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A White Paper from Search Star The Luxury Goods Market June 2012.

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1 A White Paper from Search Star The Luxury Goods Market June 2012

2 “The luxury sector has never had it so good. Although there are some signs of a slowdown in growth, absolute levels of profitability are at all time highs for most brands, and sector return on capital employed (ROCE) has expanded by 11pp (percentage points) since 2001.” Deutsche Bank, June 2012

3 But how’s the luxury sector faring when it comes to search activity? Are people looking for luxury goods online? If so, what sort of products? And who exactly are these people? Data from Google, Bing and Yahoo! has been expertly analysed to bring you fascinating and useful answers to these questions. Whether you’re a luxury goods retailer thinking of setting up your first PPC account or a search savvy marketeer, this Search Star white paper is the one for you. Contents General Insights What’s Going On? Why is this? Google vs. Bing/Yahoo! Specific Sectors Specific Sector Analysis Brands Offline vs. Online Demographics Age & Gender Location Overview Optimisation Tips

4 General Insights

5 What’s Going On? Deutsche Bank (and many other experts) are right. The luxury sector has never had it so good. The above chart shows searches since May 2011 for the top luxury goods terms on Google and Bing. From May 2011 to March 2012 for Google & Bing, the number of searches increased by 25.4%. Seasonally, November is a good month for luxury goods as people purchase special gifts for Christmas. Valentine’s day, Mother’s Day and Father’s Day also witness small peaks. The overall rise in searches has been consistent and looks set to continue. *Search Star Tip* - Luxury goods is where it’s at. If you sell any products that could be classified as luxury or designer, now’s the time to start/improve your PPC activity. Generally, ensure your account is cleverly organised with keywords tightly grouped. Include every relevant term. Use clever bidding, matching and demographic strategies to target the right audience. Be creative with your copy. More details on all of these top tips to follow….. Google AdWords & Microsoft Advertising Intelligence Data, June 2012

6 Why is this? Searches for high street terms are increasing too, but by far less. Whilst the number of searches for luxury terms on Google & Bing increased by 25.4% from May 2011 to March 2012, those for high street terms only increased by 16%. “The rise to prominence of luxury and lifestyle brands in this year’s [Global 500] report is quite impressive. Whilst the world remains shrouded in economic misery, people are investing their hard earned cash in brands they feel they can rely on to produce quality, long lasting products.” David Haigh, CEO of Brand Finance *Search Star Tip* - If you sell it, include the keywords for it in your account. Set up multiple campaigns and ad groups containing tightly grouped terms. Split your keywords up in to the campaigns and ad groups as much as humanly possible. This will help with monitoring, but most importantly, with ensuring you can tailor ads to include the keyword and it’s message. This is the best way to get clicks and a strong CTR.

7 Now that Bing and Yahoo! have joined forces, PPC accounts really need to encompass all three engines. Okay, so Bing/Yahoo! have a lot less clicks in this sector (334 compared to 2,241) and the CTR is a bit diluted at the moment, but just look at those cheap CPCs. *Search Star Tip* - Leaving Bing/Yahoo! out of your PPC strategy is a luxury you can no longer afford. Get in there, and get in there quickly! The two platforms (Google and Bing/Yahoo!) operate differently. Close monitoring of your accounts will ensure each account gets tweaked to achieve the best results. On Google, generally, go for exact match, tight max. CPCs and differentiated ads. On Bing/Yahoo!, you can get more conversions for your money but will need to use phrase or broad match (with a good set of negatives) to really reach a decent audience. Google vs. Bing/Yahoo! Luxury Goods Top Searches – Google, June 2012 Daily Clicks2,241 Average CTR6% Average CPC£0.84 Luxury Goods Top Searches – Bing and Yahoo!, June 2012 Daily Clicks334 Average CTR1.16% Average CPC£0.28

8 Specific Sectors

9 Specific Sector Analysis It’s all bagged up. Generating a whopping 37% of the total searches analysed, keywords including ‘luxury’ or ‘designer’ and ‘bag’ or ‘handbag’ are carrying the majority in this field. Jewellery, fashion and travel follow behind with leather and recruitment bringing up the rear. *Search Star Tip* - Again, if you sell these products, ensure all variations of these specific terms (plurals etc) are in your PPC accounts asap. There are lots of brilliant tools on both AdWords and adCenter to help you find a strong, relevant list of terms for every sub sector you need. Microsoft Advertising Intelligence Data, June 2012

