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Technology Ecommerce Luxury

Luxury advertisers want a piece of the direct-to-consumer pie

By Asher Gordon |

October 27, 2022 | 8 min read

Asher Gordon of Dentsu X explains how luxury brands can maintain a premium look and feel in third-party environments such as Shopify, Meta and TikTok.

Luxury retail

/ Adobe Stock

Direct-to-consumer brands have exploded over the last few years, the accessibility and price of technology making it easier for smaller and larger players to pivot for purchase. Anyone in their bedroom can set up a company and showcase products to people across the world. Digital platforms such as Shopify, Meta and TikTok have all introduced functionality for brands to showcase and sell products to consumers more easily, providing frictionless solutions to buy and sell.

Now, luxury brands are starting to get in on the act. The rise in the spending power of digital natives and the shift to digital experiences during the Covid pandemic has meant luxury brands need to evolve their luxury commerce offering to achieve the aggressive growth they seek. Luxury items are typically presented in showrooms, stores and auction houses, so moving towards a direct-to-consumer model is not straightforward for them. This is a unique challenge for the sector, as people are highly unlikely to buy a high-priced luxury product after solely being exposed to an ad or two, it being a more considered and expensive purchase with multiple touchpoints throughout a protracted purchase journey ­– one that the advertiser will not be able to fully control.

Luxury advertisers have additional reasons to want to get a piece of the direct-to-consumer pie. Cutting out any retailers or third-party sellers could mean higher margins, but there is something else that will be more valuable in the future – first-party data. Knowing your consumers and having a direct relationship means you can talk to them about new releases, understand issues and find more people like them, meaning better results all around.

It's this deep understanding of the user journey which is crucial for a luxury advertiser. Digital has been a blessing by offering advertisers measurable metrics, but also a curse; as some advertisers can be quick to pause profitable avenues just because they have not been measured effectively. This measurement accuracy is made even harder because of the touchpoints involved in this luxury multi-touchpoint purchase journey.

Consumers are going to seek and read content provided by the advertiser and also, crucially, consume content that is not advertiser controlled. This is why advertisers need to split activity into touchpoints that can and can’t be controlled, while also up weighting the areas likely to be more important to converting a user into a customer. Luxury commerce activity that can be controlled includes website content, digital platform storefronts and user experience. Areas that cannot be directly controlled are off-site reviews, user comments and other user-generated content such as testing, how-to guides and unboxing.

Brands should actively build out additional touchpoints. This can sometimes mean approaching the ‘big-sale’ side-on, by looking at the unique opportunities linked to smaller-priced incremental purchases, experiences or add-ons in the first instance. For example, creating ‘real life’ moments that encourage people to go to showrooms to experience the product, and using technologies such as augmented and virtual reality to nudge potential customers along the purchase journey to ‘feel’ the luxury of the brand before purchase. These products typically have high ticket prices so opportunities to showcase premium feel and build need to be maximized at every point along the path to purchase.

Controllable opportunities also exist outside the showroom and core website experience. Customers expect an omnipresent and omnichannel shopping experience, so it is imperative to build multiple storefronts across the digital ecosystem. As mentioned earlier, with companies such as Meta and TikTok providing opportunities to showcase and sell products, presence across these and similar platforms is vital for exposure and consideration. The difference for luxury advertisers is ensuring any formats, messaging and imagery maintain the premium look and feel while being in these third-party environments. And this is where the detail really matters, as the UX becomes synonymous with quality of the brand too, so marketers need to think speed of loading, smooth transitions and seamless navigation with every channel and media owner choice made.

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These prospects, or users, become clients after finally making a purchase. That direct relationship is valuable as this becomes an opportunity to maximize lifetime value through cross and upsell, but also by building long-term brand advocacy to assist with those uncontrollable aspects of the journey. Understanding the motivations of the consumers in each market, through this rich first-party data, can also be used to better identify which touchpoints within their purchasing journey offer the highest conversion value. Conducting post-purchase surveys will also help expose any missing data, insight, or gaps in that path to purchase and provide another way to stay connected with the customer after the initial sale.

While brands cannot control some touchpoints, it is possible to counter negative perceptions as well as boost positive ones. For example, frequently asked questions about products are listed in search results and can be pulled from internal or external sources including customer reviews or press articles. Optimizing owned website and social content can help ensure these elements rank in key positions to dominate results in a similar way to using paid search ads to push down less favorable results in order to limit their exposure.

There are other areas that will be harder to influence, such as professional reviews and user-generated content. In these instances, luxury advertisers should be taking note of any negative comments or issues and address them on platforms that reach resonate with key target audiences. Use this as an opportunity to make improvements, build responses and answer questions or concerns in owned media.

A brand is not luxury just because it says it is. The whole experience from initial discovery through to purchase and customer interaction needs to have a premium feel. As long as the core principles of luxury are followed at each touchpoint, whether controlled or not, it will be the setup for success.

Asher Gordon is global digital partner at Dentsu X.

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