L2 Digital IQ Index®: Watches & Jewelry (2011) by L2

Watches SCOTT GALLOWAY NYU Stern

& Jewelry O C T O B E R 1 8 , 2 0 11

A Think Tank for DIGITAL INNOVATION

November 10, 2011 The Morgan Library New York City To register, visit:

FORUM:

http://L2innovationforum2011.eventbrite.com

On November 10, L2 will host its third annual Innovation Forum in New York City. Presented with NYU Stern School of Business, the Forum will address innovation in digital marketing and implications for prestige brands in a TED-style event. Speakers include CEOs, Nobel Laureates, and thought leaders from academia and industry.

elements: • High-velocity, provocative presentations by thought leaders from industry and academia • Conversations and panels with industry icons and influencers • Just-released Digital IQ Index® research benchmarking prestige brands in fashion, beauty, accessories, and retail • Trends, predictions, and best practices based on a year’s worth of L2 research • Performances by innovators in art, media, music, and technology

The largest gathering of prestige executives in North America

hosts: speakers: SCOTT GALLOWAY Founder, L2 Professor of Marketing NYU Stern PETER HENRY Dean NYU Stern

MICHAEL LAZEROW CEO & Founder Buddy Media

New speakers are being added daily. Visit our event site for the most up-to-date list.

• Countdown of the seven most innovative programs in prestige To register, visit:

http://L2innovationforum2011.eventbrite.com

GREG LINDSAY

TOM PHILLIPS

JULIAN TREASURE

Author & Journalist Aerotropolis: The Way We’ll Live Next

CEO & Co-Founder Media6°

Author, Sound Business

TAMáS LOCHER Co-Founder & CEO LOOKK.com

VICTORIA RANSOM Founder & CEO Wildfire

DUNCAN WATTS Principal Research Scientist Yahoo! Research

Chairman, The Sound Agency

JENNIFER AAKER Professor, Stanford University Graduate School of Business

TIM HWANG Chief Scientist, Pacific Social Architecting Corporation

THOMAS LOCKWOOD Author, Design Thinking and Building Design Strategy

PAUL ROMER Professor NYU Stern

GEOFF WATTS Co-Founder EDITD

DAVID CAREY President Hearst Magazines

JOHN JANNUZZI Editor Lucky Magazine

SONIA MARCIANO Professor of Mangagement & Organizations NYU Stern

KRISTINE SHINE Vice President Popsugar Media

JOEL WEINGARTEN CEO & Founder StyleOwner

DAVE GILBOA Co-CEO & Co-Founder Warby Parker

SHERIL KIRSHENBAUM Research Scientist Webber Energy Group, University of Texas

OREN MICHELS CEO & Founder Mashery

MARC SPEICHERT Chief Marketing Officer L’Oréal USA

CAPTAIN DAVID WERNER U.S. Navy Office of Information

MELISA GOLDIE EVP, Chief Creative Officer Calvin Klein, Inc

CATHERINE LEVENE Co-Founder & CEO ArtSpace

MAUREEN MULLEN Research & Advisory L2

JOHN TOMICH CEO & Co-Founder OneStop

GABE ZICHERMANN CEO Gamification Co.

Digital IQ Index ®:

Watches & Jewelry

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IN T R O D U C T I O N

Digital: It’s Time In our first Digital IQ Index® measuring the category in isolation, nearly two thirds of the brands are classified as Challenged or Feeble, and only two, Tiffany & Co. and Swarovski, achieved Genius and Gifted classifications (respectively). Gray market concerns, counterfeit fears, limited pricing transparency, and retailer conflict all present obstacles for organizations in this category to build and sell their brands online. However, with 67 percent of consumers in the EU and half of those in the U.S. indicating that they research luxury goods online before making a purchase, do Watches & Jewelry brands really have a choice?

Drive and Derive

Two Ways

Just 29 percent of the brands in the Index boast e-commerce

Digital also provides the opportunity to reduce offline marketing

capabilities. However, in a category where third-party distribu-

investments. There are two ways to build shareholder value:

tion is not going away anytime soon, the missed opportunities to

increase perceived value and/or reduce costs. Managers tend

drive potential consumers to authorized offline retail is even more

to focus on the former when presented with new technology.

disappointing. Less than half of the brands link to a store locator

However, social media’s true promise may lie in the less roman-

from the product page and just one third display product prices.

tic notion of reducing (significantly) the costs of, and addiction

Tiffany is the only brand to provide in-store pick-up through its

to, print. Brands that establish direct relationships with their

site, while TAG Heuer is the only brand to provide links to online

customers via social media platforms have the opportunity to

retailers. Although Watches & Jewelry brands may never do

excise the publisher’s tax.

significant volume directly, they can steal a page from the playbook of most automobile brands and use their sites and social media channels to push consumers to the next stage in the purchase funnel.

Digital IQ Index ®:

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IN T R O D U C T I O N Dipping their toes There are signs of life. All but three brands in the Index now

The medium we are assessing is similar to our methodology in

maintain a presence on Facebook, with communities averaging

that both are dynamic. We hope you will reach out to us with

more than 200,000 fans. Mobile site adoption is up from just 7

comments that improve our investigation and findings. You can

percent in 2010 to 39 percent this year. In addition, brands are

reach me at scott@stern.nyu.edu.

slowly beginning to abandon flash-heavy sites that are difficult to navigate in favor of streamlined experiences that are more searchable, shareable, and product-centric.

Scott Galloway

Hubris

Founder, L2 Clinical Professor of Marketing, NYU Stern

While some industry icons move forward others continue to slip

further behind. With a YouTube channel launch and new iPad applications, Cartier was one of this year’s biggest winners, but still registers an “Average” IQ. The biggest disappointment is industry heavyweight Rolex, which has fallen from Gifted in 2009 to Feeble this year. Hubris has infected many of the Watches & Jewelry brands with complacency online, and their stakeholders may pay a heavy price.