10 Brands Branding is key when it comes to luxury products. ‘Demand for luxury lifestyle brands helped grow the value of the world’s 500 biggest brands by 3.3% to $3,415 billion (£2,17 billion) from 2011 to 2012.’ Brand Finance Global 500 Report, June 2012 The table below shows estimated CTR and CPCs (based on position 1, broad match, on Google) for the top 10 luxury brands in 2012 (as determined by Millward Brown Optimor). These keywords typically generate better-than-average CTRs for a decent CPC. Luxury goods is not only a burgeoning market but also a cost-effective one. *Search Star Tip* - Searchers who see an ad twice (once in the sponsored listings, and again in the natural listings) feel increased brand awareness and are more likely to click. Make sure you include brand terms in your PPC account to double your chances of success. Top 10 Luxury Brands 2012, Millward Brown Optimor’s BrandZ Study BrandEstimated Google CTREstimated Google CPC 1.Louis Vuitton4.2%£0.77 2.Hermes6.9%£0.60 3.Rolex6.3%£0.72 4.Chanel6.5%£0.83 5.Gucci7.1%£2.29 6.Prada7%£0.69 7.Cartier6.9%£1.91 8.Hennessy3.8%£0.50 9.Moet & Chandon7.3%£0.56 10.Burberry7.4%£5.97

11 Offline vs. online So everyone’s looking for luxury goods, particularly designer brand handbags, but are they actually going to convert? Well, there’s a good chance. Of the terms analysed for this section of the study, 89% included ‘online’ in the search string. These searchers aren’t looking for information on the opening hours for Selfridges, they’re looking to purchase online. And if you’re clever, they might just purchase from you. *Search Star Tip* - The most clicked on ads always include the following: – The keyword – Calls to action (such as ‘save now, register here, book today) – USPs (like ‘handmade’ or ‘exclusive’) – Price points (‘dishwashers from £125.00’) – Special offers (‘buy one get one free’) – Creativity (‘super soft feather duvets) Employ these tactics in your PPC ads, and you’ll be giggling all the way to the conversion.

12 Demographics

13 Age & Gender Microsoft Advertising Intelligence Data, June 2012 The best PPC accounts target the right audience. When it comes to luxury, it’s mainly women (58%) aged between 35 and 49 (37%) doing the searching, particularly when it comes to handbags, jewellery and gifts. *Search Star Tip* - You can reach this audience (or any audience) specifically on Bing/Yahoo! via Microsoft adCenter’s demographic targeting capabilities. Check it out or contact us for more information. Also, ensure your ads are as female-friendly as possible. Use tangible, creative & enticing copy to get that click.

14 Location The majority of people searching for luxury goods are in London, followed by Manchester, Birmingham and Sheffield. This is due mainly to the volume of people in these places, and partly to the popularity of luxury brands in these locations. Interestingly, most people searching for ‘designer bags’ are based in Westminster. Those MPs love their Jimmy Choos. ‘Designer clothes’ and ‘fashion designers’ are most popular in Manchester. A large amount of people in Exeter are looking for ‘designer wallets’. *Search Star Tip* - Include locations in your terms to ensure your ads appear to relevant searchers. Also, terms including ‘British’ and ‘UK’ (e.g. ‘uk luxury brands’, ‘british luxury brands’ and ‘british luxury goods’) are popular right now, what with the current zeitgeist for all things designed and produced on our small island. Stick these in your PPC account too. Microsoft Advertising Intelligence Data, June 2012

15 Overview

16 Search Star’s Top Tips 1.If you sell luxury goods, there are fantastic results to be had in the PPC arena. It’s a growing sector, with an engaged audience just waiting to buy that Chanel perfume from you. 2.Ensure your account is cleverly organised with keywords tightly grouped. 3.Include every relevant term, and all it’s variables. 4.Include brand terms too. Searches who see your ad in both the sponsored and natural listings are much more likely to click. 5.When it comes to ad copy, include the keyword, calls to action, USPs, price points, special offers and creativity. 6.A large part of this sector’s audience are women aged between 35 and 49 in London, Manchester and Birmingham. Use clever bidding, matching and demographic strategies to target them. 7.Advertise on Google, and Bing/Yahoo! There’s good return on investment to be had on all engines. 8.Contact us! We know rather a lot about PPC, and luxury goods, and would love to help you out.

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