Gucci, Digital Advertising & Strategy Case Study
With modern times come modern ways of doing things. The world of advertising is unlike the billboards and all-encompassing TV ads. Now, advertising is defined by its personalized touch in reaching segmented audiences that can resonate with a brand more than anyone else. And Gucci is no exception to that approach.
Gucci parent company Kering Group—the owner of Bottega Veneta, Yves Saint Laurent, Balenciaga, Brioni, Stella McCartney, and other fashion houses—has seen enviable growth in the last few years, reporting in 2017 its first three quarter revenues up over 26% on a reported basis compared to 2016. But Gucci has been the forefront and the crown jewel of the Kering group. With Gucci’s earnings composing Kering’s 39% of corporate revenues and posting a 44.5% growth in 2017, it’s safe to say the Italian luxury fashion brand is enjoying a period of prosperity.
What’s contributing to that growth?
According to Kering chairman and CEO Francois-Henri Pinault, half of Gucci’s sales come from millennials, a generation consisting of 35-year olds and younger. That has been a challenging demographic to reach for luxury brands. What this shows from Gucci is that the attractiveness of the brand’s couture resonates with younger demographics than for the proverbial older generation.
And while the couture does explain why the brand seems to bode well with a younger consumer, it would be imprudent not to look at Gucci’s advertising strategy. In seeking and attracting the millennial consumer’s attention and dollars, we can accredit Gucci’s success to its well-executed advertising and marketing strategies, which had gone concurrently with a digital rollout. In recent years, Gucci has integrated both a strong digital approach with its in-store dominance for an omnichannel strategy that will be definitive for luxury brands’ success in the coming years.
Gucci’s omnichannel strategy is a signal that it is going all-in for the demographic that’s visibly championed the luxury brand. Because 98% of today’s luxury consumers can be found online, it will be more important than ever before to tie the success of a luxury brand like Gucci to its eCommerce strategy, social media approach, marketing strategy, and mobile functionalities with its offline capabilities. The result of that means one holistic user experience that is both unique and compelling to modern consumers no matter where they choose to interact with a brand. Sure enough, Gucci’s digital strategy has become holistic in reach and followed in a surge of new luxury converts in addition to longtime patrons.
It would be criminal to count only Gucci’s digital strategy as the sole reason for its success in recent years. Of course, while helpful, Gucci’s digital approach is only a fraction of the brand’s prosperous growth in revenue and label recognition. Indeed, at the forefront of Gucci’s advertising and marketing strategy is the team that’s directly responsible for the luxury brand’s success: Marco Bizzarri and Alessandro Michele, the CEO and creative director of Gucci, respectively.
The pair has spearheaded the brand’s various fortifying strengths over the last few years; Bizzarri in business and Michele in the creative center. Since late 2014, when Bizzarri’s helm as the Gucci chief executive began, the question over who would fill the creative director position loomed over him and the brand’s future.
Bizzarri would ultimately go with the 12-year Gucci veteran in Alessandro Michele, who had been with the company since working under Tom Ford and had been an associate designer to the now-former creative director, Frida Giannini. Bizzarri made the decision after determining he needed someone that could deliver on his vision of creating a culture of “respect and joy, fostering creativity,” adding, “intuition and instinct are more important than rationality.” For the luxury space, where emotion and experiences eclipse rationality, there could not have been a better choice to lead the new direction than Alessandro Michele.
The two set their roles and responsibilities, Bizzarri taking care of the business side, and Michele to lead the brand’s creative development. Bizzarri does not discuss sales or budgets with Michele, which gives him the creative freedom to express the brand how he believes is best. As to why Bizzarri had done this, the Gucci CEO stated, “You cannot put limits or constraints on creativity.” From there on, the two began a period of covetable growth, and creativity was now the central focus of the Gucci brand.
Leading Gucci into the digital age
The first thing both Bizzarri and Michele agreed on was to take Gucci to a new stage in the brand’s history. No longer would Gucci be beholden to its past success and continue on the same track. One thing was of high importance: innovating the way forward.
