Somi’s Interview with Gary Vaynerchuk on Millennials & Luxury Brands
Are Luxury Brands doing all the right things to attract Millennials? Recently I interviewed Gary Vaynerchuk for my documentary about the future of Luxury Brands in a Millennial World. This has been an incredibly thought-provoking interview, which I decided to share with you all. So here the full transcript of the interview:
Somi Arian: In the past luxury brands have had the advantage of inheriting their customers through the generations. So people would bring in their sons and grandsons. If wanted to buy luxury watches, wines, cigars, suits, etc. you would often buy what your father recommended.
Gary Vaynerchuk: Hundred percent.
Somi Arian: But some things have changed now. Firstly the younger generation that already comes from that affluent background is not necessarily connecting with heritage luxury brands simply because their fathers and grandfathers shopped from them. There is so much noise out there and they are influenced by many other factors. Secondly, the people that are coming into money now, the new generations of entrepreneurs and young people building careers online and with new technologies, they haven’t really been exposed to those heritage brands. So there is an increasing disconnect between heritage brands and millennials.
Why is it that these amazing brands with amazing heritage, history, authenticity, why are they falling behind?
Gary Vaynerchuk: There are many reasons why this transformation is happening. A lot of it is self-inflicted by the luxury brands around their audacity and their unbelievable desire to hold onto something that used to be. And that makes sense. That’s an inherent thing but this is why all empires fall. You get to a place and you want to hold onto the past instead of mapping yourself to the future.
We are living through the biggest shift of attention in human history. All the rules are being rewritten because we’re putting youth on a pedestal, so tradition is getting absolutely hurt by that. In parallel, 22 year olds are not consuming print ads, and for some ungodly reason, these brands want to continue to put dollars into the places that their grandparents put dollars into. They disrespect places like Instagram and others without embracing them in a proper way. If they do it, and many of them have now have finally done it in the last two years, even though they should have done it five or seven years ago, they do it in a half assed nature. A kind of nod to, “Okay, I’ll appease that. I’ll check that box.” They do not take it seriously, the attention that lives here. They undermine and downplay it. They listen to marketing partners that are holding onto the past and the money they make.
When you compare the British, UK, Europe market, it’s even worse than in the U.S. So it’s a level of audacity. It’s a level of not aligned financial interest because all these brands now are held by big companies and they’re trying to make 90 day quarterly returns. There’s a lack of investment, and there’s a lack of education. They don’t really understand what’s happening on Facebook or influencers or Instagram and they’re just mis-playing it.
And this is not just happening to ultra luxury. This is the destruction of all of the establishment. We see it in political environments. I love how I have a meeting with a 75 year old executive from the UK and the first 30 minutes of the conversation was Brexit and Trump, and how incredible he found it, that it’s very clear that these new things have affected these macro-political issues. And then we got to talking about his business in marketing, and he scolded me for 30 minutes telling me that his customer still looks at print. I go, “Your customer voted for Brexit. Your customer voted for Trump.”
There’s just a stunning, stunning hold of romance to way we did it at the peril of these brands. Some of the greatest brands that have lasted world wars, that have lasted the test of time are going to disappear in the next decade or two because they are completely not speaking where the end consumer is living.
Somi Arian: Do you think part of this is because people like yourself don’t speak their language?
Gary Vaynerchuk: Oh yeah. Sure. We don’t look the part. First of all, I’ve got all sorts of extra dynamics because I use these tools to build my own brand. And so then I get pushed when they don’t like what they hear. And it’s not that I’m not empathetic, I actually understand why they think that. It doesn’t mean that I’m gonna be wrong. And so, yeah, look, people don’t like change and people like the way they grew up. And don’t forget who the decision makers are of these marketing dollars on the big companies. These are people who grew up in a different craft. They have a lot of respect for the MBA’s and scholars and the things that hang in their rooms.
And also there’s a big thing that’s not talked about which is most of their media agency partners who are pushing television and print and outdoor banners because that’s where the margin is for those media companies. It’s not the best interest of Cartier and Rolex, but it’s in the best interest of the media company. And so they’d rather believe a 71 year old executive who has financial vested interest in his or her stock than somebody who’s talking a little crass but is telling the truth, because it makes them feel better. But they’re going to lose.
Somi Arian: So would you agree with me that the golden age of advertising, the ’50s, ’60s, ’70s, ’80s has passed?
Gary Vaynerchuk: Look, what happened in the ’50s, ’60s, ’70s, ’80s, ’90s, even to the early 2000s was the golden era of television, print, and radio. That was a world where the consumer was there and pictures and videos and written words that fit that medium were perfect. And it was great. It was a lot of fun.
Let’s not forget, prior to television, the radio dominated and the people who knew how to write jingles and make sounds had great rewards. We’d lived in the TV and print era of the last 50 years, 60 years and people didn’t wanna give it up when the Internet came along in ’95. Because that was a long run of 50 years. That’s the way it was.
