Surprising Passions Of The Super Rich: What Do They Mean For Luxury Marketers?

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What do the Super Rich do when they aren’t overseeing their various business interests?

 

Luxury marketers have long tried to figure it out, trying to craft partnerships with groups and organizations that they felt would effectively position their offerings to Ultra High Net Worth (UHNW) consumers.

 

One thing I’ve always warned is there are no silver bullets. The Super Rich are highly diverse, and their interests vary, not necessarily to the highfalutin pursuits that are sometimes assumed.

 

Recently, wealth researcher Wealth-X released a survey based on the “interests, hobbies and passions” of billionaires.

 

Leading the way is philanthropy with 56 percent of the Super Rich saying that in their free time, they pursue philanthropic goals. One thing that should be warned that I have personally seen is UHNW philanthropy is about their interests, not yours.

 

In fact, I have interviewed several executives who said when promoting corporate philanthropy initiatives, it elicited high spending UHNW to bounce back soliciting support of their own charities.

 

Travel is second in popularity, and certainly with private jets on hand, it makes traveling to places near and far much more pleasurable.

 

While luxury brands flock to cultural events, only 12 percent of billionaires share that interest, and more interesting to me, is the combination of football, soccer, fishing and hunting draws interest from some 30 percent of the Super Rich.

 

If you have any question about that, check out the private jet traffic in Austin, TX, South Bend, IN, Athens, GA, Norman, OK and other major universities on college football Saturdays in the fall. For that matter, the growth in luxury boxes at football and baseball stadiums that can run as much as $500,000 to $1 million per year is largely built on renting them to UHNW fans. One travel agent who deals with Super Rich clients in Silicon Valley tells me the first thing she does is get the home schedule for the San Francisco 49ers so she can make sure her customers are there for the games.

 

One other laggard is fine dining, with only 1 in 10 UHNWs having an interest in the category, behind other pursuits such as reading, golf, auto collecting, boating, wines and even politics. I suspect the lack of interest in fine dining is probably related to the enormous travel, and interest UHNWs have in health and wellness. So yes, they eat at nice place, but they are not going out of their way to study up on them.

 

So what does it all mean?

 

While partnerships and sponsorships around these categories are all nice, they only resonate with a small fraction of this fragmented market. What it means for marketers targeting UHNW, is that they need to focus on platforms that hit the widest number of this high-yield market with the least possible waste. One such place is private jet owners who are as likely to be football fans as collectors of fine art.

 

In launching last year DG Amazing Experiences, my weekly CEO-style travel-focused e-newsletter for private jet owners, I have gained readership from investment bankers and auto dealers to distributors of carbonated beverage, citrus farmers, military defense contractors, entertainment honchos and manufacturers of everything from packaging to ships.

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What Luxury Marketers Can Learn From Proctor & Gamble

 

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Each year in Cannes, leaders from the advertising industry gather to award each other and discuss how the role of advertising continues to evolve.  Truthfully, there is not a lot of room in global advertising for luxury, except with the biggest players, as compared to the big consumers products companies, ad budgets of luxury marketers pale in comparison. To put things in perspective, Proctor & Gamble spends about $10 billion a year in advertising, about the same amount of total revenues for all Richemont brands combined.

Many smaller luxury brands are often surprised at how expensive it is marketing in countries such as the United States. Often times, I hear from marketers who have spent $500,000 or even $5 million, and wonder why they haven’t moved the needle in brand awareness. Online travel agencies Priceline and Expedia spend $750 million a year just in television advertising.

My first point is that most consumers of luxury marketing can’t afford to buy luxury in any meaningful way, and certainly not with frequency, so if one’s core business is selling products priced in the high-thousands and tens of thousands of dollars, often the media they choose only contains a small percentage of financially qualified consumers to begin with. After that, they are then battling against brands with bigger budgets, and the fact that what they are selling probably only appeals to a slice of the Ultra High Net Worth (UHNW) market.

Earlier this month, Marc Pritchard, chief brand officer for P&G, described his company’s previous spending this way: “Maybe if our ads can’t get enough love or attention, we can get louder or more complex,” he says. “We were adding to the noise.”

Instead of just churning out new executions of the same thing, he said, “We are stepping up our game to give consumers experiences they deserve.”

What does this mean?

According to the report in MediaPost, “P&G is elevating the craft of its campaigns across its portfolio of brands by conveying emotional moments. This skill requires technique, imagination, craftsmanship, and verbal poetry, he says. The results are already proving successful. Pantene’s Super Bowl ad was touted for its authentic humanity after showing NFL athletes braiding their daughters’ hair.

“Now, instead of merely promoting clean clothes, Tide commiserates with those facing the cleanliness challenges of “Sandwich Generation” families. Ariel took on generational bias with the “Is laundry only a mother’s job” campaign. The result has made Ariel the fastest-growing laundry detergent brand in India, per Pritchard.

“Upscale skincare brand SK-II called out China’s dismissal of so-called “sheng nu,” or “leftover” unmarried women. After P&G learned that 94% of boys now get shaving advice from the Internet instead of from their dads, the shaving brand introduced ads connecting to this shift.”

Pritchard noted, “Everything we are doing is to get people turned to our brands and to buy our brands.”

Recently, I attended a presentation by a senior executive at one of the biggest luxury jewelry brands for CEO members of The Luxury Marketing Council. As he walked the group through the history and stories about many of the products his company makes and sells, it was truly fascinating and engaging. This company, by the way, is very successful by every measure, however, the thing that was striking to me is that its advertising, at least what I have noticed, tells so little of these engaging stories, although they are well represented on its website.

I sometimes hear that the Super Rich are looking for a deal, and don’t dispute that. I also often hear that “the media I’ve tried didn’t produce the results I wanted.” Yet, ‘luxury media’ is still filled with page after page of product-centric ads and editorials that are basically a a catalogue of looks. Connecting emotionally with potential customers takes both the right media and the right mix of messages. I think the P&G examples show that with smaller budgets, luxury marketers have a big opportunity if they can provide truly targeted and qualified audience with messages that help the consumer see what they do that’s distinctive and attractive. When this happens, price is less of an issue, and sales have a better chance of happening.

 

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New Things I Learned About Marketing To The Super Rich Online

 

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First of all, to clarify, the generally accepted definition of Super Rich is to have assets or net worth of at least $30 million. While some researchers put it at $50 million, and others say $25 million. These vagaries mean that there are different estimates for the population of UHNWs (Ultra High Net Worth families), but they range from slightly over 100,000 to just over 200,000 based on the criteria. Wealth-X reports that the Super Rich spend over $230 billion per year purchasing luxury jewelry, watches, fashion, travel, autos, redecorating their houses, dining out and so forth. In categories such as jewelry, watches and travel this sliver accounts for 20 percent of more of percent all purchases.

 

When you think about the UHNW population and to put its small size into perspective, keep in mind that 1.3 million people are killed in car accidents each year. Wyoming has 582,000 residents, and even Iceland has a population of 329,000. In other words, while there may not be lots of Super Rich, they are a critical part of the revenue mix for sellers of luxury goods and services.

 

Last December I launched a weekly travel and lifestyle e-newsletter for private jet owners and C-level executives of companies that operate private jets. In just over six months the readership has grown from 12,000 to over 20,000.

