JANUARY 22, 2013

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Affluents Plan to Spend More on Luxury this Year
According to Mendelsohn's December 2012 Affluent Barometer, nearly one out of five US Affluents (HHI: $100K+) plan to spend more on luxury in the next 12 months; that is nearly double the number of Affluents that held the same sentiment just over a year ago. Nearly one-quarter of Ultra-Affluents (HHI: $250K+) plan to spend more on luxury in the next 12 months, outnumbering those who plan to spend less by an eight-to-one margin. The Affluents and Ultra-Affluents are most interested in spending on luxury/premium vacations & travel; the Ultra-Affluents are also very interested in premium groceries.
So what? The 2013 luxury outlook for Affluents is encouraging. Mendelsohn's release comes on the heel of reports from McKinsey and Ipsos that consumer optimism is improving. Advertisers should feel more bullish about upping their spend in 2013 to capitalize on this boost of confidence.
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Increasingly Mobile, Chinese Luxury Shoppers Start Traveling To Shop
According to McKinsey’s recent report on Chinese affluence, consumer spend on luxury goods in China has surged between 16% and 20% each of the past four years and is expected to grow another 12-16% a year through 2015. Chinese consumers are projected to spend an increased amount on luxury goods abroad instead of at home. Over the next three years, spending by consumers in foreign markets is expected to rise about 34%. This shift in location of luxury spend has already started. In 2012, 63% of Chinese luxury consumers made purchases while traveling abroad, up from 36% in 2010. While most of the “overseas” travel is to nearby Hong Kong and Macau, Europe is starting to attract luxury shopping tourists. In 2012, about one in five reported that their foreign luxury purchase occurred in a European city, which is more than double the share of 2010.
So what? Digital engagement and travel have become increasingly borderless. Condé Nast's brands should continue to embrace their audiences within China, and explore opportunities to connect with them when they travel abroad. Newly affluent and mobile Chinese customers want to learn about luxury goods and brands, and CN's magazines and websites have a long history of providing exactly that kind of inspiration and guidance.
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How to Diffuse Viral Content
The Journal of Advertising Research published an article suggesting best practices for “seeding” – initializing the diffusion process of viral content. Analyzing how YouTube videos gain popularity, the research identified several factors that can increase the likelihood of content going viral: - The larger the initial audience that the video is distributed to, the higher the probability that the viral message will spread. However, as the quality of the viral message improves, the need for a large audience decreases significantly. - It is best to start a viral campaign with consumers who have strong ties with the content creator (e.g., brand loyalty, frequent interactions with the brand, etc.). Those consumers tend to be more effective in diffusing viral content compared to individuals with a large number of connections but weaker ties to the brand. - Viral content is best diffused by an initial group of consumers who share similar interests, but is not so homogeneous that the message does not reach a larger, more diverse universe of users.
So what? Marketers that try to create a viral campaign often view it as a hit-or-miss proposition, but a strategic approach to message diffusion can improve the likelihood of success. Featuring the content on specialized media properties like Condé Nast’s can help those marketers reach large audiences with shared interests, which are crucial for the viral seeding process.
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Loyalty A Problem for US Banks
A study of more than 150,000 retail banking account holders worldwide by Bain & Company has uncovered that loyal banking customers will contribute significantly more monetary value to a bank than passive or detracting customers. Banks in the United States are facing a challenge -- their loyalty scores are poorest among their wealthiest clients. And, Bain estimates that each typical affluent bank customer who is a promoter of the bank can contribute nearly $10,000 more in net present value over their lifetime than a customer who is a detractor.
So what? Banks in America are facing a business challenge. Perhaps still reeling from the financial crisis of a few years ago, they do not hold strong consumer loyalty among their most important clients. These banks may find that campaigns run in Condé Nast magazines may be a beneficial tactic to regain high regard among their affluent clients.
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Quick Takes
Nearly Half of US Kids Have Read an eBook
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Coke Holds Significant Market Share Over its Competitors
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YouTube, Yahoo! and VEVO Had the Largest Video Audiences in 2012
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More Than One-Third of US Adults Do Not Have a Landline
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Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 | philip_paparella@condenast.com

Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights