During the Sotheby’s & Jing Daily Future of Luxury Conference in Hong Kong, I witnessed one of the most interesting moments of my entire business life. I asked the audience, made up mostly of managers working in Hong Kong and China (including senior executives of Louis Vuitton and Tencent), during my panel on AI-powered luxury management three simple questions. The first: Who in the audience is responsible for brands, either as CEO, CMO, or senior brand director? Almost everyone raised their hands. The second: How many of them do digital marketing campaigns in China? Practically all raised their hands again. But then, the answer to my third question shocked me. I asked: “How many of you can link sales precisely to your digital marketing, sponsoring, event, or social media activity?” In other words, how many of those audience members who run marketing campaigns in China—many for massive luxury brands—know their ROI? Not one hand was raised. Zero. After that, everyone agreed that there was a need for a different approach.
Not being able to understand the relationship between brand activities, investment, and sales is like driving a car blindfolded and without instruments yet still hoping you’ll arrive at your exact destination on time. That’s why brands who refuse to use advanced data querying and AI simply won’t meet their goals in a couple of years. The power of AI technology is that game-changing. Not utilizing it means wasting money on messages and campaigns that can’t be traced back to sales impact. The consequences go far beyond ineffective budgets. It also means brands can’t engage in meaningful conversations with customers, weaken their brand’s perception, experience reduced store traffic, and significantly lower conversion rates.
Traditionally, luxury brands tend to rely heavily on their global positioning when they do business in China, simply adjusting campaigns and communications using local models and translated copy. Talking with local managers, I often hear complaints that they have to use material that doesn’t resonate with local audiences, especially not with Chinese millennials. While many brands use local agencies to create social media content for China, they have major shortcomings. First of all, Chinese consumers access brands in a different way than Western consumers. Western brands usually define the brand image as the sum of their products, launches, and campaigns, but brand image and position is much more important in China.
So when we work with luxury brands that try to launch or accelerate their business in China, we first assess brand positioning by looking for gaps and building a compelling brand story that resonates with Chinese consumers. This is used to validate and strengthen the brand equity so we have a base for all subsequent marketing measures. Only after that, we can implement real-time data monitoring, so that we can see immediately if a brand moves in the right direction or not. When needed, corrective measures are deployed.
This has an additional implication: it allows the brand to create a story that’s perceived as authentic. Throughout the conference, almost all keynote speakers and panelists stated that an authentic brand message as the absolute must for success in China. It sounds easy, but it certainly is not! Brands will only be authentic if they do things with purpose and if consumers understand the purpose, and they need to deliver the brand’s purpose through their actions at all times. This is where many brands break down in delivering a consistent experience.
The fact that not one participant from this audience was able to validate the impact of their digital campaigns should make everyone in the field pause and reflect. If you have the same assessment for your brand, that means it’s time to act. Then it’s time to install advanced data querying systems that work with AI, conduct a data-based brand audit, improve the brand storytelling for China (and beyond), and install real-time feedback systems that allow to permanently fine-tune messaging and campaigns and to measure ROI. This is, in my view, the only way to create ongoing success in China, reach digitally-native millennials in an authentic way, and improve brand equity and profitability. Traditional marketing no longer works.
Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité.