Halogen

The line between luxury brand mystique and consumer transparency is getting thinner  – and being crossed all the time, mostly thanks to the web and forms of social media. Embracing that transparency, yet maintaining brand values, is a key challenge for luxury marketers and will be a theme on this blog.

Another example of this challenge today, via Halogen Guides. We have a story this morning about Overstock.com adding real estate listings – including a few listings for Four Seasons fractional real estate shares being sold at a deep discount.

This is a peak into the next couple of years – tough times for the ‘middle class millionaire’,  some of whom were relying on real estate values to generate or augment their wealth. And tougher times for the marketer, now that google makes it so easy to verify what the salesperson is saying. We are just beginning to feel the impact of web-enabled transparency on the sale of the luxury lifestyle. Tripadvisor.com was just the tip of the iceberg.

What a difference two weeks makes, from the ridiculous to the tragic:

P Diddy cuts out jets

Consumers cut healthcare expenses

And every day from now on, we will read stories about consumer spending slowing, retailers suffering, and even luxury home defaults. A scan from this morning turned up a bleak holiday forecast for Neiman-Marcus.

The next few months looks like more uncertainty, followed by a realization that we are in a recession and a more brutal assessment of the impact of that on sales and consumer demand. The bright light review of all marketing and advertising programs has already started, and will intensify. Marginal and “nice-to do” programs will fall off the list. The “tried and true” programs will need to demonstrate that they actually work, in terms of generating new business, or they face the axe.

For luxury marketers, that means a closer look at print budgets, and more effort to measure the results – did the phone ring or website traffic increase? A closer look at expensive direct mail (like to the Amex Platinum list) to find out if anybody opens this stuff – or does it move from the mailbox right into recycling? A more skeptical look at big events, that generate lots of people that want to drink your free champagne, but probably not buy anything.

And instead, perhaps a greater investment in more intimate events, with real prospects. More attention to encouraging (in a cool, subtle way) customer referral. And (as you might expect from me), a greater investment in web marketing – but with even better tracking and measurement than before.

Ok, so I run a luxury ad network – but a recession highlights the challenges facing lux marketers over the next 12 months. It will be hard to stimulate demand in this climate – the mood is ugly. The short-term goal is to connect with consumers that are self-identifying their interests – via what they are reading, searching on and watching. These consumers would appear to be more ‘in the mood’ – you don’t read too many web stories about fractional real estate unless you are interested.

So today’s to-do? Go long on Google. And more on how to find these consumers, besides search engine marketing, over the coming weeks.

Seems like everyone is getting in the vertical ad network business – now including MTV.  They are calling their audience vertical a “Tribe” – which means that our affluent readership must be the equivalent of a country club.

According to Randall Stross of the the NYTimes last week, Yelp has crushed Zagat.com in the restaurant ratings game, with a fanatical adoption of web 2.0 social media techniques and clever marketing. The audience numbers seems to prove the point: close to 4m monthly unique visitors for Yelp, compared to close to 400,000 for Zagat.com.

For Zagat, this is probably even harder to swallow, since they were using user generated content decades ago to compile their restaurant reviews -  not just relying on paid food critics. Stross wants Zagat to embrace some of Yelp’s strategy: comprehensive coverage of all restaurants in a city, as well as always updated ratings, not just annually, as Zagat.com currently does. Makes sense.

But Zagat has attributes that Yelps’ investors probably wouldn’t mind – namely revenue – about $30million annually, as far as I can tell from conversations with people familiar with their business (that was up for sale earlier in the year). And their trusted brand as the definitive guide on where to eat across the country. But of course, protecting the offline revenue and brand has made it harder for Zagats’ owners to embrace the free-wheeling world of web 2.0.

It will not get any easier. Replacing high-value print readership with web readership that drives lower revenue causes heartburn. Just ask any newspaper. But I think becoming more like a media company is the way ahead for Zagat.com – a million monthly readers that are affluent and well-traveled will be more valuable to advertisers than 5 million “yelpers” looking for a local pizza joint or bike store.

So I am not ready to call time on Zagat.com. But it is probably time for them to offer comprehensive coverage at no cost to the consumer – which should drive audience. And then both subscription revenue (not for access to reviews but access to new services, like getting into hot restaurants) and branded advertising revenue can take hold at the same time.

And both Yelp and Zagat need to keep pushing ahead with new features – otherwise consumers will find alternatives, like UrbanSpoon, a new restaurant review site that I have started to use. New brands can be built quickly online, and consumers will switch based on what search result Google serves up.

Dan Richman’s social travel site for the affluent, Extravigator, was just named one of the ten travel sites to watch by the Times Online. Dan is building a community of like-minded travelers, willing to share tips and travel advice – not a social network, but a resource built by his readers. With Facebook dominant in the U.S. (even among the affluent), and A Small World dominant internationaly, new social sites will need to provide a layer of utility that cannot be found in the general purpose social networks. We are fortunate that sites like Extravigator, Spire, and UrbanSpoon all do this well – and are part of our network.

We are patting ourselves on the back this morning, as we just launched Flight Simplified (visit www.flightsimplified.com), a new private aviation Web site for American Express® Cardmembers. We think that this is a great example of the power of working with a vertical ad network – one that can build custom websites, and then provide the media to reach the target audience.

Working with American Express, and their agency, TeamOne, we designed and built this site, using editorial content from the private aviation team at Halogen Guides. The advertising campaign for Flight Simplified will be running across the publishers in our network, Halogen Publishers.

More details in the press release.