Welcome back to The Deep Dive, a new series from Luxury Society that takes an in-depth look at the big issues and topics affecting the luxury market, and how the industry has responded to them. Through a series of interviews, exclusive data, and market analysis, we hope to provide a comprehensive view of each topic explored, adding to the wider discussions with our own expertise and that of others in the industry.
The second part of our report is a series of interviews with leading experts in different segments of the luxury industry such as Luxury Watches and Jewellery, Retail, Automotive, Media and Advertising and Private Banking, each taking a deep dive into the current state of the luxury industry today and where each category is headed. We aim to give our readers a deeper understanding and insight into the trends happening in the market through their eyes.
Our first interview features Rachid Ait Addi, Vice President of Client Partnerships at Teads, the world’s leading video advertising marketplace, who discusses how luxury brands have harnessed the power of video advertising during the pandemic, why demand for its creative services is growing, and where he expects growth in the luxury market to develop further into the coming year.
For Rachid Ait Addi, the global COVID-19 pandemic was a key pivotal moment for luxury brands to realise that the digital revolution had finally arrived. Conversations about a new innovation or a digital campaign that would have previously taken a year to sign off were suddenly being activated and launched within a few months of discussion. Interest from some of the world’s leading brands to work with Teads’ Creative Services team to develop new digital media concepts soared, and for Ait Addi, it represented a change in mindset from his clients that luxury was finally ready to embrace what digital media advertising could offer.
“It's really adapting their DNA for this new digital age,” Ait Addi told Luxury Society in an interview. “Because culture-wise, for a luxury brand, their image is super important, the quality of their products is super important, and their values are super important. This doesn’t change with digital storytelling. And how you engage in an elegant way with your consumers doesn’t change, the only thing that has is how you arrive at that point.”
Indeed, one key example for Ait Addi of the change that he had seen in the luxury market was with a client, who previously would take up to a year to consider new creative ideas and concepts pitched to them by his creative team, but following the pandemic really embraced the opportunity to explore what digital advertising could offer.
“Digital is really the first point of media for those brands now. We really see a change in the mindset,” said Ait Addi, noting the shift. “The creative team used to talk about ‘luxury time’, meaning that luxury brands really take their time to embrace innovation and even a new creative idea. Usually, we pitch an idea, and then a year later, they activate it during the space of six months. So, I was really surprised that in the first half of this year, we saw more creative innovation from them than in the last two years.”
Creative innovation and digital storytelling is a subject that Ait Addi knows extremely well, given he has spent the last 15 years of his career advising brands on how to make digital more of a priority in their advertising budgets, having previously worked at The Financial Times leading its digital strategy on products like How to Spend It. In his current role as Vice President of Client Partnerships for Luxury, Fashion, Beauty, Sportswear and Automotive, he leads a team of 24 industry specialists around the world to deliver media solutions to advertisers.
The main component of those media solutions is the Teads platform, which reaches nearly 2 billion people a month through most of the world’s leading publications, from Bloomberg and The Economist to The Guardian and Le Monde. Teads enables publishers to sell video advertising space on their websites in a smooth and seamless way (videos appear between article paragraphs and can be dismissed by readers by simply scrolling down), and enables brands to advertise in different increments on premium publishers’ platforms. During the 12 months ending in June, Teads saw its full-year revenue increase 36 percent to $645 million, and specifically within Beauty and Luxury, double-digit growth on top of its 2019 revenues.
What Ait Addi sees as even more promising is the demand for digital advertising and creative services, the move towards more meaningful interaction with innovative technologies, and companies focusing on not only capturing the attention of luxury consumers but also their aims of making more of an impact on their businesses. A trend highlighted during the global COVID-19 pandemic as audiences flocked online during the multiple lockdowns and restrictions the world over.
“People often think that the luxury industry is a bit behind in digital, but I don’t think that necessarily true,” noted Ait Addi. “They have always been interested in innovation. They always want to be the first ones to try the next new shiny thing, but they have moved on from doing that to really experiment with the next digital innovation in a more meaningful way, which shows more maturity. They are showing more maturity for the medium of digital.”
“Digital used to be an afterthought,” he added. “Now big luxury groups are going through pitches for new media agencies, which two years ago would have been impossible and five years ago would have seemed like a dream. For brands, they’ve realised that it's really building a culture, and embracing this new digital consumption habit from the target audience.”
Looking forward, Ait Addi believes that there is further growth in the luxury market to come and that the rebound in luxury will continue for at least five years, thanks to younger, more digitally savvy consumers helping to drive growth in the market and markets that had previously been overlooked by luxury brands like the United States.
“Brands are talking to these audiences more and more, and these consumers are getting wealthier as they are getting older. So, I believe we’re going into another era of growth, and that’s not only driven by China, but also millennials in the United States and communities that were not necessarily targeted previously,” he said.
He has already seen this positive sentiment about luxury’s rebound following into his clients’ media planning and buying for the fourth quarter of this year, which is typically a key time for spending from luxury consumers. “In this environment, as you can imagine, the big jewellers, the big fashion houses, the big fragrance companies are all planning really positive messages in their adverts for the fourth quarter,” he added.
The future for luxury he believes, looks very bright indeed, particularly for brands who have been preparing for one where digital is their main focus. “Luxury companies are reaping the benefits of the investment that they have put into digital,” he said. “They have set themselves up for the future, on all levels, not just a rebound.”