 

As I was building up the database, I spent a lot of time focusing on what type of content my Super Rich readers wanted, and how they wanted it delivered.

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Here are some of the things I’ve found:

 

  • There are lots of ways to become Super Rich. While I always knew that the UHNW community was extremely diverse, looking at who owns private jets and what type of businesses they own and operate reaffirmed that many of the stereotypes are far too narrow. In addition to bankers, tech executives, lawyers, Fortune 500 bosses and the like, I found a surprising amount of farmers, distributors of products from medical devices to fruits and laundry detergent, manufacturers (a number of which after studying their websites I still couldn’t figure out what the things they made did), retailing (from convenience stores to auto dealerships), builders, including one who builds tug boats. It was also revealing how many have made fortunes supplying big companies whose names we know with parts and components that go into the products they make.

 

  • While there may be a concentration of the Super Rich in global capitals, they are all over the place. I have readers in all 50 states and over 50 countries, and my newsletter is only in English.

 

 

 

  • Email can be very effective if you have content they want. My open rates range from 17 to 42 percent, with even the lowest being about double the normal open rates for this segment, according to people I’ve compared notes with.

 

  • The smartphone is they best way to reach the Super Rich. Over 80 percent of my readers open my emails on their smartphone.

 

  • Holidays are the best time to email the Super Rich. My highest open rates have come on Christmas Day, New Year’s Day, Easter Saturday and so forth.

 

  • Saturday morning is magic if you want to email the Super Rich. While conventional wisdom in digital marketing is to focus Tuesday to Thursday from 10am to 4pm or Thursday and Friday afternoons as people are starting to think about the weekends, my experience with my UHNW readers is the weekends are significantly better with a cascade of opens as soon as my email gets into their inbox, and then later Saturday night picking up again, peaking again Sunday morning, Sunday night and a final burst Monday morning.

 

  • They hate slide shows. So do I, but this was one thing I was told ‘don’t do it,’ when I was testing formats. I don’t do it, but I am amazed at how many websites do this, obviously to drive extra impressions, which is driven by advertisers who push publishers for quantity over quality when it comes to online experience. In fact, my website is really just an library of past newsletters they can come back to reference.

 

  • The Super Rich want the entire story in the email. While most emails are link bait to go to a website, at least for my content, my readers told me, ‘Give me everything I need to know in one place.’ They told me specifically they didn’t want me to link to important content, but include it in the newsletter, which means my emails run 2,500 to 3,500 words. I’ve been told by having one comprehensive email, it makes it easier to read on their smartphones, both when they are offline or when they are with other people and don’t want to be seen clicking around.

 

  • They don’t read mainstream travel and luxury media. 85 percent told me they don’t read any travel or luxury lifestyle magazines or newsletters. What do they read? Most listed three to five trade magazines or websites, related to their business, then there was a smattering of enthusiast titles related to sailing, diving, fishing, hunting, fitness, watch collecting, yachting, model trains and so forth. No single publication was cited by more 5 percent of my readers. To me, this underscores that brands large and small truly need a separate UHNW marketing strategy — one size does not fit all!

 

While the above may or may not apply directly to your marketing efforts, I think that some of my experience underscores that when marketing to high-value UHNW customers, simply using the same formats and tactics you do with regular folks might fall short.

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“I Can’t Think Of Anything To Write, So Why Not Bash Rich People I Don’t Know”

 

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Her mom Jane Gordon was a gossip columnist for the Sunday Mirror.**  Gossip columnist, of course, is one of the stranger realities of journalism. It’s a symbiotic relationship where for the most part, the people one is revealing tawdry tales about need exposure to assist in their celebrity. You might be surprised, it often takes very keen reporting skills, as one is usually walking the fine line of legal actions. Sometimes people get hurt. I have no idea if Bryony Gordon‘s mother was good, bad, professional or anything about what type of integrity she brought to her job, but good gossip columnists are actually highly skilled reporters, contrary to what most of the public perceives.

 

I can tell you, the younger Gordon seems to lack the same skill set as her mother’s segment of the profession.

 

I have a Google alert for news related to “Super Rich.” It provides an interesting mix of tidbits. Today, the top item read “Bryony Gordon: The only attractive quality of the super-rich is their money.” She is a columnist for The Telegraph, and it appears that her gig means churning out something at least once a week if not more, not always an easy task. I give her credit for using her column to talk about her own depression and bring mental health issues to the forefront. It’s very brave, and she deserves congratulations.

 

Jealousy, however, is a dangerous thing, and today’s column was all about ignoring the facts and perpetuating incorrect stereotypes. Maybe she didn’t have time to do the research.

 

Her targets may or may not have been worthy, including a Kazak oil baron, Sting who rails about the environment, but then took money from the billionaire to play at his son’s wedding, a hedge funder who apparently likes cocaine and orgies as well as a 46-year old UHNW entrepreneur who is divorcing his wife of 14 years and dating a 27-year old “Polish lingerie model”. I’m not sure the relevancy of where his girlfriend is from. Would it have been different in Ms. Gordon’s view if the lady was from Bournemouth?

 

Gordon paints with a very broad brush, writing, “The super-rich are not like the rest of us. No. They’re far, far worse. Entitled and very often in possession of more money than sense (or taste), they live by different rules, on different planets, with different moral compasses.”

 

In her assessment, “For every Bill Gates, there are another 10 billionaires whose idea of charity is showing off their disgusting car collection to the povvos of Knightsbridge.”

 

Dear Bryony, let me give you a few facts.

 

Mostly, the term Super Rich refers to folks with a net worth of $30 million or more. Wealth-X, which does a pretty good job researching the market, estimates there are about 210,000 households globally that qualify.

 

There is quite a bit of research about where their money comes from. Yes, some had connections to get a foothold into their profession as you did from your mother. I had entry from my father, for which I am grateful.

 

But as they say, once you get in the door, it’s your show, and clearly you’ve done very well. But just to enlighten you, most surveys show about three-quarters or more of the Super Rich are self-made. From a book I co-authored in 2007 where we interviewed over 600 private jet owners, close to 90 percent were self-made.  Then again, the reason most had their private jets was a business tool, not to showoff to Architectural Digest. Yes, there are celebrities and oil barons, but I think you might be surprised that your narrow view of rock stars and Knightsbridge doesn’t represent the global population.

 

In fact, in terms of where they come from, you might be surprised that there are more Super Rich families from the American flyover state of Minnesota than Saudi Arabia, and the same for Wisconsin vs. Russia.

 

How did they make their money?

 

Think mundane things like manufacturing all sorts of parts and devices, distribution of everything from oranges to medical devices, farming, auto dealerships, operating franchises of all types, making packaging, real estate development, and not just office towers, but communities for all types of folks. There are lawyers, fund managers and global bankers for sure. There are also local bankers, whose community banks operate throughout the South, West and Midwest in the US and are still a place small businesses can get a loan to start or expand.

 

And by the way, what did Sting do with the money he received from playing the wedding?

 

I don’t know, but Wealth-X notes UHNWs donated $112 billion in 2014. As an aside, American billionaires, according to the research, donate an average of $179 million in their lifetimes.

