Luxury brands see performance marketing as ‘the Wild West’

The power of performance marketing channels is being ignored by luxury brands that are adopting a “snobbish attitude”.

Jim Hawker, Co-Founder of brand performance agency Threepipe Reply says: “Luxury brands see it as the Wild West and don’t understand it so they turn their backs and seek solace in Farfetch where it's fashion people talking to fashion people.” 

However, with traditional channels for luxury and beauty products, such as department stores or spas, closed for much of the past year, retail has shifted online.

“We do a lot with Amazon and big brands don’t do that well there, and they don’t protect their brands,” he says. “In the beauty space you may not have heard of some of the top selling brands, but they optimise so well. Whereas the incumbent legacy brands don’t and are losing a huge amount of sales as a result.” 

Creative and media

These brands are failing to connect the channels to bring the consumer journey through to the point of purchase, says Hawker. And part of the problem derives from siloing creativity and performance. “There’s always that tension between creative and media. They are inherently interlinked but there is no model to help you understand what happens if you tweak the mix.”

The agency has tried to change that with a new planning tool to help its MarTech team interrogate the mix of creative assets and media, called Creative Decay. The tool analyses performance data from Facebook and Instagram to provide insights on how the correct mix of media and creative investments helps to hit performance KPIs. Crucially it helps determine how quickly creative is burning-out and losing its effectiveness and can run an audit of performance channels and make recommendations for improvement within a couple of hours. The agency is looking at extending the tool to other channels.

Brand and performance

Although performance and brand are often painted as having an uneasy relationship, Hawker says that a strong brand actually brings down the cost of performance.

The recent news that Airbnb was slashing its performance marketing was met with horror by some in the sector who feared it would lead to other brands following suit. However, few brands have the level of brand recognition, loyalty, or organic traffic of Airbnb.

“I think Airbnb was getting about 70% of traffic organically anyway. So, it probably wasn’t turning off much performance. It is a brilliant brand and invested in brand-building channels delivered excellently,” Hawker says.

Rather than divesting from performance channels, brands should look more closely at where it makes the greatest difference, he says. And they should not view performance activity as purely about traffic. 

“You can go a long way in building brand with effective performance marketing, especially with the ad inventory available with product listings and Google Display Network. If you have a decent range, a decent price point, and decent creative, you can go far.”

He advises brands to look at data to see how many sales they are missing out on. 

“Find out how many people are searching for your brand and buying another. Would you want that customer? Would you know what that Amazon Prime customer looks like because I’d bet they look a lot like your existing customers.”