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Can luxury brands benefit more from TV commercials or product placement?

July 26, 2012


While product placement can seamlessly show the lifestyle behind a luxury item, television commercials can be disruptive and stop consumers in their tracks. Therefore, it is important that luxury marketers use whichever method suits their goals.

Television commercials should be reserved for those brands that have motion and sound associated with their performance and craftsmanship including automobiles, motorcycles and airplanes, and marketers should not skimp on the budget to get the best ROI, experts say. Meanwhile, product placement is worthwhile if an item plays a meaningful role in a storyline or is used in affluent sporting events such as golf.

“TV can be incorporated into a luxury brand marketing strategy by using both commercials and product placements if used in a carefully-controlled manner to achieve realistic goals,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.

“Brands should be careful to budget funds for TV based on the true benefits to be achieved and with consideration of other alternative media that may be more cost effective," he said.

Perfect placement
An effective product placement for a luxury brand would be where the brand plays a vital role in the storyline of the show, per Al Ries, chairman of marketing consultancy Ries & Ries, Roswell, GA.

“The first automobile driven by James Bond was an Aston Martin and, even today, many people associate Aston Martins with the Bond motion pictures,” Mr. Ries said. “That was a perfect product placement.

“The show needs to be upscale and the placement needs to reflect the upscale position of the brand,” he said. “Since television is usually directed at the mass market, it can be difficult to find shows that are truly upscale.”

TV is an action medium unlike static channels such as print. Products that move such as cars and motorcycles will be effectively displayed on television over stationary products like fashion, jewelry and fragrances, per Mr. Ries.

Furthermore, a luxury product in any category can potentially benefit from product placement if a compatible program environment is used.

“Automakers and some travel brands have an inherent advantage because they include easily-recognizable brands whereas a brand in the other product categories like fashion and jewelry may not be easily recognizable,” American Affluence Research Center's Mr. Kurtz said.

Auto placement at golf, polo, horse racing or tennis events that are shown on TV help expose a brand to an affluent audience. These placements can be with vehicles or brand logos on displays and clothing.

Some luxury automakers such as Lexus and Mercedes-Benz have physical presences at these events, but product placement can be bought for the TV audience as well.

“Product placement can be effective when appearing in programs with a relatively better percentage of affluent consumers than general TV programming,” Mr. Kurtz said.

“There is opportunity for using both TV commercials and product placement but commercials, if properly executed, will have the most impact by communicating a strong message,” he said.

In-show TV placement could also provide fashion and jewelry brands with a message to share via digital channels that helps to show the lifestyle behind the brand. This works because these products do not require as much research as other purchases.

“TV can be effectively incorporated, but with all of the opportunity that is available to communicate via digital channels it is becoming less prevalent, but should not be completely removed from the marketing mix,” said Jeff Cohen, director of social media at MDG Advertising, Boca Raton, FL.

However, product placement is not always the way to go since savvy affluenct consumers cannot be outsmarted by it.

“It should be recognized that the affluent generally understand that product placements are bought by advertisers and thus do not represent an objective product endorsement,” American Affluence Research Center's Mr. Kurtz said. “Thus product placement is viewed by the consumer as purchased exposure like a commercial.”

Commercial success
On the other hand, medium and message are the two things to consider when placing a luxury brand TV commercial, per Mr. Ries.

There are many shows that reach a broad audience and are not appropriate for luxury brand commercials. These include certain sports, reality shows and sitcoms.

Luxury brands need to find a channel or show that reaches upscale consumers.

Additionally, a brand’s message must be tailored to be visible in a TV spot.

“It is especially helpful if the luxury brand has what we are calling a ‘visual hammer’ such as the watchband of a Rolex, the zigzag designs of Missoni, the polo player of Ralph Lauren, the Tri-Star of Mercedes,” Mr. Ries said. “Without a visual hammer, a television commercial would not be very effective for a luxury brand.”

Furthermore, TV can be effective for achieving several goals for a luxury brand, per American Affluence Research Center's Mr. Kurtz.

TV combines sound and video to create a strong message, often with emotion.

Second, if placed in selective programs such as news and sporting events that attract affluent consumers, the commercials can reach the target market cost-efficiently.

Third, commercials can build awareness and a positive image among the general public that is appreciated by affluent people.

If TV will be used, it is important that budget be no matter since more money is wasted from under-spending than overspending.

“If you use television, you have to spend enough money to get above the noise level,” Mr. Ries said. “Only big-budget brands should consider using television and for smaller budget brands, print would be a better investment.”

“If the brand has enough money to spend on television and if the brand has the commitment to run television spots for at least a decade or so, then TV would be an ideal medium provided the brand develops two things: a visual hammer and a verbal nail,” he said.

“The verbal nail for BMW, for example, is ‘the ultimate driving machine,’ and the visual hammer are the television commercials showing BMWs being driven around winding roads by happy owners.”

Final Take
Tricia Carr, editorial assistant on Luxury Daily, New York