Digital IQ = Shareholder Value Our thesis is that digital competence is inextricably linked to shareholder value. Key to managing and developing a competence is an actionable metric. This study attempts to quantify the digital competence of 35 global Watches & Jewelry brands. This year’s ranking reflects brands’ efforts across the U.S. and Western Europe. Our aim is to provide a robust tool to diagnose digital strengths and weaknesses and help brands achieve a greater return on incremental investments.

Digital IQ Index ®:

Watches & Jewelry

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A B O U T T H E R A NKIN G S D i g i tal I Q C lasses

M E T H O D O LO G Y

Site: 35%

IQ Range

Effectiveness of brand site

Functionality & Content: 75%

BRAND TRANSLATION: 25%

• Site Technology

• Site Aesthetics

• Navigation, Product & Site Search

• Messaging & Imagery

140+

IQ Class

GENIUS Digital competence is a point of differentiation for these brands. Site content is searchable, shareable, and mobile-optimized. Social media efforts complement broader digital strategy.

• Social Media Integration • Customer Service & Store Locator • Product Display & Content • E-Commerce & Transaction Orientation • Account Sign-Up & Functionality • Innovation & Interactivity

110–139

• Global E-Commerce Footprint

GIFTED Brands are experimenting and innovating across site, mobile, and social platforms. Digital presence is consistent with brand image and larger marketing efforts.

• Branded Content

Digital Marketing: 25% Search, display, and email marketing efforts • Search: Traffic, SEM, SEO, Web Authority • Display Advertising & Innovation: Text & Banner Ads, Retargeting, Cross-Platform Innovation Initiatives • Blog & Other User-Generated Content: Mentions, Sentiment

90–109

Digital presence is functional yet predictable. Efforts are often siloed across platforms. Sites often offer limited transaction-orientation.

• Email: Frequency, Language, Content, Social Media Integration, Promotion

Social Media: 25% Brand presence, community size, content, and engagement on major social media platforms • Facebook: Likes, Growth, Post Frequency, Applications, Responsiveness, Content, Global Presence • Twitter: Followers, Growth, Tweet Frequency, Online Voice

70–89

Mobile: 15% • Mobile Site: Compatibility, Functionality, Transaction • iOS Applications (iPhone & iPad): Availability, Popularity, Functionality, iPad Differentiation • Android: Availability, Popularity, Functionality

CHALLENGED Limited or inconsistent adoption of mobile and social media platforms. Site lacks inspiration and utility.

• YouTube: Views, Number of Uploads, Subscriber Growth, Content, Interactivity

Compatibility, optimization, and marketing on smartphones and other mobile devices

AVERAGE

<70

FEEBLE Investment does not match opportunity.

• Innovation: SMS, Geolocal, Other Mobile Marketing Innovation © L2 2011 L2ThinkTank.com

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D I G I T A L I Q R A NKIN G

PARENT COMPANY: COMPAGNIE FINANcIèrE RICHEMONT S.A.

Other: publicly traded

THE SWATCH GROUP LTD.

Other: privately owned

LVMH

Rank

Brand

Parent

TIFFANY & CO.

Tiffany & Co.

143 Genius

A class by itself, Tiffany boasts the only m-commerce site and a flare for cross-platform programming

SWAROVSKI

Swarovski AG

124 Gifted

Huge Facebook community, #1 Digital Marketing score and site traffic leader

JAEGER-Le COULTRE

Compagnie Financière Richemont S.A.

108 Average

Bridges Grande Tradition with digital best practices and notches top score for Social Media

DAVID YURMAN

Yurman Design, Inc.

107 Average

Strong site coupled with Foursquare activity

CARTIER

Compagnie Financière Richemont S.A.

106 Average

Finally commandeering its own Facebook efforts; social media traction coupled with iPad updates score biggest winner accolades

OMEGA

The Swatch Group Ltd.

103 Average

Content-rich iPad magazine and strongest mobile site in study

TAG HEUER

LVMH

100 Average

Live press conferences on Facebook and top-scoring YouTube channel somewhat compensate for sluggish site load

LONGINES

The Swatch Group Ltd.

95 Average

Leading (limited) e-commerce efforts in the watchmaker category

MONTBLANC

Compagnie Financière Richemont S.A.

92 Average

Launched e-commerce right after data was cut, savvy Facebook programs delight

PANDORA

Pandora A/S

92 Average

Pandora Club sign-up available using Facebook connect bolsters a community more than 800,000 strong

BULGARI

LVMH

90 Average

Mobile site absence is saved by F-commerce experimentation and Enchanted Garden experience

HUBLOT

LVMH

90 Average

Early innovator is hurt by anemic Facebook growth

IWC SCHAFFHAUSEN

Compagnie Financière Richemont S.A.

90 Average

Award-winning iPad app coupled with strong Facebook growth and engagement keep brand ticking

AUDEMARS PIGUET

Audemars Piguet Holding S.A.

89 Challenged

The Art of Timeless Precision needs online shopping

Digital IQ Class

Comments

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D I G I T A L I Q R A NKIN G

PARENT COMPANY: COMPAGNIE FINANcIèrE RICHEMONT S.A.

Other: publicly traded

THE SWATCH GROUP LTD.

Other: privately owned

LVMH

Rank

Brand

Parent

RAYMOND WEIL

Raymond Weil S.A.

85 Challenged

Punching above its weight class with strong social presence, awaiting mobile innovation

CHOPARD

Chopard Holding S.A.

83 Challenged

Elegant efficiency needs e-commerce best practices and mobile applications

MIKIMOTO

K. Mikimoto & Co., Ltd.

83 Challenged

YouTube absence hinders IQ; strongest e-commerce presence in the Index

DE BEERS

LVMH

82 Challenged

March site launch improves IQ and threads the needle between brand and commerce; next step: social media

BAUME ET MERCIER

Compagnie Financière Richemont S.A.

81 Challenged

Overachiever on Facebook and surprising #2 in Twitter followers signals digital potential

PIAGET

Compagnie Financière Richemont S.A.

79 Challenged

Rewards and thanks Facebook fans but playing it safe on most digital fronts

MOVADO

Movado Group Inc.

78 Challenged

What about 2011 Legends? Facebook content is stale

BREITLING

Breitling S.A.

77 Challenged

Only Android app in the study, but without a mobile-optimized site still not fully compatible

HARRY WINSTON

Harry Winston, Inc.

77 Challenged

Needs to add sparkle to predictable digital performance

VAN CLEEF & ARPELS

Compagnie Financière Richemont S.A.

75 Challenged

E-commerce could perhaps be the new chapter?

VACHERON CONSTANTIN

Compagnie Financière Richemont S.A.

71 Challenged

Highest Facebook engagement rate in the study, but can’t overcome limited mobile presence

BULOVA

Citizen Watch Co., Inc.

68 Feeble

Needs to adopt Twitter and YouTube

BACCARAT

The Baccarat Company

65 Feeble

Department store e-commerce connection is a Genius move for this otherwise disappointing digital experience

ROLEX

Rolex Holding S.A.

64 Feeble

Biggest digital disappointment in the sector

Digital IQ Class

Comments

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D I G I T A L I Q R A NKIN G

PARENT COMPANY: COMPAGNIE FINANcIèrE RICHEMONT S.A.

Other: publicly traded

THE SWATCH GROUP LTD.

Other: privately owned

LVMH

Rank

Brand

Parent

FRANCK MULLER

Groupe Franck Muller Watchland S.A.

48 Feeble

Anticipating mobile app debut

H.STERN

H.Stern Jewelers, Inc.

48 Feeble

Facebook presence weak, site even weaker

OFFICINE PANERAI

Compagnie Financière Richemont S.A.

47 Feeble

Screensavers: Out. Social Media: In

BUCCELLATI

Buccellati Holding Italia S.p.A

42 Feeble

Dated

GRAFF DIAMONDS

Graff Diamonds International Ltd.

42 Feeble

Facebook newcomer has a lot of catching up to do

FABERGÉ

Fabergé S.A.

39 Feeble

Digital means more than a strong site experience; awaiting the social media Rebirth Of (this) Icon

PATEK PHILIPPE

Patek Philippe S.A.

36 Feeble

Last place in an uncompetitive race

Digital IQ Class

Comments

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K E Y F IN D IN G S

D I G I TA L I Q D I S T R I B U T I O N % of Brands per Digital IQ Class

(Time) Standing Still GENIUS

In our first-ever Watches & Jewelry Index, nearly two thirds of Watches & Jewelry brands are classified as Challenged or

Feeble and only two brands registered IQs of Genius or Gifted,

Digital IQ

>140

Tiffany & Co.

confirming the hypothesis that the category is one of the biggest luxury laggards online. In comparison, in the digitally

GIFTED

sophisticated Specialty Retail and Travel categories, both which Swarovski

ink considerable revenue through online channels, 42 percent and 41 percent of brands, respectively, were Genius or Gifted.

Digital IQ

110–139

Meanwhile the Fashion and Beauty categories register about

AVERAGE

one third of brands in the Genius or Gifted ranks. Although Watches & Jewelry brands are beginning to invest in social

Jaeger-LeCoultre

Montblanc

media and mobile, transaction-orientation and digital marketing

David Yurman

Pandora

Digital IQ

Cartier

Bulgari

90–109

Omega

Hublot

TAG Heuer

IWC Schaffhausen

31%

competence (search, email, retargeting, etc.) lag other industries.

Longines

D I G I TA L I Q A C R O S S IN D U S T R I E S

CHALLENGED

% of Brands Classified as Genius or Gifted Audemars Piguet 42%

41% 33%

Raymond Weil

Breitling

Chopard

Harry Winston

Mikimoto

Van Cleef & Arpels

De Beers

32%

Baume et Mercier Piaget

Movado

Digital IQ

70–89

34%

Vacheron Constantin

FEEBLE

29% Specialty Retail

Travel

Beauty

Fashion

Watches & Jewelry

Digital IQ

<70

Bulova

Officine Panerai

Baccarat

Buccellati

Rolex

Graff Diamonds

Franck Muller

Fabergé

H.Stern

Patek Philippe

Click Icons to Download Research

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K E Y F IN D IN G S In the Company of Genius Tiffany & co.

One of the top sites in the Index, Tiffany threads the needle between brand building and e-commerce.

What Makes Love True microsite and app bring the magic of Tiffany & Co. to life through authentic love stories, curated New York experiences, and film and music suggestions.

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K E Y F IN D IN G S In the Company of Genius Tiffany & co. (continued) One of only two brands in the study with an Instagram account.

Tiffany & Co. emails provide communications links to e-commerce, customer service, social media properties, and mobile applications.

Tiffany’s Engagement Ring Finder app blends utility and shareability. The app allows users to identify their ring size and comment on products on a private Facebook wall.

Even for products that aren’t sold via e-commerce, such as engagement rings, Tiffany provides pricing, payment options, and seamless handoff to an in-store consulation.

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K E Y F IN D IN G S Digital IQ by Ownership Structure

D I G I TA L I Q BY O W N E R S HI P S T R U C T U R E 170

Genius

An analysis of Digital IQ by ownership structure suggests that brands held by public companies register a significant advantage online, arguably as a result of the emphasis (pressure) the

Disparity

markets place on innovation. Public companies not affiliated with a larger organization demonstrated the biggest Digital

140

Tiffany & Co.

