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Study ranks 72 luxury brands on digital competence
13
Oct '10
In a major shift from last year's results, fashion brands hold eight of the top 10 slots in the second annual Digital IQ Index for Luxury. Only two brands, Louis Vuitton and Ralph Lauren, managed to hang on to their 'Genius' ranking, with newcomers Coach, Gucci, Hugo Boss, Burberry and Dolce & Gabbana making significant investments in the medium in 2010.

The Digital IQ Index, developed by NYU Stern Professor Scott Galloway, a team of experts from L2 and industry partner iCrossing, measures and ranks a brand's digital footprint across four dimensions: effectiveness of a brand's site, digital marketing, social media and mobile. The top 10 brands are:

1. Coach
2. Louis Vuitton, Ralph Lauren (tied)
4. Gucci
5. Hugo Boss
6. Burberry
7. Dolce & Gabbana
8. Giorgio Armani, Swarovski (tied)
10. Tiffany

Key findings of the Digital IQ Index include:

• The standard deviation of Digital IQ increased from 29 to 39 from 2009 to 2010 indicating a larger disparity across brand efforts. Legendary brands such as Prada, Christian Dior, Cartier and Rolex dropped significantly suggesting they are largely ignoring the digital medium.
• Traffic to brand sites from Facebook more than doubled in 2010, growing from 3.4 percent to 7.1 percent with 73 percent of luxury brands registering the social media giant as a top eight source of traffic. Traffic from Twitter and YouTube decreased. Brand sites with social sharing recorded annual traffic growth of 42 percent versus 18 percent for brands without social sharing suggesting the increasing importance of social media optimization.
• There is a Digital IQ disparity across the three major luxury conglomerates. LVMH boasts an average IQ of 118 across its eight brands in the study. Gucci Group registered an average IQ of 109 across five brands. Richemont has fallen behind with an IQ of just 84 across its nine brands.
• Digital competence leads to more site traffic. The 21 brands that increased their Digital IQ demonstrated annual traffic growth of 52 percent versus traffic growth of just 8 percent for brands that registered IQ decreases.
• The 39 brands that sell online boast a Digital IQ of 117 versus an average IQ of 79 for the 33 brands that are not e-commerce-enabled.
• There is still substantial low-hanging fruit around basic digital marketing tactics. Only half of brands engage in email marketing, only two in five are purchasing search terms and only 10 percent have mobile sites.

“2010 has been a seminal year for the luxury industry. Some brands have put the weight of their organization behind digital, while others have stood still and have been left behind,” said Professor Galloway. “The 'it' product in luxury is not a handbag or watch, but innovative social media programs.”

Professor Galloway will discuss the results from his study at the L2 Innovation Forum, co-hosted by NYU Stern, to be held on Friday, November 5, 2010 at The Morgan Library in New York City.

New York University Stern School of Business

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