 

Yes, your column could have meant to be tongue in cheek. You conclude, “We often sit and dream about what we would do if we were ever to win the lottery: buy mansions, travel on private jets, run around in Lamborghinis. What we never factor in is: “turn into a complete rotter”. Perhaps I’m just envious. But join the ranks of the super rich? You couldn’t pay me.”

 

Of course, what your rant ignored is that for the vast majority of the Super Rich, they didn’t lollygag around daydreaming. They spent a good part of their adult lives making if happen. I say kudos to them. Lot’s of very inspirational stories about folks who came from nothing and made a lot, in some cases creating things that improved our lives.

 

And, yes I do understand that it’s a challenge to turn out quality columns and still drive the Internet clicks your bosses judge you on.  Of course, finding the UHNWs I described and you are not aware of can be difficult.  Like most of us, they are living below the radar, more than happy to spend time building their business and enjoying life with their friends and family privately, not showing off.

**Note:  The younger Gordon took the time to Tweet me the following:

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How Do The Super Rich Make Their Money?

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In December I launched an e-newsletter for private jet owners focused on travel. To do so, I needed to build a database of owners, no easy task.

 

But first let me clarify. When I say jet owners, it also includes C-Level executives at larger companies that operate multiple jets. I also included owners of the popular Beechcraft King Air, though a turboprop, it carries up to eight passengers and a new 350 version runs $7.5 million. I additionally included helicopters. The worldwide fleet of private jets, King Air turborprops and helicopters is just over 25,000, so with my database now up to 16,000 names I cover a nice piece of the market.

 

In building the database, which entailed licensing three different databases, then spending over 1,000 hours of research covering hundreds of websites, I learned a lot about private jet owners.

 

Full disclosure: I wasn’t starting from square one. In 2007 I co-authored the book “The Sky’s The Limit: Marketing to the New Jet Set” based on over 600 interviews with owners and fractional owners of private jets. I also started a magazine in 2001 called Elite Traveler, which was distributed via private jet terminals, corporate flight departments, fleet operators and caterers.

 

That said, this project included an enormous amount of granular research. In the case of privately held companies, it often meant reading newspaper articles from business journals about my subjects. In public companies that operate private jets, it meant reviewing Annual Reports and SEC Filings to assess how much compensation senior executives made.

 

My research confirmed findings that have been published by Wealth-X in that there is a lot of wealth beyond the traditional go to places of California, New York, Florida and Texas. It was interesting to find very wealthy individuals spread across all 50 states, including places like Iowa, Nebraska, Kentucky, Alabama and other places that might not readily come to mind. My readership in fact includes all 50 U.S. states and over 40 countries.

 

While I certainly found lots of wealthy folks in banking, finance and insurance, the list of industries that spawned private jet owners was extensive, including farming, from pigs and cattle to apples and other fruit. And of course there was produce distribution, and then companies that make farm equipment. In oil and gas, I found not only people who made a lot of money drilling and refining but also laying pipeline and manufacturing components of pipeline and other industries that support oil and gas. There are readers in media, sports ownership and entertainment as well as auto dealerships, auto racing, legal, pharmaceuticals, logistics, consulting, beauty, fashion, real estate, hospitality, mining, education, franchising, frozen foods, pasta, jelly beans, education, research, utilities and any and all sort of manufacturing you can think of.

 

If you are marketing luxury products and looking for Ultra High Net Worth consumers who can be regular customers, it is a good reminder that the typical stereotypes of the super rich are often misleading.

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Why Oxfam’s Latest Research Is A Must Read For Luxury Marketers

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If it’s time for the World Economic Forum in Davos, it’s time for another damning report by Oxfam about the One Percent, but before you say you’re too busy to care – and yes there are valid points such as tax avoidance – you may well be part of the greedy rich.

 

What?  You?

 

Oxfam notes that entry into the One Percent, based on data it evaluated from Credit Suisse, means having total assets of just $760,000. So if your apartment, house, car, bank accounts, jewelry, comic book collection and whatever valuables you have add up to that amount, congratulations, you are in the One Percent.

 

You may say, you don’t feel like you’re in the One Percent, and my response is, that’s my point. After all, you can’t even buy a studio apartment in Manhattan for three quarters of a million bucks.

 

And by the way, to be in the top 10 percent worldwide takes a net worth of just $68,800. Please note, that’s not a household income, that’s net worth!

 

However, if you are selling luxury goods here are a couple things to think about. Credit Suisse says, the assets of the top One Percent are now greater than the remaining 99 percent, so clearly that means that the One Percent is in fact a good starting point in terms of targeting consumers who can afford what you are selling on an ongoing basis. If you are marketing in the U.S., the entry point for Household Income to the One Percent is just under $500,000.

 

But while making a half million dollars may provide a comfortable lifestyle with nice vacations and some luxury purchases now and then, it is not Super Rich, which is generally put at a Net Worth of at least $30 million and a household income in the multiple millions of dollars.

 

Coincidentally, coinciding with the Oxfam report, SIHH, a major watch show opened today in Geneva. Sellers of Swiss high-end watches may see a decline in sales after two middling years, according to a piece in The New York Times by Victoria Gomelsky. She outlines how a perfect storm of declining oil prices are hitting the economies luxury consumers in Russia, the Middle East and Africa, while the crackdown on gift giving in China and the Apple watch are all conspiring to provide headwinds.

 

With no silver bullet in sight, as China, Russia, Brazil and Nigeria provided in the booming 2009-2012 period when the U.S. economy tanked, what should marketers be thinking about in terms of boosting sagging sales?

 

As part of a recent project I’ve been working on, I was able to ask about media consumption with UHNWs who own private jets. The most interesting point I found is what they read mainly revolved around two distinct areas: B2B Media for the industries where they make their money. I had previously never heard of Apparel, Auto Dealer News, Auto Dealer Today, Breeder, Citrus News, Citrus Industry, National Fitness, Turbine and Club Solutions. The second was areas of passion, with titles such as Car & Driver, Hunting, Hunting & Fishing, Sailing, Whitetail and Practical Horseman. Yes, there were watch magazines in the mix.

 

My research was for a travel project, and the other thing that surprised me was the general lack of knowledge about some major luxury hotel news which was the talk of the industry, but was not even on the radar of the Super Rich.  The again, 85 percent said they don’t read any travel magazines or e-newsletters.  I suppose they are busy running their businesses. So my other takeaway, is UHNW consumers are probably not as familiar with what you are selling as you may think, despite all the A List places you’ve gotten coverage.

 

There is a fairly large opportunity to strategically reach the Super Rich via media, however, the answers may not be obvious and unfortunately, most of the research used by media buyers to figure out where to allocate ad dollars doesn’t cover where the real action is, which is the top half of the One Percent.  And by the way, if you were wondering how much it costs to replace a cracked windshield on a Gulfstream private jet, that would run you about $800,000, including labor.

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Gallup: Mass Affluent Cutting Back On Spending

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The question of what’s rich came up again this week when Gallup this week published the results of a new survey. From my perspective, it once again underscores the precarious position for luxury marketers who don’t have comprehensive marketing strategies to target the Ultra High Net Worth (UHNW) consumer (Think Household Income of $1 million +).