IQ gains, up 11 percent year on year. Although small sample sizes prevent us from drawing conclusions, The Swatch Group

Disparity

Gifted

narrowly outpaced other Watches & Jewelry conglomerates with an average IQ of 99 versus an average of 91 across the LVMH portfolio and 83 for watch-giant Richemont. Richemont registers a 61-point spread between the organization’s highest

Disparity

110 Disparity

Average

Digital IQ (Jaeger-LeCoultre) and its lowest (Officine Panerai) suggesting that there are innovation silos and that brands are not sharing best practices, a trend we have seen play out

AVG IQ

Disparity

Omega

Jaeger-LeCoultre Car tier

David Yurman

TAG Heuer

Longines AVG IQ

Montblanc IWC Schaffhausen

Pandora

Bulgari Hublot

Challenged

across other organizations in the prestige category.

Swarovski

AVG IQ

Audemars Piguet Raymond Weil Chopard Mikimoto Breitling

AVG IQ

De Beers

Movado Harry Winston

70 Bulova

Baume et Mercier Piaget Van Cleef & Arpels Vacheron Constantin

AVG IQ

Feeble

Baccarat

Rolex

Franck Muller H.Stern

Officine Panerai

Buccellati Graff Diamonds

Fabergé

Patek Philippe

y el at iv Pr

pa m

ly ic Pu

Ow THE R n= ned :

gn Ri ie F ch in em an on ciè t S re n= .A .

LV M

Tr THE ad R: n= ed

n= H 4

L n= t d. 2

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K E Y F IN D IN G S G R E AT E S T Y E A R - O V E R -Y E A R G A IN O R LO S S 2010 vs. 2011 Digital IQ Percentile Rank

Cartier CHALLENGED

AVERAGE

Industry icon is finally on Facebook and introduced iPad apps on the art of watchmaking and bridal collection. Still needs significant site investments to compete with other icons of prestige.

+35%

David Yurman AVERAGE

AVERAGE

Boasting the strongest site in the study, e-commerce capability is a point of differentiation this year. Making inroads with Twitter launch.

+30%

Jaeger-LeCoultre AVERAGE

AVERAGE

Strong social sharing, mobile site launch, and YouTube channel catapults brand to #3.

+30%

IWC Schaffhausen CHALLENGED

AVERAGE

Early investments in Facebook have resulted in one of the largest and most engaged communities in watches.

+28%

Chopard FEEBLE

CHALLENGED

Mobile site launch and modest social media programming are enough to move brand up an IQ class.

+27%

-22% -27% -30% -30% -32%

Hublot GIFTED

AVERAGE

Others are starting to catch up with one of the early digital content kings. Earned media from 2010 World Cup isn’t a factor this year.

Piaget AVERAGE

CHALLENGED

Early innovator maintains stronger digital presence in Asia than in U.S. and Europe. Upgrades to site navigability and purchase handoff are necessary for it to reverse trend.

Rolex CHALLENGED

FEEBLE

Brand equity alone can no longer keep icon afloat. Absence from social platforms is taking its toll.

Fabergé CHALLENGED

FEEBLE

With only one brick and mortar store, online innovation is a must for this iconic jeweler.

Van Cleef & Arpels AVERAGE

CHALLENGED

Another brand with early legacy investments, including one of the first iPhone apps. Limited site sophistication is becoming more and more of a liability.

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K E Y F IN D IN G S Selling Is Knowing Only 29 percent of the brands in the Index boast e-commerce capability, and Longines and Movado are the only pure play watchmakers that sell online. Concerns about pricing transparency, retail relationships, and inventory all provide significant challenges for brands in the online channel. However, our data indicates e-commerce capability is the strongest predictor of digital competence across channels. When brands begin selling online, digital transitions from a marketing cost to a P&L. Brands with e-commerce capability register double the traffic growth, 85 percent higher Google search volume, and nearly triple the number of Facebook fans. They also demonstrate broader adoption of digital marketing tactics, such as search engine optimization and marketing and email communication.

Y E A R - O V E R -Y E A R S elect d i g i tal & soc i al med i a growt h E-Commerce vs. Non-E-Commerce (August 2010–August 2011)

Average YOY Traffic Growth

Average Monthly Google Searches

Average YOY Search Growth

Average Number of Facebook Fans

E-Commerce

No E-Commerce

Difference

10%

100.0%

1,166,200

628,904

85.4%

429%

115%

273.0%

330,668

116,897

182.9%

Swarovski nabbed the #2 E-commerce and #1 Traffic scores in the study.

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K E Y F IN D IN G S S I T E F E AT U R E S : W AT C H E S & J E W E L R Y S I T E S

Driving and Deriving E-commerce isn’t the only way to drive incremental revenue, and there is evidence that a stronger digital presence can fuel retail sales. A recent report by Fondazione Altagamma1 indicates that 67 percent of EU luxury purchasers and 50 percent of U.S. consumers research a product online before they visit a store. However, the majority of brands in the Watches & Jewelry category are doing little to facilitate this handoff. Although 80 percent link to third-party retail locations, less than half link to a store locator from the product page. TAG Heuer is the only brand that links directly to online third party retailers. Only one third of the brands display the product price, and Tiffany is the only brand that offers in-store pick-up.

80%

(August 2011) With Without

49% 34%

Link to Store Locator Display Product from Product Page Price

29%

Shareable Wish List

23%

Gift Finder

Link to Other Online Retailers

In-Store Pick-Up

97%

20% List 3rd Party Locations in Store Locator 51%

In Search of Search

66%

71%

77%

In a category rife with gray market and counterfeit products, paid search represents one of the biggest missed opportunities. Less than half of the brands are purchasing their own brand keywords and fail to come up in the top three for paid ads. Instead,

G O O G L E PA I D S E A R C H R E S U LT S : B R A N D S E A R C H T E R M S

this valuable search engine real estate is being seized by e-tailer,

% of Results in Top Three Paid Ads

flash sites, and discounters such as eBay and Overstock.com.

