Out-of-home advertising’s allure for luxury brands

November 26, 2024

Swarovski x New York flagship grand opening. Image credit: Swarovski

The global luxury market is facing a pivotal moment.

After years of steady growth, a recent Bain study predicts a 2 percent dip in sales next year – marking the first decline since the Great Recession.

Even more striking, the number of luxury consumers has contracted by 50 million.

In the face of these challenges, luxury brands must allocate their advertising spend carefully, investing in channels that evoke engagement from their target audience.

As digital spaces become increasingly cluttered and interruptive, many luxury brands are embracing out-of-home (OOH) advertising for its ability to captivate, inspire and enhance environments.

For brands navigating a shrinking market, OOH offers a unique opportunity to enhance an environment while connecting with audiences in ways that digital simply cannot.

Recent data from OAAA in partnership with The Harris Poll highlights just how effective the medium is for this category: nearly 90 percent of consumers who see a luxury OOH ad engage with the brand, whether by making a purchase, visiting its website, or following its social media accounts.

Over the past six years, the luxury sector’s OOH spend has doubled, with powerhouses such as Chanel, Gucci and Dior leading the charge.

To explore why OOH advertising is so effective for luxury brands, Mack McKelvey, founder/CEO of strategic marketing firm SalientMG, sat down with Stephanie Gutnik, global chief strategy officer of billups, a leading independent out-of-home agency worldwide.

From generational insights to the power of iconic locations, Ms. Gutnik offers a fresh perspective on how luxury brands are leveraging OOH.

Stephanie Gutnik

What unique aspects of OOH make it especially suited for luxury marketing?
We don’t talk about it enough, but OOH is a premium channel.

A massive, hand-painted wallscape, breathtaking spectacular, or dynamic digital billboard isn’t just advertising – it’s art. These installations are bold, indulgent and timeless, perfectly mirroring the ethos of luxury.

One of OOH’s greatest advantages is that it is both trusted and liked by consumers.

Unlike digital ads, which often interrupt content consumption, OOH exists seamlessly in the physical world.

When you see a towering Calvin Klein ad in Soho, it feels like a natural extension of the environment, adding to its cultural cachet rather than detracting from it.

OOH also offers incredible control for brands to curate their message and ensure it appears in environments that align with their identity.

Where a luxury brand shows up matters just as much as how it shows up.

Brands can select exclusive OOH locations in iconic environments like the Sphere in Las Vegas or London’s Piccadilly Lights to amplify their message and create unforgettable consumer experiences.

Studies show Gen Z and millennials are especially receptive to OOH. How can luxury brands capitalize on this trend?
Gen Z and millennials are visual-first generations, and they respond well to striking, aspirational imagery – qualities that luxury brands excel at delivering.

To capitalize on this, luxury brands should integrate their campaigns into culturally resonant environments.

A bold ad in the Meatpacking District or a striking installation along the Sunset Strip doesn’t just promote the brand – it becomes part of the fabric of that neighborhood. And because OOH is so visually captivating, it naturally sparks organic social amplification, extending the campaign’s reach far beyond the physical location.

In fact, over 60 percent of TikTok, Instagram and Facebook users say they frequently notice OOH ads being shared on their respective platforms, according to OAAA-Harris Poll research.

Out-of-home advertising

Can you give examples of how luxury and non-luxury brands are using OOH to create impactful experiences?
Absolutely. Many luxury brands have mastered the art of OOH.

Prada, Calvin Klein, Tommy Hilfiger and Versace have all launched iconic campaigns that feature timeless, evocative imagery in high-profile locations.

Crew launched sailboats in the Hamptons this summer to target affluent travelers, and brands like Dior and Hermès have synchronized digital screens in airports to fully immerse passengers in their world, from duty-free shops to private aviation lounges.

What’s your advice to luxury brands looking to invest in OOH?
A successful OOH campaign should exude sophistication, either as the centerpiece or an amplifier to the overall marketing strategy.

Consider larger-than-live executions like hand-painted murals, towering digital screens, or immersive experiences, which can act as a focal point for a campaign.

Beyond your focal point, make sure to allocate budget to extend your reach and frequency in surrounding communities and audiences that you’re targeting to get the full benefit of your OOH campaign.

For example, if you’re opening a new store in the city, pair a flagship wallscape with street-level posters or nearby digital panels to amplify the campaign’s reach.

Lastly, integrate OOH with other marketing channels.

OOH is a powerful amplifier for digital, social and CTV campaigns. Seeing the same luxury ad across multiple platforms reinforces its iconic status.

How do luxury brands measure the effectiveness of their OOH campaigns?
Measurement is crucial for luxury brands, from store visitations to website conversions, it’s worth funding a measurement study when you leverage OOH to understand what’s working and what can be optimized.

Creative optimization should be included as a best practice in pre- and mid-campaign efforts.

Before a campaign goes live, we can conduct A/B testing on creative elements, assessing where the attention is going and how the design can be tweaked to maximize impact. This level of precision allows luxury brands to fine-tune their OOH strategy for the best possible results.

By harnessing OOH’s ability to blend artistry, aspiration and immersive experiences, luxury brands can captivate, inspire and enhance environments.

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