American Marketer

Events / Causes

L2 Think Tank recaps year, forecasts 2014

December 13, 2013


NEW YORK - L2 Think Tank recapped some of the year's key digital moments and trends, what to expect in the coming year and its own global ambitions at a gathering of its members Dec. 12.

Maureen Mullen, director of research and advisory at L2, discussed the unexpected promise of email marketing, the growing competition between brands bidding for search results, Facebook's and Google's mobile advertising dominance and other issues. L2 founder Scott Galloway expounded upon ideas he broached at the L2 Forum such as how prices for luxury goods have dramatically outpaced increases in product quality, making all luxury categories juicy targets for outsiders.

"The easiest way to boost revenue [for brands like Apple] is to enter luxury," Mr. Galloway said. "In your business, people make irrational [purchasing] decisions.

"The water in luxury has gone bright red," he said.

Halcyon phase

During the "Then, Now, Next" event, Ms. Mullen recalled a few comical examples of how digital was looked at a few years ago to punctuate the improvements that have been made. Richemont had denounced the idea of having an online presence in 2007, and then purchased online fashion retailer Net-A-Porter in 2010.

What Amazon looked like upon its launch

Marc Jacobs' Web site in 2012 resembled a boring video game, and now a streamlined, standardized experience greets consumers. Ms. Mullen added that brands do not need to reinvent the wheel when handling projects such as Web site redesign.

Brands that have signed deals with Amazon, such as Lancôme, have a coherent, image-reinforcing presence on the online marketplace, while hold-outs such as Estée Lauder have an erratic search presence riddled with huge markdowns.

A search for Estée Lauder on Amazon

Amazon has become a hub for consumers looking for personal reviews, since only a handful of brand Web sites have user review sections. The digital retailer is also a primary Web site that consumers visit after checking out branded Web sites.

Similar to user reviews instigating sales decisions, consumers are two times more likely to convert after seeing user-generated images.

Email marketing efforts have experienced a rise in open rates, click rates, average order size and a decrease in unsubscribe rates, but the attention that brands pay to targeted email campaigns varies wildly.

However, automotive brands have leveraged email impressively, with consistent follow-up emails and integration of individual service representatives.

Ms. Mullen predicted that the the default "likes and followers" justification for social media will be replaced with standard metrics used to gauge traditional platforms.

Waking up

Mr. Galloway revisited the fact that luxury goods prices have risen 14.8 percent year over year, which is six times higher than the 2.6 percent inflation rate. Although luxury products do have a higher quality, the unbridled price increases are bound to draw competitive attention.

The executive, also an NYU Stern professor, used the metaphor of a dead blue whale leaking blood into the water and attracting hordes of predatory sharks.

A similar phenomenon occurred in higher education, where soaring prices and disaffected students caught the interest of outside players that are now inflicting heavy blows through online education.

For luxury, the biggest competitor may come from the technology world.

During the “’7′: The Forces Shaping Prestige in 2014″ session, the L2 Think Tank boss pointed out that Apple’s acquisition of CEOs from Burberry and Saint Laurent indicates that the brand is forcefully moving toward the luxury sector (see story).

Growing income disparity, a deserted middle class in mature markets, a rising middle class in emerging markets and innovation led by mega-brands will also test the mettle of luxury in the coming year.


In addition to its recently launched database system that allows members to comb through various digital indices, L2 plans to release an interactive heat map that illustrates brand performances in different parts of the world.

L2's social media adoption graph

Also, L2 will continue its expansion into emerging markets around the world and will increase its number of annual reports. This year saw a 120 percent increase in the number of reports from the year-ago period, from 14 in 2012 to 31 in 2013.

Although L2 analyzes massive amounts of data, Mr. Galloway asserts that data complements rather than generates innovation.

"There will be a renewed emphasis on creativity and taking risks," Mr. Galloway said. "Tomorrow does not belong to data."

Final Take
Joe McCarthy, editorial assistant on Luxury Daily, New York