The biggest challenge in having been presented with this new opportunity as the new CEO of a luxury brand and a new creative director’s appointment was to stand still, says Bizzarri. But that was not the answer. “We have to empower talents, we cannot always tell people what to do, and there’s no limits to growth if you are exposed to innovation.”
First to happen as part of this new, innovative approach to Gucci’s marketing strategy was the shift of the face of the brand. The iconic celebrities of Gucci’s past, such as Elizabeth Taylor, Grace Kelly, Jackie Kennedy, would now be succeeded by the modern-day style icons that would resonate with the increasingly younger luxury demographic: Harry Styles, Rihanna, Lady Gaga, Beyoncé, and Salma Hayek.
And though the Bizzarri-Michele team phased out Gucci’s storied successes in search for new ones better framed for today’s generation of luxury consumers, the resurrection of the GG logo preceded its prominent placing on its new handbags and accessories, with it also restoring the Dionysus buckle for part of its new shoes and bag lines. As a result, six out of seven of Gucci’s best-selling and high-margin accessories have been created by Michele.
The GG logo comeback doesn’t stop there. With free rein, Michele asked graffiti artist GucciGhost to collaborate with the brand for its fall collection. It’s difficult to imagine any other luxury brand would give this much creative freedom as part of its way forward, much less allowing its logo to be redressed. “But such is the way with Gucci, and it demonstrates the embrace of the changing times and need to appeal to today’s luxury consumer,” says Manuel Gonzalez, head of the luxury digital agency G & Co. “As an advertising agency, we commend Gucci’s willingness to adapt and allow consumers to enjoy the brand as they do. It’s user-generated content and collaborations with some of the biggest icons of today’s world that can excite younger consumers.”
Of course, the digitally savvy Kering group knows Gucci’s advertising strategy goes further by investing in its digital innovation and infrastructure. As an early adopter of eCommerce, the Italian luxury brand knows far too well that the millennial demographic that has surged their market share is always online—again, with 98% of affluent consumers stating they use the internet on a daily basis. This segment of the market desires an authentic experience in a digital medium and, as a result, expects a sincere relation with brands online, especially with luxury brands; if consumers are spending considerable amounts of money on luxury wares, the experience should be just as luxurious.
It’s precisely that rationale that has seen Gucci invest heavily in its online strategy and infrastructure. Gucci had redesigned their eCommerce site for the first time in 13 years to signal their intention to meet new consumer expectations. New additions to the site included a find in-store option feature, an excellent product information, gift wrapping features, an expanded customer service through phone and e-mail, and a generous shipping and return policy that has since been recently augmented to consider the pandemic-induced disruptions.
Of course, these leaps in Gucci’s digital transformation are helped in part because of their early adoption of the online world. And while the rest of the luxury world has lost valuable time catching up with the shifting trends in a more digitally-centric world, Gucci has been able to rally loyal customers and uphold its lustrous image through its proactive implementation of its digital strategy while retaining the quintessential aura of exclusivity luxury brands have.
At the same time, Gucci has benefited enormously from the hip hop culture that has promoted the luxury brand for years. From Kanye West dubbing the new phrase to turn “What’s good?” to “What’s Gucci?” to the 2017 rap hit Gucci Gang visibly flaunting the brand, it’s clear the Kering subsidiary is an admirable luxury house.
Not surprisingly, this dominance over hip hop culture has also spurred Gucci’s popularity with younger consumers even more than before. In the first half of 2018, Gucci broke record sales, most of which came from consumers under 35. “What this means for Gucci is that its combination of an excellent online experience, admirable consumer affinity, and embrace for innovation has led to the kind of growth that surely translates to success in the years ahead,” says Juan Manuel Gonzalez, founder of UI/UX and luxury marketing agency G & Co.
Omnichannel Strategy Development
As big as an emphasis as Gucci has put on their online strategy, there’s certainly no denying the luxury brand is reshaping its image for the new age. As of 2017, Gucci had remodeled over a quarter of its boutiques to integrate the in-store shopping experience with its cutting edge digital platform.