 

My experience is many of the biggest and brightest believe marketing to the Super Rich is about having some private dinners, sponsoring a few cultural events, perhaps a polo tournament, and that’s it. Few, if any, have a separate media strategy to target consumers who make over one million dollars a year. Instead, it is assumed that general media plans are effective in reaching this target.

 

But back to Gallup:

 

Thirty-seven (37) percent of Americans making over $240,000 a year said they are “cutting back on how much money” they spend on a weekly basis. For those making $180,000 to $239,999, 42 percent are cutting back. In the $120,000 to $179,999 household income range, the percentage cutting back rises to 44 percent. From $90,000 to $119,999 it rises further to 52 percent, and continues to rise as you go lower.

 

Gallup believes that consumers are skittish about the future, and would rather bank money than spend it.

 

Of course, a Washington Post story revealed that in major metropolitan markets, a $250,000 household incomes leaves little wiggle room to begin with. With no new silver bullet markets such as Russia, China or Brazil to take the place of mass affluent American spenders, the Gallup numbers are a good sign that luxury marketers should be crafting a stand alone strategy to gain share of the over $210 billion the global Super Rich spend annually on luxury goods and services.

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Luxury Marketers: Where The Super Rich Give Their Money May Be A Surprise

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While common wisdom among many luxury brands is that Arts and Culture is the best way to reach Super Rich patrons who are potential customers, a small sample survey by Wealth-X shows museums, operas and so on ranked fifth out of five philanthropic destinations for UHNW money.

 

The “Generosity Index” looked at 20 of the most generous Super Rich givers and found Education to be the most popular cause with 18 of 20, or 90 percent of UHNWs donating in this category.

 

Next was Health and Medicine, favored by 80 percent of Super Rich. Fifty-five (55) percent made major donations to Social and Humanitarian causes, followed by 40 percent for Community Development.

 

Only four of the 20 UHNWs Wealth-X looked at, 25 percent, aligned themselves with Arts & Culture.

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Stupidity Tops The Charts As MTV Mistakenly Reports The Super Rich “Are Responsible for Half of the World’s Carbon Emissions”

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Rae Paoletta is a “dreamer, news junkie, knowledge sponge” who is some type of writer or journalist for MTV. She also Tweets as @MTVIssues where “We tell stories that are changing the world and we just have a lot of feelings.” Her boss, Sumner Redstone, the controlling shareholder in MTV’s parent Viacom, is Super Rich. His net worth is estimated at $5.3 billion. In fact, Viacom CEO Philippe Dauman, thought to be worth $200 million, is also super rich. A quick search of Google looking for what the definition of “Super Rich” is would yield a multitude of answers from having an annual household income of exceeding $9.5 million or a net worth or $30 million, or even $50 million or more.

 

What caught my eye about Paoletta was an article she wrote for MTV.com, “Super Rich People Are Responsible For Half The World’s Carbon Emissions.”

 

Just reading the headline, it didn’t sound right. After all of the various estimates of Super Rich global population, the most generous, by Wealth-X, reports a mere 211,000 households worldwide with a net worth of $30 million or more. That equates to under one million people who are part of Super Rich households.

 

It only took getting to the second paragraph to see where journalistically Paoletta or or whomever wrote the headline made their mistake. “Disturbing new research from Oxfam, an anti-poverty organization, asserts the world’s wealthiest 10 percent are responsible for 50 percent of all carbon emissions,” she wrote.

 

Quick math shows 10 percent of the world’s 7.2 billion population equates to some 720 million people, of which the Super Rich make up approximately one million. The article also mentions the footprint of the richest one percent “could be 175 times that of the poorest 10 percent.” For continued clarity, one percent of 7.2 billion is 72 million. Again, the Super Rich total around one million.  In fact, there only 16 million people worldwide who are single digit millionaires (out of the 720 million people who account for 50 percent of carbon emissions).

 

Paoletta concludes for her readers, “Currently, world leaders are gathered in Paris discussing humanity’s role in climate change. Now is the perfect time to address the relationship between class and carbon emissions, and what can be done to catalyze the change.”

 

A bit deeper look at the Oxfam statistics would have revealed the wealthiest 20 percent of the world’s population, about 1.44 billion people, accounts for nearly 70 percent of all emissions. My guess is that includes a good chunk of the MTV.com audience.

 

Perhaps a more relevant focus for Paoletta is what she and her peers can do. Of course the Super Rich or Ultra High Net Worth (UHNW), whichever label you want to use, should be conservation minded as well. But let’s start with facts. The under one million Super Rich do not produce half of the world’s carbon emissions. Headlines like the one in Paoletta’s story only create a wider divide and make critical issues harder solve. And I do really miss the days when MTV actually played music.

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The Super Rich: The Good, The Bad, The Ugly and The Sad

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While perceptions of the super rich are often tied to what we read in the press, rarely do we get insights from the people who work directly for and with UHNW families. The Super Rich are generally diligent in making employees and service providers sign non-disclosure documents, and many that serve them have little to gain by spilling the beans as it would deter other UHNWs from hiring them.

According to a report in the Australian media, angel investor Kai Peter Chang was happy to dish on the UHNW customers he worked for during his days in wealth management.

Some highlights from Chang:

The Bad, The Ugly:

  • Financial services is the “Concierge of Money” for the Plutocrat class; we were suit-and-tie wearing mandarins of their largesse, who knew the details of our clients’ finances better than they did; it was our job to anticipate their needs before it even occurs to them.
  • Managing a massive personal fortune often means managing their dirty secrets.
  • Money is a personality amplifier. If you are a poor person who hates gay people/broken-English-speaking immigrants/Republicans/whatever, your need for a paying job forces a level of decorum in your conduct, and you learn to keep quiet your most objectionable opinions so you can get along with your employers/customers. On the other hand, if you are a poor person who has a benevolent heart and genuinely wishes to help the less fortunate, your financial constraints will limit whatever level of help you offer to very modest levels; your efforts may be invisible to most unless they are direct beneficiaries of your generosity, or know you personally.
  • Money removes these constraints: A wealthy bigot can afford to be a raging terror to whoever he or she wishes, with almost no consequences. I’ve witnessed multi-millionaires confidently drop shockingly racist/nasty remarks about gays/disabled/[insert group] in casual conversations.
  • Most employees and service providers roll with the tide: We were trained to go along with it — they are the client, and their accounts are worth millions in fees over the course of their lifetime, so while we won’t join in the racist/bigoted banter, we won’t object either; we are trained to nod politely and refocus the conversation to the technical matters.
  • A wealthy married man can incorporate separate businesses/LLCs for the sole purpose of buying property/spending money on the sly for his illicit lover(s).
  • Control of financial trusts can used as chess pieces to manipulate family members/dependants/beneficiaries to bend to the will of the owners of the capital.
  • Errant adult children of the wealthy who find themselves incapable of earning a living on their own, often find themselves in protracted legal battles with stepmothers their own age (their plutocrat fathers, having paid a fortune to rid themselves of their first wives, marry younger women who now vie for a piece of the dying man’s fortunes).
  • Entitled heirs — with no irony or self-awareness — often speak of their fathers’ fortunes and possessions as “my house,” “my boat” or “my plane.”
  • If you put over US$100,000 on the table in any casino in Las Vegas/Macau/Monaco (which you can either lose or win), an entire battalion of high-touch specialists employed by the casino materialize to cater to your every whim, so long as you gamble at their tables. They know your name, your favorite foods, your favorite entertainers (“free tickets for you and your friends sir, and we can arrange for you to meet singer/rapper/comedian/magician so-and-so backstage!”) and your favorite recreational drugs (if you’re into such things — they will be discreetly tucked away in the bathroom of the penthouse suite of the hotel/casino where you are staying).

