallen angel of the food world, is now shifting in status once again. With El Niño wreaking havoc in the lands where it grows, demand is outstripping supply by 20%. This might only add a few pence to the price today, but it offers a glimpse as to what might happen when China’s billions acquire the taste for guacamole. While we may not see a reprise of the avocado and prawn cocktail, the avocado itself may yet regain its status as a luxury ‘pear’.

Luxury, it seems, is forever in flux. Even in our globalised world, the pace and direction of these fluctuations can vary by geographical market and while products can change in status, brands targeting affluent consumers need not – as long as they do not rely solely on scarcity and authenticity. For brands to remain relevant to these buyers, characterisics must be bolstered with USPs and marketing messages based on their superior craftsmanship and the opportunities they offer their buyers for personalisation. But those are just two of the differences between a luxury brand and a luxury product. And that’s another story altogether.

An Extraordinary Grand Tour: The Story of Bentley

Keko London has collaborated with Mill+ to create Bentley Motors’ new brand campaign film, reminiscent of a film or series opening credit sequence.

The 90 second film: ‘An Extraordinary Grand Tour: The Story of Bentley’, celebrates Bentley Motors entering its 100th year of creating the world’s most iconic Grand Tourers, honouring decades of innovation, achievement and craftsmanship.

To bring the creative idea to life, the team used a combination of state-of-the-art 3D-scanning techniques to transform actors into metallic statues alongside fluid motion graphics and live action elements to tell the captivating Bentley story.

The short film can be viewed here:  www.BentleyMotors.com/100Years

Why the one-stop shop is back.

By Harry Steer.

As I write, the ad industry is buzzing with reports of the imminent demise of WPP. While the reasons put forward vary wildly, what they have in common is the underlying assumption that the company founded by Sir Martin Sorrell – like its competitors – has failed to adapt to an industry environment that has outgrown the current media agency model.

Recently, P&G Brand Chief Marc Prichard delivered a speech calling for creative and media agencies to reunite. He’s not alone. In fact, this is something some of my more experienced media colleagues were prophesising throughout my career – in part, because they remember the way things used to be.

 

Where we were and where we are going.
Until the late Eighties, media and creative were typically managed by the same agency. Then today’s specialist media agencies began to spring up, offering economies of scale and deeper industry knowledge – a model that persisted well into the 21st Century. But in isolating media from creative, a certain agility was lost.

The landscape is now evolving again, thanks in part to the demands of influential clients like Prichard. Consumers now have more choice than ever, while on the supply side, the increasing prevalence of digital media allows for superior targeting and reporting.

This is a topic close to my heart, having spent my entire career at two of the industry’s giants – Mindshare and Omnicom’s Rocket – before making the decision last year to leave the media world and join a full service agency. My decision was rooted in my beliefs about the future of media, which arose from three big trends.

 

1. Transparency (or the lack of it).
As media agencies have shifted investment from traditional channels to digital, they have increasingly faced questions relating to the transparency of their work. As Jon Wilkins, chairman at Karmarama, recently said, “the media agency margin has been made up of a lot of non-transparent practice in the digital space – and that’s where they’ve succeeded in margin. With the transparency agenda at the forefront of most clients’ minds, this will be under pressure.”

One of the key areas to come under such pressure has been the use of agency-owned programmatic trading desks. During my time in media agencies, I saw an active increase in investment in agency owned desks – something that made transparent costing much more difficult to provide. Brand security is also an issue. The World Federation of Advertisers recently cited that around two thirds of marketers are uncomfortable with the conflicts these desks create.

 

2. Trust (or the lack of it).
This is a tough one. Not only have the channels used by consumers changed, but their attitude towards advertising in general has changed, too. Currently 69% of consumers do not trust advertising. This has resulted in 39% of adults using an ad blocker, an increase in use of ad-free services and an increase in ad blindness. Instead of looking to rebuild this trust, media agencies have increased the number and size of ads shown to the consumer, which has only increased their problems. Recognising the opportunity, consultancies such as Deloitte and Accenture have entered the market – and rather than limit themselves to media buying, they are extending their offers to include operating models, forecasting and even creative services such as product design.

 

3. Google and Facebook.
Recent figures suggest that the expenditure going to Google and Facebook accounts for 90% of online advertising growth. The meteoric rise of these platforms has impacted media agencies in two important ways:

• No media discount: The traditional media model is based on a 15% buying discount, which allows the agency to charge the client the market rate, and take the 15% for itself. Neither of these platforms offer such a discount so, as spend in these channels increases, the traditional agency revenue stream decreases. This reduction in profit means media agencies must look for alternative revenue models, which brings us to…

• …self-service media. Both platforms allow anyone to set up and run their own ad campaign. This bypasses the need for a specialist agency. For clients who are frequent high spenders, both platforms offer specialist teams to ensure they make best use of the platform (while increasing spend on said platform, of course). By allowing anyone to run campaigns, the big tech players make it even harder for media agencies to generate profit. Clients are naturally reluctant to pay a commission for something they can do themselves.

 

The future is sort of blurry.
In the case of WPP, this is not the first time the company has faced a major challenge. It has survived two recessions and one full-on global financial crisis. What we are seeing now is more fundamental, however. It is a specific challenge to the business models on which our industry is based. No longer can the giants of media rely on their clients to adhere to their business model. Many of the challenges facing agencies are also facing clients – and the clients are already responding.

One way they’re doing this is to look outside the bubble of media specialists. In some cases, they’re empowering creative agencies like my new employer to unite media and creative on a project-by-project basis. In other instances, they’re taking the process in house.

There’s still a role to play for the big shops, however, with all the specialist tools and insight they can bring to the table. My prediction is that, just as creative agencies are encroaching on some of their work, today’s media agencies will start to integrate some creative work into their offering, at a level they haven’t considerd in the past. And maybe we’ll see one or two full-scale reunifications of creative and media under one roof. Whatever happens, the lines we’ve all respected for the last two or three decades will become blurred.