Marketing Luxury to Millennials: Why brands must embrace UGC

Multidirectional Engagement

Marketing is no longer a unidirectional relationship between brands and consumers. Through Facebook, Twitter and other social media platforms, and with the proliferation of earned media, there has been a shift in the ecosystem to one of multidirectional engagement rather than a process that is controlled and pushed solely companies.  Marketing now involves building emotional connections with customers based on shared interests and broader opportunities for interaction.

One way that many brands are successfully engaging with their audiences is by integrating user-generated content (“UGC”) into their campaigns and marketing channels.

User-generated content is defined as “any form of content…that [is] created by users of an online system or service, often made available via social media websites”. UGC has, in fact, become one of the best tools that marketers have to connect with their fans on social media…leveraging audience stories, reviews and commentary into marketing campaigns.  

Millennial Influence

In its article, How Millennials are Changing the face of Marketing Forever, BCG suggests that six out of ten millennials rely upon UGC when making a buying decision. Furthermore, millennials engage with brands far more extensively, personally, and emotionally—and in entirely different ways—than do other generations.

BCG refers to this two-way marketing as “the Reciprocity Principle” and attributes much of the reciprocal activity to millennials.   But who are these millennials? Loosely defined, millennials are those in their middle twenties to early thirties. They are quickly becoming a huge group of consumers—more than 2.3 billion strong, making up about 32% of the world’s population.

Although initially slow to embrace UGC, luxury brands (from fashion to travel) have come to recognise its value and are now more active in this area. Historically, luxury players have been very cautious about digital and e-commerce generally, with many fearing that digital branding, and especially the “democratisation of marketing” through UGC, posed a risk to the very exclusivity and strict control of messaging on which luxury brands rely.

UGC, however, has proven to be a valuable tool in solving issues with clicks and engagement. According to Meltwater, a leading media intelligence company, social media campaigns including user-generated content see 50% higher engagement and email campaigns see 73% higher click-through rates than those that do not include UGC.

Adweek confirms that consumers also find UGC to be much more influential than content developed by brands themselves, with 85% saying it has more of an impact on their opinion of a company than branded photos or videos.

Millennials are indeed yearning to share their opinions and feelings around brands and products, and they rely more heavily upon content created by their peers to influence their perceptions and buying behaviour, with 47% trusting UGC compared to only 25% trusting content developed directly by the brands themselves.

Luxury Embrace

According to The Economist, millennials will be the main consumers of luxury by 2026.  And, in less than 10 years, most luxury will be consumed by digital natives used to shopping (comparing, searching, deciding and buying) online.

Since millennials and other young consumers will be tomorrow’s buyers of luxury goods, it’s important for luxury brands and their marketers to engage with them today, and this requires the adoption of a reciprocal marketing strategy which includes UGC.

Luxury companies such as Burberry, Christian Louboutin and Fendi recognise the value of UGC and have launched successful campaigns in an attempt to ingratiate themselves with aspirational, if not already affluent, millennials.

As described in my recent article, Burberry: from British Icon to Chinese Darling, in 2009 Burberry became one of the first retailers to engage directly with its customers on social media, integrating UGC into a media campaign for the iconic Burberry Trench Coat, the Art of the Trench.  For the campaign, the company launched a micro site encouraging its customers to post personal photos with them in a Burberry Trench. Users were encouraged to comment, ‘like’ images and share the photos via social media and e-mail. In 2014 the campaign was rebooted to give it a global footprint.

More recently, Christian Louboutin launched the #Tribaloubi UGC campaign asking consumers to download and print tribal-themed finger puppets and share their creations on social media for a chance to be featured by the brand. Christian Louboutin often shares photos of its followers wearing its handbags and shoes, and this enables aspirational consumers to also get recognition from the brand, furthering their sense of loyalty.

Fendi also recently leveraged Weibo in China to engage directly with MeituPic users.  In Cracking China through Digital Activation, I write about Fendi recognising the importance of UGC in order to appeal to millennials in China. The company partnered with MeituPic to provide its users with an exclusive set of Fendi frames, stickers and more to decorate their selfies and post them to Weibo with the hashtag #FendiHypnoticEyes.

Beyond fashion, UGC has also disrupted the travel industry by influencing booking decisions and driving higher engagement. Reacting even more slowly to this trend than the fashion sector, luxury hotels are now increasing investments in UGC. Luxury hotel brands now see UGC as a way to cost effectively fuel their content engines with guest-generated imagery that is both on brand and authentic, resonating strongly with prospective guests.

Luxury hotels that feature UGC in their Instagram posts see six times more interactions per post than brands that do not, according to a new report from L2, a New York-based consultancy firm. Those hotels that source more than half of their posts from UGC also generate 2.6 times higher engagement than brands that do not.

According to McKinsey & Co in its report Digital Inside, Luxury consumers are digitally savvy and highly active on social media. Some 80 percent of luxury shoppers use social media on a monthly basis, whether it’s Instagram, We-Chat, Facebook or Twitter. Half are weekly users and more than 25 percent are daily social media users. And they’re not passive users. Two-thirds generate social media content – photographs, videos, product reviews or re-postings of content created by others – at least once a month. Fifteen percent do it daily.

Reciprocal marketing has clearly emerged as a powerful, if not necessary, tool for brands, particularly those seeking to engage with millennials. They must continue to embrace UGC and continue building two-way relationships with this large segment of customers – for both today and tomorrow.