The Good:

  • While many wealthy philanthropists want to get credit for their contributions to charities/foundations they support (seeing their name emblazoned on their former university’s Major Donor walls, creating foundations in their names, etc.), I was surprised by the number of people who wanted to remain strictly anonymous — the only entities who were aware of their donations of these people was the IRS (for tax deduction reasons), the recipient non-profit/foundation, and us, who facilitate/structure these large donations.
  • There are many who view their wealth as a blessing that they entrusted to be good stewards during their lifetime; they take their responsibility seriously to leave the capital to the next generation along with imparting their most cherished values.
  • Children of this second group are polite, respectful and thoughtful — they understand they occupy a rare and privileged position in society and are very careful about not lording it over others, and make sincere efforts to be worthy heirs.
  • The former type of client was far more interesting (and lucrative for the firm, given the complexities of the layers of financial instruments deployed), the latter was far more pleasant to interact with.

The Sad:

  • The most valuable thing I’ve learned is this: whether you are a rich dysfunctional bigot dropping N-words in my office and throwing your financial weight around while bankrolling mistresses through your shell companies, or a thoughtful philanthropist trying to quietly change the world for the better with your largesse, being wealthy is a relatively lonely existence.
  • The problems you encounter, while very real and very frustrating, will not elicit sympathy from 99.999 per cent of the planet.
  • Like being an exceptionally beautiful woman, most of the people who approach you are only after one thing, and that perspective warps your ability to connect genuinely with others — one of the most quintessential human needs.
  • Almost everyone wouldn’t mind being a bit more beautiful or a bit more rich, but few can truly appreciate just how alienating it is to have either in such abundant quantity, that they become the object of desire/envy by everyone you meet.

Follow me on Twitter @elitetravelerDG

Doug Gollan is ranked by Verb as “Top 25 Digital Luxury Experts To Follow.” His 2014 book “23 Ways To Create More Sales Opportunities in 25 Minutes” ranked Top 10 in 3 Amazon business categories.

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Are Luxury Brands Overexposed To Arts And Culture?

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As we approach Art Basel Miami in less than two months, I can make three predictions. Lots of luxury brands will spend tens of millions of dollars – yes tens of millions – throwing lavish parties. Secondly, lots of expensive art will be purchased in a very short time. Lastly, most of the marketing dollars will be at best an exercise in public relations.

There is no doubt that the super rich have an affinity for expensive art and high-end culture. Look at the boards of any museum or philharmonic. And there is no doubt there is a strong connection because the artisan craftsmanship of beautiful jewelry, watches and the inspiration of fashion designers and other luxury purveyors with the talents of world class painters, sculptors, sopranos or tenors.

Yet at the end of the day, much of the audience for museum galas or Art Basel Miami parties is not the Ultra High Net Worth or Super Rich consumer that the luxury brands are hoping to network with and cultivate as customers. In fact the Miami Convention and Visitors Board expects close to 100,000 people to flock to the city. In the convention center alone over 250 galleries from 31 countries will be represented. If 2015 is anything like past years, there will be around 300 to 400 private jet flights bringing in the wealthy. If you want to say there is an average of six people on the jet, we are talking about 2,500 people who are probably UHNW, usually defined as having a net worth of at least $30 million. And while that is a nice concentration of the well to do, it isn’t much different than what you would find tomorrow in any number of cities across to country from South Bend to Baton Rouge and Austin, Texas. Major collegiate football teams draw between 80,000 and 100,000 fans to those games, and for the big schools when they play big games, having several hundred private jets flying in super rich alumni who will view the game from luxury boxes is the norm.

The picture above shows the lounge of Swift Aviation in Phoenix earlier today as fans of Arizona State mingled awaiting their private jets to see the Sun Devils play Utah tomorrow, not a marquis match-up.  The Phoenix/Scottsdale area has three main airports that serve private jets and more than a half dozen FBOs (private jet terminals) like the one pictured above.  This scene is repeated throughout the fall in dozens of cities around the country.

Wealth-X research shows that UHNW consumers account for over $200 billion a year in luxury spending, and as a segment are the biggest “niche” of consumers buying watches, jewelry, fashion, luxury autos and fashion.

While it may make sense for multiple reasons for luxury brands to bump heads with each other in places such as Art Basel Miami, the example of college football is a good lesson that the Super Rich have many other passion points beyond the arts. It is also good to remember as many billionaires dropped out of college as went to Ivy League institutions, and the vast majority matriculated from state universities. There are large Super Rich populations outside of New York, Miami and Los Angeles with plenty of money (there are more UHNWs in Minnesota than Russia and more super rich in Wisconsin than Saudi Arabia).

For luxury brands seeking to grow high-value, high-spending consumers, a broader view of who the wealthy are, what their passions are and where they can be found is a good way to find new clients. At the same time, there will be plenty of appreciative posers and appreciative fans of the arts drinking free champagne in early December in Miami Beach. Bottoms Up!

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The Chinese Visitor: Are Luxury Brands Losing Control Of Their CRM to Salespeople?

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Luxury brands have invested hundreds of millions of dollars in CRM and building their database, and for the most part it is working.

The one exception where traditional CRM capture is falling short is in the Chinese traveler market. The reason is simple. While brands typically have salespeople capture email addresses, many Chinese have eschewed email for WeChat, using the social platform as not only an all in one replacement for Facebook, Twitter, Instagram, Pintrest, etc. but for good old email.  WeChat has grown in several years to over 700 million users!

The desire of brands to capture data about customers, particularly emails, is critical as it gives the brand a way to stay in touch with customers even when a salesperson leaves. However, the new affinity for Chinese travelers to use WeChat in place of email has not escaped salespeople working at luxury brand boutiques. Needing an effective way to stay in touch with customers to schedule second fittings, notify them when a piece they wanted comes in, engraving is done or just to sell them more, salespeople working the Chinese market are communicating to customers from their private WeChat accounts.

The department manager at a major boutique from one leading European luxury company who said corporately there is no WeChat platform specifically dedicated to the Chinese visitor shopping in the U.S. told me, “Unfortunately there is nothing we can do about it.”

Building a WeChat database specifically of Chinese travelers to the U.S. is more important than ever with the new 10-year visas introduced at the beginning of this year.  Applicants for the new 10-year renewal visas represent the frequent, affluent visitor to the U.S. luxury brands are courting, but are harder to find as they travel independently and not with tour groups.  By building this database, brands will be able to market to this target during multiple annual return trips.

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WeChat is an opt-in multiplatform marketing dream that enables brands to communicate with customers, providing videos and webcams as well as enabling customers to share purchases with others on the platform.

Alec Glos, CEO of i2i Media, a Shanghai based communications company specializes in assisting companies targeting Chinese travelers. Speaking about the growing importance of WeChat as a de facto email, he reported after a recent trade mission from America to China his team entered over 500 business cards of Chinese contacts. More than half the emails bounced or went unanswered. It turns out even though the emails were on the business cards, the Chinese executives had abandoned email in favor of WeChat’s replacement feature.

