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Summary:

Rich people have phones, like apps and want to buy things using said phones. A study from the Luxury Institute offers some facts and figures around this “trend,” but what’s really worth pondering is how to create luxury mobile experiences to help drive commerce.

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Rich people have phones, like apps and want to buy things using said phones. The less-than-groundbreaking results of a study from the Luxury Institute offer some facts and figures around affluent people who own smartphones (60 percent), use apps on them (73 percent) and who have or want to buy something (67 percent) using their handsets. But what’s really worth pondering is the call by the Institute to create luxury mobile experiences via apps and in-app advertising to help drive commerce even when affluent shoppers aren’t in the store.

From the release:

“Consumers are becoming so much more mobile and we need to figure out how to translate that mobility into a humanistic experience,” said Milton Pedraza, CEO of the Luxury Institute.

“Apps are becoming ubiquitous, so it’s what we do with them that make the experience more extraordinary that will make the difference,” he said. “How the app is being used by the consumer or to contact someone who represents the brand is now where the real opportunity lies.”

There are many luxury buyers, should there be many luxury brand apps?

So what exactly defines luxury in a mobile setting? In the original web world, sites or luxury brands equated an “experience” with processor-hogging and time-consuming animations, movies and Flash-like experiences (see restaurant web sites), or they scorned the web for years (see Prada). So in bringing luxury to mobile devices and to popular mobile apps such as Words with Friends, Angry Birds or other popular games that the Luxury Institute discovered rich people also play, how do brands and developers indicate their class?

The Institute’s survey respondents had an average net worth of $2.8 million, so I’m not in the demographic, but I do have some experience with luxury brands that might offer some clues for creating an experience that resonates with some shoppers. There is a woman at Nordstroms who picks clothes out for me when I call and tell her I need something (usually before a GigaOM event). That’s luxury for me. Saving time. So perhaps a browser extension across PC and mobile that sent everything I looked at or liked to her would be useful.

But other luxury shoppers (those with more money and time) might have a different definition of luxury and different requirements. If we think of apps as so popular because they create a small individual experience then maybe luxury brands would do well to create apps for their different types of shoppers? Gateway apps, such as the engagement ring app Tiffany’s created to guide people through the purchase of a ring helps get mobile users into the Tiffany fold. Meanwhile, another app could focus on serving established customers with reminders about a spouse’s birthday (go diamonds!) or upcoming baby showers where Tiffany silver might make a lovely gift.

So what about ads?

A larger portion of the survey appeared to focus on the experience of online ads in the current apps that everyone plays. Aside from seeming surprised that wealthy people also play apps, the Institute noted that Nordstroms and Bergdorf Goodman were running ads inside Words with Friends. But for luxury brands, instead of a tacky banner app, could a luxury brand come up with something … well, more luxurious? This might help luxury shoppers choose mobile instead of the in-store experience.

Apple’s iAd was supposed to be something similar to that, allowing a brand to pay big to create an “experience,” but so far it hasn’t been a resounding success. The cost to participate has dropped from a $1 million commitment to a $100,000 commitment, and Apple has made the revenue share on iAd larger, perhaps in hopes of enticing developers to use it. Although, what may be a surprise for Apple lovers, only 28 percent of luxury consumers own an iPhone, according to the survey. Twenty-two percent own an Android, 16 percent own a BlackBerry and 2 percent own another smartphone.

So will better in-app ads drive rich people into stores? Will better apps drive rich people to buy online? In the mobile age, luxury brands have the same problem as every other retailer pondering a mobile strategy. The difference seems to be that this time around luxury brands won’t be as slow to adapt to the new commerce.

  1. ThaoLinh Bui Monday, April 2, 2012

    It would be interesting to understand your definition of “rich people”. In the Bay Area alone, there’s more than 163,000 households that have $1million. To some, that may be “rich”. To others, it could mean average living.

  2. What are your thoughts on emerging immersive ad formats like AdJitsu? Could that style of mobile ad be the luxury that has been missing for these types of brands?

  3. Christina Lundeberg Friday, April 6, 2012

    It is interesting to see what ‘rich’ means in monetary data. I’m under the impression that extra disposable income is the only qualifying factor. ‘Rich’ has such a different meaning in today’s society.

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