1. MYTH-BUSTING SOCIAL MEDIA
AMEX Luxury Summit
April 2011

2. INTRODUCTION
Dizzying HYPE surrounds social media
Our discussion today intends to demystify social media for luxury brands
By popping well-read myths
Including the relationship between T R A F F I C and social media

3. YOUR JOB IS MORE DIFFICULT

4. THERE IS MORE COMPETITION FOR YOUR CUSTOMERS
• Attention is a commodity, the most valuable for
luxury marketers.
• While the supply is fixed, demand is escalating faster
than ever before.
• Attention is increasingly spent online.
• As a result of this change, all media now self-
organizes by affinity, sensibility, and sharing (left and
right).
• This is how consumption of luxury goods is
changing.
TAKEAWAY: In the Attention Economy what
worked before may not work now. Embrace change.

5. ATTENTION COMES THROUGH GREAT CREATIVE

6. WORD-OF-MOUTH
IS #1 FACTOR IN LUXURY IN PURCHASING
• My apologies to your creative director.
• The number one factor in a luxury purchase is
word-of-mouth.
• Word-of-mouth in today’s media environment is a
[link].
• And traffic arrives through a [link].
• So traffic is word-of-mouth, right!
• Social media is now the plumbing for how [word-of-
mouth] spreads.
• All of your grand creative is reduced to a [link].
TAKEAWAY: You cannot produce great creative if
you do not understand link-based distribution.

7. LUXURY CONSUMERS DO NOT USE SOCIAL MEDIA

8. THEY EMPHATICALLY DO. DIFFERENTLY.
• Luxury consumers are overwhelmingly more active:
- 80% of high-net worth customers use the
Internet daily and more regularly buy products
online.1
• Buyers are voyeurs, not publishers.
- Affluents are more likely to use social media to
look at brands rather than commit to a
relationship with them (25% friends).2
• Older customers are among the most active
comparative shoppers through social.
- 70 percent of affluent consumers over age 40 have
at least one social media profile. 3
• By adding product recommendations and “shop the
WetPaint and The Altimeter Group, 2009 5
look” features to JuicyCouture.com, the brand saw a
160%+ increase in conversion rates. 4
-
Social media strikes at the heart of what luxury brands
TAKEAWAY: The marketing mix for luxury brands offer: passion.
must evolve to a minimum of 60-30-10, if you are
paying attention to marketing attribution.
1. Time, 2009
2. Luxury Marketers and Retailers: To Be a 'Friend,' You Have to Listen, 2010
3. Morpace, Omnibus Report, June 2010
4. FashionablyMarketing.Me, February 2010
5. http://www.altimetergroup.com/2009/07/engagementdb.html
6. Forbes.com,, October 2009

9. SOCIAL MEDIA DOES NOT DRIVE LUXURY SALES

10. LUXURY NEEDS SOCIAL MORE THAN EVER
Search:
• Google’s algorithm looks primarily for three
attributes:
• Naming convention
• Inbound (social) links
• Depth of recent conversation
• 60% of brand links are from social media; 25% of
search results for the world’s 20 largest brands are
links to user-generated content.1
Referral
• Facebook accounts for 21% of referral traffic, and
38% of page referrals online. 2
• Post < Link < Multimedia < Like < Comment
Social Commerce
• 61% of people rely on user reviews for product
information before making a purchase.3
• 67% of shoppers spend more online after
recommendations from online community of
friends. 4
TAKEAWAY: How many people work on your 1. Socialnomics, 2009
2. Marketing Sherpa 2010
website versus your social channels? 3. Razorfish 2008
4. Internet Retailer, September 2009

11. MY WEBSITE IS MY MOST IMPORTANT STORE
11

12. YES BUT...
• The average consumer mentions brands 90 times
a week in social media.1
• Luxury consumers increasingly do not visit
websites directly.
• Websites visit THEM through social networks,
RSS, email.
• Consumers increasingly access media through
distributed (social) rather than centralized (web)
channels.
• Traffic is not a zero sum game anymore.
TAKEAWAY: Luxury brands must now create
branded experiences across the customer journey in
the context of each channel, rather than adapt
creative across social networks.
1.Keller Fay, WOMMA, 2010

13. SOCIAL MEDIA DOES NOT DRIVE IN-STORE SALES

14. IT CAN. IT DOES. IT IS NOT YET PREDICTABLE
• We know the future of retail.
• Think of retail like a museum.
• At a museum, you have an audio tour, placards,
guides.
• Now imagine you can do all that socially through
QR, Geo-Mobile, and Links in-store.
• You can enrich the entire shopping experience in-
store.
• And all the interactions get published virally
through social media (mobile is social).
TAKEAWAY: Do not think of in-store and on-line
as separate channels, but part of the same customer
journey.