Glos notes WeChat even has an appointment scheduling feature that enables users to schedule appointments. The ability to target repeat visitors from China is becoming more important. In 2014 nearly two-thirds of Chinese visitors to the U.S. were repeaters. This segment is not only the highest spending, but also is more likely to be traveling independently, so can’t be marketed to via tour group leaders. On the other hand, Chinese travelers stay in a variety of hotels, including non-luxury and with relatives, so local “concierge” solutions don’t work.

i2i under Glos is now working with luxury brands that not only want to capture more of the $24 billion Chinese visitor market, but who want to strategically ensure they have ownership of their CRM.  The upcoming launch of Galerie is an extension of the successful Essentially America platform, this time targeting Chinese visitors penchant for luxury shopping and real estate purchases.

The platform begins by capturing opt-in Chinese visitors coming to the US who receive the magazines when they are getting their renewal visa.  80 percent come to the US within 60 days and 98 percent within six months meaning for luxury marketers who want to find a needle in a haystack of 1.3 billion people, the distribution method connects directly to the approximately 1.5 million repeat Chinese visitor market brands are seeking.

Luxury Daily recently called the platform “really smart.”

i2i not only handles all of the implementation, including managing all the social media aspects of WeChat for the brands, but also takes care of translation.  “It is like having dedicated support to the Chinese visitor market, which when considers has a $24 billion annual value just to the U.S. is something critical for brands,” Glos told me.

Of course the key is being able to access Chinese visitors at the point of visa renewal.

For more information, please email me at douggollan@aol.com

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(Part 2 of 2) Are You Using WeChat Effectively To Target Chinese Visitors To The U.S.?

Are you using WeChat effectively to connect with Chinese visitors to the U.S.?
WeChat is an effective way to market to Chinese visitors to the U.S.

WeChat is a key strategic element of gaining more business from Chinese visitors to the U.S., particularly repeat visitors who are harder to reach because they tend to travel independently instead of with groups.
There are over 700 million Chinese currently on WeChat, and over 100 million Chinese who travel internationally each year, so how do you find the approximately 1.4 million repeat Chinese visitors that are expected to come to the U.S. during 2016?
It may sound like finding a needle in the haystack, but it’s not!
By creating a specific WeChat account for Chinese visitors to the U.S., jewelry, watch and fashion companies can promote their own retail locations. Real estate companies can build awareness and get appointment requests.
–  If you don’t have your own retail, you can use WeChat to direct Chinese visitors to your wholesale accounts. 
– If you have your own retail, but only have a WeChat account serving the Chinese domestic market, we can create a specific one for travelers to the U.S.
The key of course is to identify those Chinese consumers who are traveling to the U.S. in the near future!
Since 1994, Essentially America Group has been specializing in inbound tourism to the U.S., and since 2012 we have been active in China having created TravelUSA, our exclusive WeChat platform that averages 40,000 active, qualified users on a weekly basis.  Users get entrance to TravelUSA via a QR code only in Essentially America China, our magazine they are given when they apply for their visa renewal before leaving for the U.S.  In fact, 80% of the Chinese who apply for a U.S. visa renewal travel to the U.S. within 60 days and over 95% in six months.  This means you are reaching readers ready to shop and buy!
In November (timed for Chinese New Year 2016 travel shopping trips), we will debutGalerie, a luxury lifestyle magazine version of Essentially America specifically geared towards the repeat visitor interested in shopping, fine dining and real estate purchases.
We can create a custom WeChat USA platform for you or just create content for you on our platform.  We have marketing programs to fit your budget, and most importantly we have a guaranteed way to target the Chinese repeat visitor to the U.S.
Email me at douggollan@aol.com, and I can show you how you can benefit fromEssentially America’s more than two decades of expertise.
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(Part 1 of 2) How Can Luxury Marketers Capture Repeat Chinese Visitors to the U.S.?

Despite the headlines, China remains an economic powerhouse and key market for luxury marketers, and if fact, in North America, real estate is seeing an uptick as both a safe haven and as more wealthy Chinese send their kids to high school in addition to college.
Figuring out how to capture your fair share of the Chinese traveler market is more critical now than ever.
Thus China continues to be an important market for luxury brands, as Chinese focus luxury shopping around their travel.  The core of this spending comes from the repeat Chinese traveler.

It is a market that Essentially America has been tapping into successfully since 2012.

In November, a new luxury platform is being added to this successful model.

“In Galerié’s case, it is like casting a net into the stream. Once the fish swims by, you don’t have another chance, in this case until the next visa renewal which with the changes into effect this year, means up to 10 years,”

“The print magazine is the entry point, with advertising and editorial. The Galerie QR code then provides an ‘opt-in’ to content that will be used for the duration of the trip and for subsequent trips, so we are enabling partners to build a long-term relationship,”

Luxury Daily calls the Galerie approach integrating a print magazine given during the Visa renewal process with a custom WeChat platform “really smart…something other (media) can learn from.”

 

If you would like further information on how you can get more business from repeat Chinese travelers, including a free WeChat platform for your company, please email me at douggollan@aol.com
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Does Hard Luxury Need To Redefine Itself? Or Is There An Easier Solution?

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If I were to believe what I read, which I frequently don’t, the luxury industry, specifically the makers of hard goods, need to look in the mirror as they face unprecedented hurdles, some they can’t control, others of their own making.

Amongst the headwinds are the challenges in Russia, Ukraine and China, plunging oil prices that could cut back on consumption from wealthy Gulf nations and spots like Nigeria, Azerbaijan, Kazahstan and Indonesia that have been over-delivering uber wealthy customers to the malls of Hong Kong and shopping streets of Paris, London, Milan, New York and Beverly Hills.

Questions continue about how strong the economic recovery in the U.S. truly is. Unemployment reports are structured so many that are looking for jobs aren’t counted, and there is little question that the lion’s share of economic gains go to the top of the pyramid. A recent Bloomberg article noted, “While the merely rich haven’t seen their share of society’s wealth increase since 2000, the Super Rich have seen their slice of the pie soar.”

A part of UHNW gains can be attributed that the cash rich wealthy are best positioned to jump in a buy low when there is a crisis, enabling them reap oversize returns when the curve ticks up as it inevitably does.

More troubling, the article described the overall middle class has been on a decline for a while now, like the two halves of the Titanic, the upper end white collar middle class at slower trajectory, but still the same downward track of their blue collar cousins.

If you want more bad news, a number of European economies remain shaky, and the situation in Greece and now with refugees isn’t exactly the type of news luxury goods executives wish for.

A macro-issue is when the occasional luxury consumer needs to make a choice on how to spend their limited discretionary budgets, money is apparently shifting to experiences, a boon to the luxury travel industry, at the expense of thousand dollar handbags and mechanical watches under $10,000.

A recent piece in The Guardian was titled “Luxury Brands Must Redefine The Way They Do Business.” The writer argued, “The silver bullet for luxury retailers isn’t e-commerce. It’s redefining the business they are in….With luxury consumption becoming global, digital and experiential, the role of luxury retailers irrevocably shifts from products to services and experiences. The core value unit that luxury retailers designed their businesses around isn’t a luxury item anymore – it is seamlessness, convenience, speed and quality of personal service.”