(August 2011)

2010 GOOGLE

In 2010, 28 percent of the brands registered a discount or auction site in the top three paid results. That number has exploded to 62 percent this year as brands continue to ignore

2011 GOOGLE

45% 48%

Brand Site

paid search. Not addressing paid search results is a giant “for sale” sign in the world’s biggest retail window: Google.

Department Store

24% 28%

83%

E-tailer / Flash Site

Discount / Auction Site

45%

28%

62%

1. “Digital Luxury Experience,” Fondazione Altagamma, September 2011.

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K E Y F IN D IN G S Social Integration

S O C I A L M E D I A IN T E G R AT I O N

Social media and mobile adoption has increased dramatically in Watches & Jewelry, but many brands still do not link to their social and mobile properties from their brand sites, missing out on valuable opportunities to build communities and increase interaction. Although 70 percent of brands maintain a Twitter handle, only 46 percent link to their account from their sites and only 40 percent allow products to be shared via Twitter. There are more links to brands’ Facebook pages, however Facebook sharing functionality is limited and only one third of the brands incorporate the Facebook “Share” or “Recommend” API and just 14 percent include Facebook “Like” functionality on the product page. Data suggests that linking to social media properties and incorporating product sharing features can provide tangible results, and the amount of traffic coming from and going to a brand site from social media properties significantly correlates with Digital IQ.

% of Sites With Links to the Following (August 2011) With Without

31%

69% Facebook Page

54%

46% Twitter Account

60%

40% YouTube Channel

66%

34% Mobile Application

83%

17% Online Forums & Communities

89%

11% Blog

94%

6% Mobile Website

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K E Y F IN D IN G S Starting to Get Social

SOCIAL MEDIA ADOPTION

Although community sizes, especially on Twitter and YouTube,

% of Brands Present on the Following Social Media

remain small, social media adoption has exploded year-on-

(September 2009, 2010, 2011)

2009

year as brands get serious about establishing direct relationFacebook fan base, almost 200,000, is driven up considerably by behemoths Tiffany (1.5 million) and Swarovski (1.4 million).

2010

89%

ships with their consumers across the industry. The average

2011

83% 79%

Brands are growing fast and on average add 530 new fans

74%

per day. Post frequency has increased as well, with brands

71%

averaging about four per week. Twitter adoption has increased significantly, but communities are still small, averaging just under 5,000 followers. There is a direct correlation between the number of tweets a brand has sent (which can reflect frequency or be a proxy for legacy on the platform) and the number of followers. Brands are averaging less than one tweet per day,

45%

suggesting that there is significant opportunity to amplify efforts

41%

on the platform. On YouTube, high viewership of brand content is rare, and more than half of the top-viewed videos are on non-brand channels.

26%

17%

Facebook

Twitter

YouTube

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K E Y F IN D IN G S

FA C E B O O K FA N R A C E

B E S T IN T W E E T

Top 10 Brands: “Likes”

Top 10 Brands: Followers

(September 2010–September 2011)

624,857

N/A*

333,070 208% Growth

@DavidYurman

@officialpandora

SEPT. 2010 SEPT. 2011

00 ,5 12

0 50 2,

0 00 0,

0 00 0, 50

0 25

# FOLLOWERS IN:

2,598 329% Growth

@Montblanc_US

Growth

N/A*

2,892 285% Growth

@vancleefarpels_

4,843%

180,632

Baume et Mercier

SEPT. 2011

SEPT. 2010

182,132 503% Growth

Piaget

3,270

# LIKES IN:

182,191 519% Growth

Cartier

5,367 387% Growth

@Hublot

201,214 984% Growth

IWC Schaffhausen

N/A**

5,816 312% Growth

@TAGHeuerOnline

240,810 18% Growth

Hublot

7,284

249,367 254% Growth

TAG Heuer

11,849 284% Growth

@Bulgari_US

Bulgari

12,800 429% Growth

@swarovski

Pandora

14,129 86% Growth

@baumeetmercier

Growth

1,396,429 173%

Swarovski

32,102 456% Growth

@TiffanyAndCo

1,513,220 222% Growth

Tiffany & Co.

* Data Not Available ** Launched post September 2010

Digital IQ Index ®:

Watches & Jewelry

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K E Y F IN D IN G S

T O P 1 0 Y outube v i deos Across Branded & Non-Branded Channels (August 2011) Click to view videos: BRAND CHANNEL NON-BRAND CHANNEL

Cartier: “Calibre de Cartier, Mechanics of Passion”

1,359,162

Hublot: “Jet Man”

939,026

Breitling: “Formation flight with the Breitling Wingwalkers!”

655,147

De Beers: “Morning Surprise” 2006 Christmas Commercial

389,195

Tiffany & Co.: “True Love Grows”

377,524

Omega: “Omega Seamaster Automatic Watch Review”

353,646

Patek Philippe: “Birth of a Legend”

300,551

Pandora: “New Pandora Beads Promo”

211,644

Piaget: “Piaget Altiplano Ultra-Thin”

186,351

TAG Heuer: “Grand Carrera”

50 0,

00 0

00 0 00 , 1, 2

00 0 90 0,

00 0, 0 60

00 0 30 0,

176,079

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K E Y F IN D IN G S Overachievers vs. Underachievers

O V E R A C HI E V E R S & U N D E R A C HI E V E R S

Comparing a brand’s number of Facebook “likes” with the

Actual Facebook Fans vs. Predicted Facebook Fans Based on Google Monthly Global Search Volume (Linear Regression)

number of global monthly organic searches for its brand name on Google (a proxy for brand equity online) identifies 1.5 million fans Tiffany leads all overachievers on Facebook.

