Luxury brands must engage with social media tools

The rise of social media has put more power in the hands of a diversity of stakeholders who now shape for a large part what is viewed as luxury. As a result, luxury brands have to learn how to negotiate their identity by striking new deals with these stakeholders at three levels: brand image, brand content and brand ambassadors.

Social media has upended the way many industries operate, and luxury is no exception. In this sector, brands traditionally relied on creating a perception of distance between themselves and their customers - the brand dream. With new powerful tools aiming to connect people with people, or people with brands, luxury brands have no choice but reconsider this age-old principle to capitalise on increasingly digital customers. While their power is waning, the challenge now lies in negotiating their luxury identity with increasingly influential online stakeholders, while preserving their unique cachet.

To successfully negotiate their online identity, luxury brands need to learn how to strike new deals with digital actors on three key dimensions: how will their image be represented (image deal), what content will build their stories (content deal), and who will help them spread and communicate their values (people deal).

Each dimension represents a strategic area for growth that luxury brands need to manage, balance and constantly redefine and evolve.