For luxury executives it must seem like driving a Formula One car at full speed with junk being thrown on the course in front of you.

My take is pretty straightforward:

  1. There is no new China or Russia ready to burst on to the scene and save the day so this time around, the answer won’t be rushing into new markets (although to be fair, many brands spent many years to ensure they were well positioned when the rush started.).
  1. Most luxury goods companies still have a country or regional approach, that ignores high-end travel is the common denominator of the big spenders. Even when an UHNW community takes a hit as they are in Russia, those that still have money are still traveling. There may be less, but they still have lots of money and still spend. Most luxury goods companies rely on local market advertising in home countries to hopefully impact those that are traveling. Just as luxury brands are spending more resources to digital, they need to shift more marketing focus on dollars to global print and airport (don’t forget private jet terminals), still the best way to be top-of-mind with the high-spending travel target.
  1. Travel’s gains in its share of the luxury-spending dollar didn’t happen by accident. After getting hammered in the American recession and not having the same flexibility to simply chase new markets (it’s hard to move a hotel, for example), they stopped selling beds and started to view themselves as “vacation stylists.” Groups such as Four Seasons created unique experience-led programs, such as being able to play basketball with retired Hall of Famer Hakeem Olajuwon if you stayed at its Houston hotel, or having a private dinner overlooking the Arne from the Ponte Vecchio if you stayed at its hotel in Florence.

I think The Guardian piece was maybe a bit too dramatic. Luxury goods in my opinion will always be closely aligned to the “It Bag,” the star designer, the celebrity who wore it, artisanal craftsmanship, heritage, limited inventory, innovation and great stories.

At the same time, by dedicating more resources to the high-end global travel market (beyond Duty Free) and taking a page from the travel industry to create experiential offerings exclusive to customers (there are dozens of on-brand, simple ideas as well as some very high-impact more complicated ones) I think the hard goods side of the luxury industry will find clear track ahead.

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How Luxury Brands Should Look At Russia, China, Brazil and the Middle East Amidst The Turmoil

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There are economic woes in Brazil, China and Russia, including political worries the latter two. With oil prices plummeting, what will happen to the big spenders from the Arabian Gulf? Needless to say, luxury brands and service providers can attest first hand there is less spending. So what to do?

For brands there are key issues. Much money was invested in opening retail in emerging markets, including staffing up, marketing, advertising and communications, including events and getting aboard national celebrities as ambassadors and endorsers.

Well, the good news, in my opinion, is all of the money spent into developing these markets was well worth it, even if they are seeing some bumps, valleys or ruts. Having spent 14 years as co-founder, President and Editor-in-Chief of Elite Traveler before leaving at the beginning of the year, I was intimately involved both first hand and through extensive research in what makes the Ultra High Net Worth (UHNW) consumer tick.

Globally, as much as 90 percent of the Super Rich (those with at least $30 million net worth) are self-made and most of them were not known outside their companies and families. While certainly there are UHNWs who are celebrities, athletes or celebrity CEOs, many made their money through mundane businesses such as manufacturing, services, logistics, retailing and real estate. I’ve seen several billionaire surveys that show more billionaires dropped out of college than graduated from Ivy League institutions. In other words, the general stereotypes of Oxford University, polo and museum galas represented a sliver of the Super Rich, as does the sports team owner who made his money through car dealerships. In other words, the UHNW community is exceptionally diverse in both how they made their fortunes and their interests.

At the time we coined the term “Driveway Celebrity” as the only places they were famous was at home or at their office. We also found like the general population, they were generally attracted to pop culture. When we wrote about top suites, we created a section “who slept here” listing the famous folks who had bedded down in that suite. Rich readers loved the fact they could spend $10,000 a night to sleep in same bed as Sharon Stone or Sylvester Stallone.

We also disproved the myth that rich people don’t respond to advertising. We tracked tens of millions of dollars in watches, jewelry, hotel suites and real estate sold directly through advertising in the magazine via our oversized, pictorial format that spoke to the way UHNWs consumed media aboard their private jets.

So as I said, for luxury brands that spent big bucks on marketing and public relations in regions and countries now under pressure, my belief is that it was money well spent.

The challenge now is that with sales sliding, the broad based approach needs to be refined. Wing-X, a company that tracks private jet flights, reports that so far this year private jet flights between Russia and Europe are down 20 percent and for the United States, the falloff is 18 percent.

This news shows that clearly the recession has hit even the upper crust as it did in 2008 in the United States. At that time, private jet use dropped by as much as 28 percent. The common wisdom was that most of the Super Rich had gone broke, and those that hadn’t had shut down the spending.

Looking back more than a half decade later, the truth was much different. Yes, like what is happening now, there were UHNWs who were overexposed and were no longer Super Rich. But when one examines the U.S. UHNW market, since 2010 UHNWs households have grown not only globally, but in the U.S., their wealth has grown, and in one survey by University of California-Berkeley it was show that 95 percent of gains as the stock market came back went to those in the top 1 percent, with a large part of that in the upper half of 1 percent. Billions were made on buying distressed real estate and investing in teetering public companies. In other words, for those UHNWs that had cash in the bank, it was a great opportunity.

I recall in the ‘90s being at a New York breakfast with a well-known financial titan who in the midst of the Asian financial crisis was heading off later that day to Seoul. Somewhat dumbly, I asked, why? He simply said, “Buy low, sell slightly above the middle” and laughed.

The common wisdom after the crisis, however, was the American UHNWs had stopped spending, as in an entire group, more or less stopped. Now the wife of a former UHNW doesn’t say, “I am not going to buy this because we have serious cash flow problems.” She says, “I don’t think it is appropriate in times like this.” The fact is, she couldn’t afford it anymore. And our research showed after a 90-day dip as the Super Rich tried to get a handle on how their fortunes had been impacted, spending on luxury goods and services by those who were still loaded rebounded and actually surged a bit, although not enough to counter those who were no longer rich.

So what do I think the takeaway is? I am currently working on a partnership development project with a leading broker of superyachts. The average customer has a household income of $20 million and a net worth of about $160 million. In addition to spending an average of $200,000 per week to charter a yacht, excluding food, fuel, port charges and tips to the crew, they own five homes, spend five weeks a year vacationing at resorts, spend hundreds of thousands of dollars on expensive watches and fine jewelry, and yes they rent villas too! Most of all, they are a global audience. One day Beijing, the next Dubai, then Monaco next month for the boat show there, Ft. Lauderdale in November, Miami in February and so on.

For luxury brands the latest turmoil underscores the need to develop a global strategy targeting the Super Rich wherever they may be from, and wherever they happen to be today, as well as however they happened to make their money.  An important screen is travel, be it via yachts or just independent, affluent travelers.  We know from prior experience those who continue to travel are those with the money.

One thing we will see again as recoveries take place in markets now under pressure, is that for every story of an UHNW meltdown, there will be 10 of people who are taking advantage of the crisis to amass huge wealth.  Marketers need to make sure they are connected to these consumers more than ever.

