Dive Brief:
- Even though big agencies want luxury brands for the prestige they have trouble getting those contracts. One way around the issue is merger and acquisitions.
- For instance, Digiday points out, BBDO bought majority stake in Wednesday Agency Group, a luxury marketing agency, in a deal that gets BBDO into the luxury marketplace and offers Wednesday better data and analytics capabilities.
- Further, luxury brands, such as Lamborghini, can be found in one place that increasingly is not surprising – Instagram.
Dive Insight:
"Big agency networks have not successfully cracked this market, and it’s not for lack of trying," Wednesday Agency Group Co-Founder Jens Grede told Digiday, explaining the nature of luxury marketing and BBDO's interest in the agency.
Michel Campan, founder of Same Same But Different, a Paris luxury firm acquired two weeks ago by McGarryBowen and now rebranded as McGarryBowen Luxury, put it this way to Digiday, "It’s a little industry with a lot of unique habits and many internal codes. It’s not possible just to come in from the outside."
Big agency interest in luxury might appear to be more for prestige than revenue, as typical margins are 13% to 15%, while luxury margins are 10% to 12%, and luxury marketing budgets tend to be lower than other categories, per Digiday.
Some brands, such as Lamborghini, eschew paid advertising altogether. And those that do paid ads can be difficult clients for agencies with in-house marketing teams that keep a tight rein over brand image and how products are presented. Wednesday's Grede explained to Digiday, "It takes a very different agency to service Tory Burch than Procter & Gamble."