15. TRADITIONAL MEDIA IS MORE IMPORTANT THAN SOCIAL

16. DEPENDS ON THE OBJECTIVE
• When a reader participates in social media, the
brand and reader share:
• Affinity
• Sensibility
• Link
• This relationship yields more traffic per reader,
because it acts as peer-to-peer word-of-mouth
rather than passive editorial or advertising.
• This word-of-mouth stems:
• Influencers across channels
• Inclusion of social at onset of planning
• Curation and sensibility
TAKEAWAY: Partner with influencers who
introduce you to new customers rather than solely
speaking to your own.

17. I CAN’T CONTROL MY BRAND IN SOCIAL MEDIA

18. NOT TOTALLY...
• Start with a good offense, distinct voice, and
curation.
• You can also make luxury work for your brand by
understanding influence.
• Some people are more equal, because they are
simply more influential.
• Influence is more than popularity; popularity is
actually only a third of what constitutes influence.
• Influence = Traffic + Virality + Links
• Influence, not awareness, drives the right kind of
traffic. “We believe that influence is the ability to drive people to
action -- ‘action’ might be defined as a reply, a retweet, a
comment, or a click.”1
TAKEAWAY: Create campaigns to drive influence,
not awareness, in luxury.
1.Klout, 2010

19. SHOPPING IS NOT A SOCIAL EXPERIENCE

20. SHOPPING IS SOCIAL. ONLINE AND OFFLINE
• Shopping in the real world is social: why not
online?
• 53% of people on Twitter recommend
companies and/or products in their Tweets,
with 48% of them delivering on their intention
to buy the product. 1
• Consumer reviews are significantly more
trusted -- nearly 12 times more -- than
descriptions that come from manufacturers. 2
• 90% of consumers online trust
recommendations from people they know;
70% trust opinions of unknown users. 3
• Online user reviews have the biggest influence
on consumer electronics purchases, with
43.7% of purchases affected by word-of-
mouth. 4
TAKEAWAY: Invest in social shopping and open
authentication as soon as possible. 1. ROI Research for Performance, June 2010)
2. eMarketer, February 2010)
3. Econsultancy, July 2009
4. BIGresearch, December 2009

21. BRAND IS KING

22. UH-OH
• Sadly, yes.
• 65% of consumers no longer have a favorite news
source.1
• Social media is ultimately dilutive of brand:
• Links are word-of-mouth
• Brand of sharer is more valuable than brand of
publisher
• Fractured distribution results in increasingly
shared brand equity Terri Mugler versus Tom Ford in WWD
• Search rinses off brand in the great archive,
because of keyword
• Demand for personality, authenticity, access
TAKEAWAY: Lean in or Lean away.
1.Pew Research, 2010

23. INVEST ALL MY MONEY IN SOCIAL MEDIA!

24. SOCIAL MEDIA IS A BUBBLE
• Bubbles are characterized by:
Inflation in the cost of talent
High financial valuations
Volume of new entrants
Inversion of buzz to word-of-mouth
• However, real value is being built, and consumer
attention is quickening.
“During the subprime bubble, banks and
• Similar to the dot-com bubble in 1999, media will brokers sold one another bad debt — debt
sort itself within 12-18 months; growth of social that couldn't be made good on. Today, ‘social’
media is plateauing domestically. media is trading in low-quality connections.”1
• This sorting will mark the end of the beginning of
the socialization of all media.
TAKEAWAY: The clock is ticking to socialize your
sites, move beyond the web, and outside of the U.S.
1. Harvard Business Review, Umair Haque, 2010

25. ACQUISITION

26. THANK YOU
Curtis Hougland
curtis@attentionusa.com
@curtis_Hougland