2016 was not an easy year for luxury.
Global events that tested the economy — including terrorist attacks in France, Brexit, a tumultuous U.S. election and undulating Chinese stocks — transpired to the luxury market’s first downturn since 2009. Most markets experienced slowed or stagnant growth: Americas and Asia each contracted by 3 percent, and Europe declined 1 percent, according to a study by Bain & Company.
Though the dip negatively impacted the resources luxury brands allocated toward marketing, data shows gains are on the horizon. According to Zenith’s 2017 Luxury Advertising Expenditure Forecast, the industry can expect mostly positive change in luxury advertising spending across several regions as the market regains momentum.
Despite the growth, there is still a mounting disparity between “high luxury” (characterized by Zenith as watches, jewelry, fashion and accessories) and “broad luxury” (luxury automobiles and cosmetics). Though high luxury tends to include more iconic brands, consumers are growing increasingly interested in broad luxury items, perhaps as a result of their utility. Zenith predicts that this focus on broad luxury will continue into 2017 and 2018, as marketers and advertisers continue to focus their energy on these types of products.
“Luxury advertisers are having to respond to consumers’ changing expectations,” Vittorio Bonori, Zenith’s Global Brand President, said in the report. “Consumers are now looking for luxury experiences that are personal and relevant to them, and targeted brand communication is central to creating this extra brand value.”
Data courtesy of Zenith
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When it comes to predicted future ad spend between 2017 and 2018, Eastern Europe has the highest predicted growth rate, at 10 percent. Latin America and North America will both see upticks, while Asia Pacific and the Middle East/North Africa regions are expected to show continued decreases at a rate of 6 percent, as a result of continued political turmoil and low oil prices.
Data courtesy of Zenith
When it comes to advertising for luxury brands, print still reigns supreme. This is particularly true if the company is in the high luxury space: 73 percent of all high luxury ad spend was directed to print in 2016. However, looking at the entire luxury market, including broad luxury, tells a different story. Across print, television and internet, print advertising is expected to begin to dip before 2018, as internet and web ads start to spike.
Data courtesy of Zenith
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Overall, consumers in North America are spending the most on automobiles over other forms of luxury and are expected to continue the trend into 2018. Following cars are fashion and accessories, fragrances and beauty, and watches and jewelry, respectively.
Graph courtesy of Zenith
