A huge surge in digital creativity is resuscitating industries that faced possible collapse after months of lockdown squeezed revenues and left businesses on the brink, writes Orbital Partners’ Nick Adams.
Smart marketing strategies involving bespoke digital experiences and virtual streams are not only helping the live music and luxury goods sector ride out a rocky road during Covid-19 but innovative new initiatives are proving so successful they are likely to live on well beyond the pandemic.
Whilst concert venues lay empty gathering dust amid the pandemic, an extraordinary transformation was unfolding around online live music streaming.
Pre-Covid, live music streaming was seen as a niche opportunity compared to the physical live music event.
But in recent months, the number of attendees (confined to their homes) willing to pay for virtual tickets for live music streams has regularly matched, or even exceeded, attendee numbers for the largest physical ticketed music events of recent times, like Glastonbury last year, which 175,000 attended.
Take BTS for example, the Korean 7-piece boyband, who in June 2020 attracted 756,000 paying attendees to their Big Bang Con: The Live event, reportedly generating $20m in sales at $26 per ticket.
Granted, there may (for the time being) be a sizeable gap between the average face value of tickets for virtual streams compared to pre-Covid physical event ticket prices.
But the huge volume of the potential addressable market able to pay for a virtual stream can more than make up for the ticket price gap if live acts and their management deliver effective marketing strategies.
Of course, BTS leveraged its massive base of existing fans, and cleverly built anticipation via a free online event before releasing tickets for the paid stream.
That said, even acts with more modest fan bases are achieving significant multipliers of sales for virtual events compared to physical events by deploying smart digital targeting strategies that segment and prioritise messaging to potential customers.
The unexpected growth opportunity for live acts now is to acquire new fans willing to attend a paid-for livestream who would never attend one of their physical gigs in the past due to the added investment of time and cost inherent in visiting a concert venue.
Indeed, organisations that own rich databases of music fans have seen great success in cross-selling live streams to new fans in adjacent but related music categories, which has allowed live acts to massively expand their paying fan base.
For example, during lockdown mobile ticketing platform Dice.fm managed to drive 50% of its live stream ticket sales via its recommendation (cross-sell) algorithm, compared to a cross-sell of 34% for physical music events pre-Covid.
When I spoke to Olivier Geynet, Head of Music at Dice, he explained:
“We’re working with promoters and experimenting with different strategies to see how we can engage fans at an earlier stage and pull sales forward, such as offering a tiered pricing strategy (like that of a traditional concert), or unique, premium experiences like VR or Zoom rooms.
“A great example of this is when we worked with David Guetta on his livestream on the roof of the Rockefeller centre in New York, offering fans VIP Zoom room tickets where they could meet and interact with David personally.”
There is no doubt, we’re just at the start of an explosion of creativity in live music streaming, which will likely cement this format as a mainstay in the repertoire of music promotion beyond the end of the pandemic; yet despite the rewards, the risks and stakes are high due to the extreme shifts in consumer behaviour.
High Net Worth & Luxury
The luxury sector has been hit hard by the pandemic- due to a combination of the classic luxury High Street shopping experience being shuttered by the pandemic, and the sudden disappearance of high net worth tourists from city centres.
Management consultants Bain & Company estimate the luxury sector will suffer a drop in year-on-year revenue of 29%.
Like in live music streams, there is a big opportunity in the luxury sector to expand the paying audience and acquire new customers via digital.
The challenge for the luxury sector, though, is two-fold.
It’s to mitigate decreases in physical retail sales by rapidly transforming digital ecommerce capabilities and also expand its addressable audiences by delivering personalised luxury shopping experiences directly to HNW’s (high net worth individuals) and the wider ‘HENRY’ (high earners not rich yet) audiences via global digital platforms – which luxury brands have traditionally been slow to address.
Oscar de la Renta recognised this opportunity and was one of the first luxury brands to launch a ‘store within a store’ experience on Amazon in the US earlier this month.
Prime members lucky enough to receive an invite will be able to virtually try on luxury goods using Amazon Fashion’s “View in 360” feature.
Meanwhile, Gucci Live aims to replicate the personal shopping experience via a digital “faux luxury store” in a dedicated studio equipped with cameras and lighting to support what Gucci calls ‘remote clienteling’.
Both cases demonstrate how smart luxury brands realise the pandemic represents an opportunity to establish new routes to access a wider market, whilst also leveraging opportunities around digital personalisation.
But as with any personalisation strategy, the key will be in developing a robust underlying data and marketing technology infrastructure that allows them to stay in control of their own data whilst striking a balance between using third parties like Amazon to tap into smart profiling and targeting, without becoming overly reliant on them post-Covid.
There is little doubt we’re going to see a huge increase in creativity around bespoke digital experiences, and the use of personalisation in the luxury sector should become more widespread, a development which might never have happened without the pandemic.