(August 2011)

Overachievers:

Facebook overachievers and underachievers. With more than 1,200%

IWC Schaffhausen and Baume et Mercier also appear on the overachiever list. Arguably, the category’s greatest underachievers, Patek Philippe and Rolex, do not appear on the graph as they have yet to launch official Facebook

1,065% 1,000%

communities. Both brands boast several substantial unofficial communities (one unofficial Rolex page has 250,000+ fans placing it #5 in the study).

800%

600% 512%

400% 311% 304%

28%

Tif

fan

Co Pa . nd o Sw ra IW ar C o v Sc ha ski ffh au se n Ba um Hub l ee o tM t erc ier Bu lga r Ch i op a rd TA G He ue r Om eg a

65% 52% 42%

he ro n on Con tb lan stan tin Lo c ng ine s Ba cc ar a Bu t lov a H. St er n De Be er Fra s nc kM Bu u cc ller ell ati Gr aff Di am on ds

171%

Va c

196%

200%

-60% -65% -71%

-89% -89% -96% -96% -98% -99% -100%

-200%

Underachievers:

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K E Y F IN D IN G S Size vs. Engagement With brands in the Index averaging more than 200,000 likes,

FA C E B O O K C ommu n i ty s i ze v s . e n gageme n t rates

the conversation on social media is beginning to shift from fan

U.S. & Global Facebook “Likes”, Excluding Pages With < 2,000 Fans

acquisition to fan engagement. We measure engagement by

(August 2011)

the number of comments or likes on brand posts divided by the size of the community. As expected, when Facebook com-

FAMILIES

munities grow engagement rates decline and rarely do we see

TRIBES

a brand that effectively balances the two. Although no brand in Watches & Jewelry falls in the elusive “Tribes” quadrant, Cartier and IWC Schaffhausen come close as the result of high engagement, while Tiffany, Pandora, and Bulgari are moving

KEY:

in as a result of page size.

IWC Schaffhausen

= BRANDS Narrowing on “tribes” categorization

Cartier

Bulgari

LEVEL OF ENGAGEMENT

Tiffany & Co. Pandora

COHORTS

CROWDS

SIZE OF COMMUNITY Note: Horizontal axis (Size of Community) is graphed on a logarithmic scale.

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K E Y F IN D IN G S

IWC Schaffhausen encourages usergenerated content by enthusiastically thanking fans for their photo contributions.

T op 1 0 : h i g h est i n teract i o n rate (June–August 2011)

Vacheron Constantin 0.38%

De Beers 0.35%

Vacheron Constantin generates dialogue by responding to customer service queries and engaging with fan posts and uploads.

Van Cleef & Arpels 0.33%

IWC Schaffhausen 0.28% Jaeger-LeCoultre 0.23% Cartier 0.21% Bulova 0.21% Breitling 0.19% Audemars Piguet 0.19% Piaget 0.18%

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K E Y F IN D IN G S Upwardly Mobile

M O B I L E A D O P T I O N R AT E S A C R O S S P L AT F O R M S

Mobile site adoption has increased dramatically year over year,

% of Brands on the Following Mobile Platforms

and 39 percent of the brands now host a tailored mobile site, up

(2010 vs. 2011)

from just 7 percent in 2010. Although adoption has increased, utility still lags, and only one brand—Tiffany—is m-commerce

Mobile Site

enabled, while a mere 23 percent of brands link to a retail loca-

tor and just two have mobile search. iPad apps have also grown 39%

significantly in popularity; three in ten brands now boast an app for the tablet. iPhone adoption has remained relatively static, with more than half of the brands now hosting marketing apps.

2010

2011

Tiffany and David Yurman are the only brands that maintain an iPhone

official account on geolocal platform Foursquare. Both average 20 times more check-ins at their retail locations than brands with no official presence on the platform.

45%

2010

2011

52%

M O B I L E s i te fu n ct i o n al i ty % of Brands With or Without the Following Features (June–August 2011) With 77%

23%

iPad

Without 29%

Retail Location Finder 89%

0% 11%

2010

2011

Customer Service Information Android 94%

6% 3% Site Search

97%

3% M-Commerce

2010

2011

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F L A S H O F G E NI U S

Enchanting F-Commerce Experience Only a third of the brands sell online and commerce-orientation

time the app was F-commerce enabled, with customers se-

on Facebook is even more rare. Just three brands in the Index

lecting products on Facebook before being redirected to the

link to e-commerce products through their Facebook pages.

e-commerce site for check out. Averaging 176 new “likes” per

In mid-May, Bulgari launched the “Dream of an enchanted

day before the launch of the application, Bulgari added 8,537

garden” Facebook application, becoming the lone F-commerce

additional fans in a single day at the height of the project.

pioneer. The application allows fans to explore exclusive con-

While the brand deserves praise for experimentation, the app

tent, check in to virtual gardens via Facebook, and browse a

was simplified less than a month later and the F-commerce

range of Bulgari products available for purchase. For a limited

functionality was eliminated.

FA C E B O O K “ L IK E S ” P E R D AY: B U L G A R I (May 10, 2011– June 10, 2011)

MAY 25

The 2nd location is revealed as fans continue to “check in”

8,537

9,000 MAY 20

7,500

Bulgari opens The Enchanted Garden revealing the “Fountain of Splendor”

6,000

5,092

4,500

2 6/

1 6/

30 5/

29 5/

28 5/

27 5/

26 5/

25 5/

24 5/

23 5/

21 5/

20 5/

19 5/

18 5/

17 5/

15 5/

14 5/

13 5/

12 5/

11 5/

1,500

Through check ins Bulgari encourages its fans to share the enchanted experience.

3,000

Digital IQ Index ®:

Watches & Jewelry F L A S H O F G E NI U S

Want to know more about your brand’s ranking? CONTACT US The brand demonstrates its commitment to aviation with a Facebook competition.

Flying to Digital Heights In April, the brand announced a Facebook photo competition encouraging fans to submit images capturing the spirit of aviation. The winners, chosen by the fans and a panel of judges were awarded a number of prizes including pilot lessons for first place. Breitling received more than 5,000 photo submissions and gained an estimated 68,000 new fans. Additionally, the brand rolled out a mobile game available on both iOS and Android platforms. The Breitling Reno Air Races iPhone app received the highest number of ratings in the study. One of only two Android applications in the study, the app has more than 10,000 installs.2

Cross promotion with a Facebook tab and YouTube videos.

Available from the iTunes store and Android market, the Breitling Reno Air Races application has generated buzz in the gaming community, which is dubbing it “The world’s best flying simulator.”

2. https://market.android.com/details?id=com.breitling.breitlinggame&feature=search_result

Digital IQ Index ®:

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F L A S H O F G E NI U S

Hello Kitty Appealing to a younger consumer, Swarovski relied heavily on digital media to launch its Hello Kitty collection in August. On Facebook, fans use an application to decorate their profile pictures with a pink bow and view a 3-D catalog of the new products with links to Swarovski’s e-commerce site. The brand also used in-store and on-site QR codes that redirected users to a mobile site and developed iPhone and Android photo applications. During August, this global campaign resulted in 61 percent growth to the Swarovski Consumer Goods Business Facebook page, which previously averaged just 9 percent monthly growth. The on-page application has more than 5,000 active monthly users and the brand is close to reaching its goal of 10,000 pink-bowed profile pictures.

Bridging offline with online, Swarovski drove customers to its mobile-optimized site through instore QR codes.

Digital IQ Index ®:

Watches & Jewelry F L A S H O F G E NI U S

Join

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The online community drives Facebook interaction with a social plug-in. The brand’s mobile application is also promoted on the club page.

Pandora’s online club gathers avid enthusiasts and encourages them to share their customized designs and curated scrapbooks while rewarding them with exclusive Facebook contests and a members-only e-magazine. The community investment has paid dividends as Pandora boasts one of the largest and fastest-growing Facebook pages in the study, growing at a 21 percent monthly rate versus the study average of 9.8 percent. Through the club’s various features, Pandora is able to track a member’s previous product purchases, the stores they purchase from, the products on their wish lists, and their communication preferences. The brand customizes messaging based on the collected demographic and psychographic information, increasing relevance. The ability to harness this community was evident in June when a survey sent to club members received more than 95,000 responses within just a few hours even though the brand offered free bracelets only to the first 75,000.

Extending offline, Pandora’s fans share their love of the brand with their closest networks.

Building a global community: Pandora’s globally tailored contests encourage fans worldwide to create “My Moments” scrapbooks.

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F L A S H O F G E NI U S

Chiming In IWC’s Collectors’ Forum is a member-only space for brand devotees. Moderated by a non-IWC affiliate, the simple-

The Collectors’ Forum is shareable on social media.

interface provides the opportunity for afficionados to discuss the latest models, share photos and personal stories. The Forum also provides the brand with valuable feedback around customer service, its timepieces and its consumers. To date, the tight-knit community is host to more than 20,000 discussions, garnering almost 150,000 replies. A recent discussion, which encouraged fans to share where their IWC has taken them, boasts more than 28,500 views as enthusiasts post photos of their watches in various global locations.

The forum is an active playground for likeminded enthusiasts to share their stories and personal collections © L2 2011 L2ThinkTank.com

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F L A S H O F G E NI U S Both brands include a “sort by price” option in their navigation toolbars.

+ E-Commerce Of the 19 pure play watchmakers in the Index, Longines and Movado are the only two selling online. E-commerce enabled brands in the Index registered annual traffic growth two times higher, received twice the average monthly global Google searches, and maintained Facebook communities twice as large as those brands without the feature.

Longines asks for feedback on every product page with an easy online form. For products not yet available online, Movado offers a direct link to a retail locator from the product page.

Product comparison features aid online shopping decisionmaking.

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TEAM SCOTT GALLOWAY Clinical Professor of Marketing, NYU Stern Founder, L2 Scott is a Clinical Professor at the NYU Stern School of Business where he teaches brand strategy and luxury marketing and is the founder of L2, a think tank for prestige brands. Scott is also the founder of Firebrand Partners, an operational activist firm that has invested more than $1 billion in U.S. consumer and media companies. In 1997, he founded Red Envelope, an Internetbased branded consumer gift retailer. In 1992, Scott founded Prophet, a brand strategy consultancy that employs more than 120 professionals in the United States, Europe, and Asia. Scott was elected to the World Economic Forum’s “Global Leaders of Tomorrow,” which recognizes 100 individuals under the age of 40 “whose accomplishments have had impact on a global level.” Scott has served on the boards of directors of Eddie Bauer (Nasdaq: EBHI), The New York Times Company (NYSE: NYT), Gateway Computer, eco-America, and UC Berkeley’s Haas School of Business. He received a B.A. from UCLA and an M.B.A. from UC Berkeley. MAUREEN MULLEN L2 Maureen leads L2’s Research and Advisory Practice where she helped developed the Digital IQ Index®. She has benchmarked digital marketing, e-commerce, and social media efforts of more than 300 brands across Luxury, Specialty Retail, Beauty, and the Public Sector. Maureen also has led digital strategy consulting engagements for a variety of Fortune 1000 clients. Before joining L2, Maureen was with Triage Consulting Group and led managed-care payment review and payment benchmarking projects for hospitals, including UCLA Medical Center, UCSF, and HCA. Maureen has a B.A. in Human Biology from Stanford University and an M.B.A. from NYU Stern. DANIELLA CAPLAN L2 Daniella is a Research and Advisory Associate at L2 where she leads several Digital IQ Index® reports. Starting her career as a marketing communications manager for a leading global defense contractor, she directed the company’s creative programs and the rebranding of newly acquired divisions. She was later hired to lead public relations for the Israeli Consulate in Boston and guided the local implementation of the country’s nation-branding efforts while spearheading the consulate’s social media integration. Daniella © L2 2011 L2ThinkTank.com