On the more corporate side, Gucci added a 37,000 square foot manufacturing facility in Italy named the Gucci ArtLab to meet the growing demand and produce leather goods in a more sustainable manner—all while staying true to its promise of banning the use of fur in its products. As part of Michele’s long-term creative vision, the Gucci ArtLab serves to house innovative and artistic expression to nurture the brand’s embrace of bold ideas, much like the ones that have elevated Gucci to where it is today.
It’s impressive, to say the least, the kind of success the Bizzarri-Michele team has demonstrated. Gucci’s hands-off management approach and understanding that the creative side is never to be capped, along with the digital transformation that’s captured the attention of the growing millennial segment in luxury, has led to the sort of admirable expansion of the Gucci brand name that seems to only herald greater growth ahead. We’re excited to see what more there is to come from Gucci’s advertising strategy.
How much does Gucci spend on digital marketing and advertising?
The most recent annual figures for Gucci’s advertising spend is roughly $567 million, an estimated 11% of Gucci’s revenue.
What did Gucci do for a digital transformation?
Gucci’s digital transformation is unique in that it was one of the first brands to embrace eCommerce in the early 2000s. Thanks to Kering’s early conviction that the online medium would ultimately become necessary, and the bold leadership at Gucci, the luxury brand has gone further to encompass features such as a “find in-store” feature, descriptive product information, gift wrapping features, and customer service through phone and email—all components of a strong online strategy that is certain to give Gucci the edge over its competition.
What is Gucci’s digital strategy?
Gucci’s digital strategy recognizes who their target audience is, knowing where they spend their time and meeting them where they are to engage them.
Given that Gucci’s social media exposure includes inviting artists like GucciGhost to recreate their patterns as part of their advertising strategy, we can only assume that the luxury brand’s efforts to reach out to their younger audience are certainly working.
Kering, the parent company to Gucci, has shifted its communication budget to 40% digital, up from 20% just four years ago. This can only mean that Gucci sees greater returns for investing in its digital marketing strategy. As a luxury marketing agency, we commend this approach and are confident it will mean even more growth in Gucci’s long-term vision.
What is Gucci’s customer experience (CX)?
No matter the medium, Gucci has taken an approach of “brand first, channel second” for its customer experience. That philosophy is essentially what has propelled the brand to invest in its omnichannel strategy to more fully engage shoppers either in-person or online. The consistency with which Gucci has tried and excellently carried out is part of the reason why it has stood out for consumers and only accelerated the brand’s digital presence.
Who is Gucci’s target market/customer?
Half of Gucci’s sales are attributed to consumers 35 years old and younger, meaning their target market is the millennial and Generation Z consumers who are typically more online savvy than most other consumers. Gucci’s target customers are those who value self-expression and want a brand that values creativity and innovation.
What is luxury brand digital marketing, how is it different?
Because of the brand positioning, a luxury brand’s digital strategy will have to look different than any other brand’s in terms of how it engages with customers, showcases its products, and communicates its value.
Why is UI/UX important for luxury brand eCommerce stores?
A good user interface (UI) and user experience (UX) is essential for any eCommerce store in that it helps browsers easily navigate a website for the sole purpose of making their customer journey easier to finish. Most importantly, an eCommerce store is a window into a brand’s image; the first impression a browser makes when coming across a shop can easily determine whether or not they will continue browsing and ultimately purchase something.
Why is eCommerce important for any luxury business?
In the rapidly changing world we live in, it’s important now more than ever for brands to adapt to evolving consumer needs. And that includes meeting them where they are. As an advertising agency and eCommerce shop, we know the value in a consumer-centric strategy to help luxury brands excel for the future.
It’s not enough for luxury brands to have a branded site just to check the box off on eCommerce. Consumers today want an experience that matches the quality of a luxury product they purchase. That’s why luxury brands place a great emphasis on tailoring their approach to play on consumer sentiment and meet the mark of exclusivity.