Starting in 1995 with Windows 95, the Internet became consumerized. Normal people started getting on the Internet. And now we’re 20 years into that. There’s full maturity. There are people that are now using it at scale. Like we buy things on the Internet. The Internet controls our attention. Now it’s with us at all times.
And so the consumer moved. The advertising industry doesn’t get to choose. It has to move to where the eyeballs and ears and attention of the consumer is. There’s five major holding companies that make billions of dollars that don’t want it to change. It’s not super complicated. The two highest profit margins for holding companies in the advertising agency world is television and programmatic banner ads, and that’s what they push.
Somi Arian: What is the difference between traditional advertising and modern content?
Gary Vaynerchuk: The big difference between traditional content or traditional marketing, and modern content or marketing is nothing, other than the traditional market wants to make it for places that used to have people’s attention. And the new people want to make it for where they believe the people’s attention actually is. And this is not a digital versus traditional game. For example, I day trade attention. So for example, in America, I would buy Super Bowl ads if I’m a high luxury brand because if you sell in America, everybody in America will know what you stand for in one shot with a Super Bowl ad. And I think that $7 million price tag is underpriced attention.
So this is not about the computer being better than the real world. It’s details, but the difference is nothing. You just have to make a great story in the medium that is of the day. You have to make a better ad for a podcast because now it’s podcast and not radio so you have to understand that the person can rewind it or do something different.
You have to make a two minute video or a three minute video or a nine minute video, or a 15 second video for Facebook. You’re not stuck into a 30 second spot. You can make four videos. You can target African Americans, you can target British kids 18 to 33 that like football. There’s so much more capabilities in the modern world. The audacity and the ego of the traditional market, isn’t it allowing them to adjust?
People don’t invest in the long term anymore. These are all big companies. But to directly one more time, recap your question, nothing. Just the mediums.
Somi Arian: I argue there is one thing though, the value, because look at the content that you create. I would argue that traditional advertising is in the service of the seller directly.
Gary Vaynerchuk: I think that’s exactly right but I promise you an unbelievable amount of modern content is also in the service of the seller. The mediums have changed, but good advertising versus bad advertising hasn’t. To your point and I think you’re right … The advertising industry doesn’t allow the flexibilities of the modern platforms.
Do you know how incredible it is to be a cashmere company in 2017 where you can make a four minute documentary and educate people about cashmere or how you give back to your farmers? No 30 second spot can do that. No picture in a print ad can do that. You know how incredible it is to tell the origin story of grandpa, grandpa, grandpa who made the hat in a three minute documentary on Facebook? How incredible that is versus a 30 second spot on UK television?
But they don’t see the upside. They’re being pushed by the propaganda of the downside by the people that have financial vested interest in keeping the old world alive.
Somi Arian: You pointed out something very important there. I do believe one of the stories that luxury brands rooted in heritage can focus on is the the sustainability aspect of what they do.
Gary Vaynerchuk: Not only that, why do you we love Zeus or Spider Man, right? Why do we love these things? We love, as human beings, origin stories. These luxury brands literally have the best origin stories. Yet, because of the limitation of television, outdoor billboards and print, they’ve never been able to tell them. This is a documentary. Every fashion brand in the world should make four documentaries of how it happened. That is propaganda. That is media. That is marketing.
And the fact that you can post that in a Facebook environment and have millions of people see it … You don’t need to make a deal with the BBC. Netflix doesn’t have to pick it up. This is incredible flexibility. This is the greatest time for luxury brands, but yet, they hold on. They hold on because they put themselves on a pedestal and they look down at the modern communication tools much to their detriment.
Somi Arian: Now, I want to ask you about influencer marketing space … Is it serious? Is it going to last?
Gary Vaynerchuk: The influencer space hasn’t even started. I believe it’s going to last for a very long time, not because I’m guessing, because it’s always lasted. But the influencers of the ’60s and ’70s were a couple of people, and now because we have scale and platform, there are just many more.
Now, should every high fashion brand do every single thing with every influencer? Of course not. But no question, the influencer, AKA the person that’s actually the celebrity to anybody under 35, is an awfully important thing for people to consider if they want to care about the next generation, having a business.
And so, you need to be thoughtful. You need to know who the influencer is, but yeah. For example, when you look at the attention attractive people have on Instagram, they have more attention than any high fashion model on Earth. They just do. And when you do it with 17 of them, or 44 of them, 163 of them, well then you’ve got the potential for real scale, real impact. And yeah, I think it’s incredibly important.
Somi Arian: So one of the things that I’m encouraging the luxury brands and our clients to do is to create content similar to what influencers do, but to own the IP]. Create their own reality shows, talk shows and podcasts.