received a B.A. in Politics with International Studies from Warwick University (U.K.) and an M.S. in Integrated Marketing from NYU. R. DANIELLE BAILEY L2 Danielle began her career at The Home Depot, Inc. where she led a variety of internal consulting engagements focused on supply chain, merchandising, and in-store process improvement. She went on to manage the implementation of award-winning mobile initiatives for several large media clients, including The New York Times Company, NBC Universal, Disney/ABC, Maxim magazine, and Zagat. While at L2 she has benchmarked the digital competence of brands spanning the Specialty Retail, Public Sector, Pharma, Wine & Spirits, Travel, and Financial Services industries. Danielle has a B.S. in Systems Engineering from the University of Virginia and an M.B.A. from NYU Stern. CHRISTINE PATTON Creative Director, L2 Christine is a brand and marketing consultant with more than 15 years of experience creating brand identities and marketing communications for aspirational and luxury brands. As creative director of L2, she leads the translation of the L2 brand across all touchpoints, with a particular focus on the visual packaging of L2’s research.She began her career at Cosí, where she developed the brand and oversaw its evolution from concept through growth to 100 restaurants. Since then she has provided creative direction for a wide array of clients, including the launch of Kidville and CosmoGIRL! magazine. Christine received a B.A. in Economics and Journalism from the University of Connecticut and an M.B.A from NYU Stern. JESSICA BRAGA L2 Jessica, a freelance art director, specializes in identity, iconography, event graphics, and invitations. She began her career in fashion, designing textiles and prints at Elie Tahari’s design studio in New York City. She then focused on the Elie Tahari brand aesthetic and consistency in design across its many developing disciplines. She went on to become the art director of a small, prestigious design firm in Chelsea, where she focused on event graphics, digital and print collateral, and brand aesthetics for companies both large and small. Jessica has a B.F.A. in Graphic Design and an A.A.S. in Illustration from Rochester Institute of Technology.

CINDY GALLOP Brand Translation Expert Founder & CEO, If We Ran the World Cindy Gallop’s background is brand building, marketing, and advertising—she started up the U.S. office of ad agency Bartle Bogle Hegarty in New York in 1998 and in 2003 was named Advertising Woman of the Year. She is the founder and CEO of www. IfWeRanTheWorld.com, a web-meets-world platform designed to turn good intentions into action one microaction at a time, which launched in beta with a demo at TED 2010, and of www. makelovenotporn.com, launched at TED 2009. She acts as board adviser to a number of tech startups and consults, specifically for brands and clients who want to change the game in their particular sector. She describes her consultancy approach as “I like to blow shit up. I am the Michael Bay of business.” Cindy works with luxury brands to radically innovate, transform, reinvent, and redesign business strategy, brand positioning, and marketing/communications programs, including conceptualizing new brands/products from scratch. She has a reputation as a compelling and inspirational speaker appearing at conferences and events around the world on a variety of topics, and recently published Make Love Not Porn: Technology’s Hardcore Impact on Human Behavior, one of TED’s new line of TEDBooks launched this year with Amazon. You can follow her on Twitter @cindygallop. MIRA MEDNIK L2 Before joining L2, Mira completed her M.B.A. in Madrid at IE Business School. She began her career modeling at New York Model Management while finishing her B.A. in History at Boston University. She left modeling to join former hedge fund The Galleon Group where she began as research coordinator to the healthcare team, building earnings calendars, editing stock reports, and studying valuation models. She later went on to work under the Chief Risk Officer constructing a risk/performance framework for the firm. In addition to interning at L2 she has spent time interning at New York-based fashion designer Yigal Azrouel and Paris fashion house Martin Margiela.

Thanks to L2 summer research analysts Julia Cole and Ashish Mookim for their data collection efforts.

UPCOMING 2011 EVENTS

L2 is a think tank for digital innovation. We are a membership organization that brings together thought leadership from academia and industry to drive digital marketing innovation.

11.10.11 L2 Forum Innovation 2011

NYC

Called the “TED for marketing,” L2’s third-annual Innovation Forum will bring together the highest density of scholars, business leaders, startups, and marketing executives in North America.

Re s e arch Digital IQ Index®: The definitive benchmark for online competence, Digital IQ Index® reports score

11. 21.11 L2 Clinic The Social Graph

EUROPE

brands against peers on more than 350 quantitative and qualitative data points, diagnosing their

Academics and industry professionals highlight the

digital strengths and weaknesses.

opportunities, challenges, and underpinnings of social media in the prestige industry in a one-day, intensive Clinic.

EVE N T S Forums: Big-picture thinking and game-changing innovations meet education and entertainment. The largest gatherings of prestige executives in North America.

300+ attendees Clinics: Executive education in a classroom setting with a balance of theory, tactics, and case studies.

60 –120 attendees Working Lunches: Members-only lunches led by digital thought leaders and academics.

UPCOMING 2011 Research

Topic immersion in a relaxed environment that encourages open discussion.

12 – 24 attendees

Prestige 100® Reports:

Mobile MBA Mashups: Access and introduction to digital marketing talent from top MBA schools. Digital IQ Index® Reports:

consult in g

European Luxury:

Advisory Services: L2 works with brands to garner greater return on investment in digital initiatives.

• Boutiques

Advisory work includes Digital Roadmaps, Social Media Strategy, and Site Optimization engagements.

• Specialty Retail

MEMB E R S H IP For membership info and inquiries: membership@L2ThinkTank.com

A Think Tank for DIGITAL INNOVATION

51 East 12th Street, 2nd Floor New York, NY 10003 W: L2ThinkTank.com E: info@L2ThinkTank.com

ÂŠ L2 2011 L2ThinkTank.com