Gary Vaynerchuk: Do all of it. Some people, you just give a jacket. They have 653,000 followers, you think they look the part. Mazel tov. Some models you use for catalogue and some people that become your spokesperson, and that’s what we’re both talking about. I think you need to look at influencers as a matrix.
There are some people that you say, “Wear the boots of the season”, “Oh you. We actually think you have a creative eye, so can come be part of the process because you’re more of a creative director that just happens to look great”. “Okay, you four have huge scale. So we wanna lock you up for three years.”
I think everybody talks about these new marketing trends in very binary terms. Do we do influencer marketing or don’t we? I just described three totally different executions as nuanced versions of influencers. And I didn’t even get into the fact that, for example, for most of the luxury brands, in high net worth neighbourhoods, there’s an alpha mom or two that is, by far, the most important person. She may only have 713 followers on Instagram, but if you get her, you have 17 moms to buy that jacket times 11 rich neighbourhoods? Starts to get interesting. So that’s a fourth execution.
I think that we have been very lazy and headline reading and talking about stuff that we don’t know about. But if you’ve been doing influencer like I’ve been doing for the last six or seven years, there’s many, many different layers to a proper influencer strategy. And when you’re a high fashion brand, the stakes are very high because your woman, your man lives on Instagram.
Somi Arian: Yeah, absolutely. I think the problem is that a lot of the brands are finding that influencer marketing is so complicated. Because the effort that it takes to get to know these people. Also a lot brands are used to a campaign model of advertising. You do two campaigns a year and repeat across various TV and print outlets.
Gary Vaynerchuk: Of course.
Somi Arian: But now, suddenly everyone has to work much harder, because the market is so much complex and intricacte.
Gary Vaynerchuk: Look, that’s fine. That’s what business should be. Or what? You wanna take a million dollars and pick one model and do four print ads and not sell any product and start losing your business?
Look, I’m sorry that it’s hard. Life’s hard. Marketing got harder, I know. I get it. I wish it didn’t change. I loved email and Google AdWords. I killed it. I built a huge wine business in America because of it. I wasn’t excited about YouTube. I wasn’t excited about Twitter. I wasn’t excited about Facebook and Instagram. I wasn’t excited about Alexa. I wasn’t excited about all this stuff. It’s just the reality.
Somi Arian: Now, being an influencer is turning into a job for a lot of people. Does that mean it’s going to saturate the market and the influencers are going to lose their impact?
Gary Vaynerchuk: Look, here’s how it gets saturated. Not only is it a job, everybody who’s 15 and under wants to be an influencer one day. That is THE job, right? It’s supply and demand. Of course, it’s saturated. Was it better to be an influencer three years ago? Yes. Was it better for brands that did influencer marketing three years ago? Yes. But there will always be the top ten percent of anything, and that’s who’s gonna trade.
Somi Arian: Last question, So you’re very big on voice. I want to ask you about that. Are there gonna be influencers in the voice space and how can luxury brands use voice for their sales and marketing.
Gary Vaynerchuk: I think the voice space is super interesting. First of all, watch this.
Gary Vaynerchuk: Hey Alexa, buy me a pair of boots. (Gary talks to Alexa and buys a pair of boots right then.)
Gary Vaynerchuk: I just bought a pair of boots. I think people need to realise how to be the boots that comes up on Alexa when people ask for a coat or a boot or an umbrella or a sneaker or a jacket.
I think this is incredibly powerful. I don’t think people understand. People are just now trying to figure out influencer or Facebook and Instagram, and the world’s already moved to the next frontier of voice. Listen, if fashion brands, the high luxury brands, think it’s complicated now and it feels tight now, wait ’til they see the next ten years. The biggest, most historic brands of our time are going to go out of business.
This is what happens when the land changes on people. I’m not happy about it. I don’t think it’s cool. It’s just the reality. And the only way that they don’t go out of business is they disproportionately bring in talent, start working with talent, and reallocate their money into the new frontier. Which is mobile, which is voice, which is long form content, which is influencers. It’s just black and white.
Most of the luxury brands need to be advertising on the podcasts that have high net worth individuals listening. Most of the luxury brands need to figure out how to build Amazon Alexa skill and briefing. Most of the luxury brands should be spending, I want everybody hear me nice and loud, 50% of their marketing budget on Facebook and Instagram.
But they’re doing none of these things. And then everybody’s gonna be baffled why Lord & Taylors closes in Manhattan. Everybody’s gonna be baffled when one of these 200 year old companies fold. They don’t understand how big the stakes are. And look, I’m gonna say it, I’m gonna record it, I’m gonna talk about it every day, but I can’t run their businesses for them.
I will also be releasing some of the full interviews as podcasts and videos over the coming weeks, so keep an eye out for these. Hope you enjoyed this interview – it was a massive investment of time and resources for me and my team to go to New York for a 25 minute interview with Gary. Please leave a comment below and share the link if you enjoyed.