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Why Being A Millionaire Doesn’t Mean Much In The Business Of Luxury

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I am always on the lookout for research on Ultra High Net Worth (UHNW) consumers, who are commonly defined as having a $30 million net worth as an entry point. However, many times I have to settle for a broader cut, which is why I was interested to see Shullman Research Center’s Insights Into Luxury, Affluence and Wealth published about a week ago.

The Shullman report looks at three slices: Consumers with a household income of at least $500,000 which in the U.S. represents the vaunted 1 percent of households; those with a personal net worth of $1 million + making up 11 percent of adults, and those with a personal net worth of $1 million + in liquid assets, or six percent of U.S. adults.

The executive summary is succinct: “The good news for luxury marketers, their agencies, and the media alike is that consumers with really deep pockets are digging into those pockets with gusto, even more so than their merely affluent counterparts. These extremely high-income and wealthy luxury consumers are also purchasing with greater frequency, and this also bodes well for the entire luxury category. At the same time, challenges remain, as quality and service continue to be important for these deep-pocket consumers as well as for other luxury purchasers.”

By the same token, I was surprised to see that only 40-44 percent of the three categories said they had made 6+ luxury purchases over the past 12 months (even if it compared favorably to 5 percent of all adults). Again, 29-30 percent said they had bought at least one piece of fine jewelry at $500+ in the past 12 months. For watches valued at $500 + (not generally what the industry considers high watchmaking) the range was 18-26 percent, and while that is impressive compared to the 3 percent of all adults, it is not in line with research on spending by UHNWs.

Shullman’s research is important because it contrasts the difference between High Net Worths (HNWs) and the Super Rich. Recent research by Northrop & Johnson, a leading broker of superyachts shows 85 percent of their customers (Net Worth Average $160 million) buy fine jewelry annually and 50 percent by high-end mechanical watches annually. Research I have been involved in with private jet owners showed similar numbers. Wealth-X research shows the average UHNW household spends $117,000 annually on watches and jewelry, and the Super Rich account for 35 percent of all global purchases in these two categories.

I think the message marketers can take away from Shullman is if they want to sell expensive products with price tags in excess of $10,000 and find customers who can buy regularly, $500,000 is not high enough in terms of a household income target, and low single figure millionaires are probably of limited value.

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The Prince And Ryanair: Another Example On Why It’s Hard To Get A Full Picture Of The Super Rich Via The Media

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According to a recent email from Travel + Leisure Prince William flew Ryanair while traveling on business for his new employer, an air ambulance service. The brief goes on to note “insiders” say his wife Kate Middleton and Prince Harry fly budget airlines too! I am sure the report, taken from sister Time magazine is correct, since there are pictures. At the same time the source article notes Angelina Jolie and Brad Pitt were recently spotted flying coach on Air France, forgetting to mention that they had flown in from the U.S. in first class and there was no first or business class on the domestic connecting flight to Nice.  Tickets for the family on that trip likely ran well over $100,000.

A quick Google search would have found a June 23 Daily Mail article that members of the Royal Family spent nearly $8 million on travel in 2014 billed back to the state. Among the highlights was a $150,000 trip by Prince Harry to the World Cup, including about $60,000 on commercial airlines and another $60,000 for private jet charters, hardly Ryanair type fares. Prince William also rung up a $120,000 trip to Japan and China, including $30,000 for pre-trip planning trips. Prince Andrew visited Kuwait via private jet at an expense of $90,000, and in total there were over 60 trips that cost at least $15,000.

The point of this is not to say the spending was right or wrong. The aforementioned trips were as part of the Royal’s official role to generate tourism and investment in the UK, plus sales for homeland companies.

I think it’s fine that William flies Ryanair. I suppose his company won’t pay for a private jet, and he doesn’t want to pay the difference, or perhaps the Queen won’t allow it. In fact, it’s not unusual for private owners and user to mix in commercial airlines for long-haul flights or sometimes a quick hop, although Teterboro to Washington D.C. is one of the most heavily traveled private jet routes.

The point is that looking at the Super Rich through the lens of the media rarely provides an accurate picture, particularly if looked at in a singular way. Does William ever fly privately when hopping up to Scotland? The full ledger of trips shows there are plenty of domestic trips made by the Royal Family by private aviation.

That said, while flying a private jet doesn’t necessarily mean one is ready to shell out hundreds of thousands of dollars for a watch, it generally does mean they have the money. On the flip side, getting a glimpse of an UHNW on discount airline may not reflect their normal lifestyle.

While the piece by Travel + Leisure didn’t try to portray William’s Ryanair flight as anymore than a matter of fact, it just shows how it’s critical not to make assumptions from a single piece in the puzzle, particularly if you are in the business of selling and marketing luxury products to UHNWs.  After all, maybe William’s private jet had a mechanical problem?

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Donald Trump: What Luxury Marketers Should Learn

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Dick Fuld was named by Time magazine one of 25 people most responsible for the 2008 financial meltdown. The last chairman of Lehman Brothers, who despite losing as much as $900 million in stock he owned at the time of his company’s bankruptcy, is thought to still have a net worth of at least $500 million.

He’s kept his toe in the waters of finance with his own advisory firm since and various SEC filings show he has been able to gain a few high profile clients, including AT&T. When it came to light a few days ago that he will probably pocket $30 million and possibly $50 million in August auctioning his 71-acre Sun Valley Ranch, it barely made a ripple, outside of reports by The Wall Street Journal, CNBC Wealth Reporter Robert Frank, Fox Business, CNN Money, some local Idaho newspapers and real estate. He wasn’t available for comment, and he has kept away from the media since 2008.

Of course he is not running to be POTUS. Then again, neither was Jeff Green when he made comments during the World Economic Forum that it might make sense that Americans don’t spend more than they earn. Forgetting that he came from a blue collar household, worked his way through college and started his first business by saving instead of partying, he was widely flamed in the media for the lavish estates he owns today and his expensive lifestyle. Yes, he arrived in Davos with wife, children and nannies aboard a private jet. Since then, we haven’t heard much from the billionaire.

Donald J. Trump may yet rue the day he decided to join the Republic primary for President. So far, he has stood his ground, slightly qualifying his comments about illegal immigrants. But first let me give you a disclaimer. In his 2005 book, “Think Like A Billionaire” Trump dedicated a chapter to me and the magazine I co-founded Elite Traveler. I had only met him a couple times and frankly didn’t know I was even going to be included until after the book was published and somebody told me. He kindly described me as somebody in the know about all the best places to go, although he did add that he prefers his own hotels. He also described the magazine as a must-read or something to that effect. It was very nice of him, and indeed it was terrific publicity for which I will always be grateful.

Back to Trump’s current situation.   Since his initial announcement, he has lost a number of business relationships. Were their ends mutual decisions? Was it because executives at those companies, who had been profiting from the relationship all along, came to the sudden realization that Trump has strong opinions they disagreed with, not always articulated with feel-good flowery prose? Was it they felt like they were going to lose customers if they didn’t cut ties? It’s impossible to really know. Either way, they’ve cut their losses soundly sleeping with the knowledge previous profits are safely banked.

The relevant part is I am sure that many other Super Rich and Ultra High Net Worth folks are watching Trump’s current plight and taking notes. Clearly, if you want to be in the public profile, you better make sure you are really well coached so you articulate controversial opinions in the most palatable way. Even better, you might want to stay clear of these type of divisive issues. Worst case, the message is that you should support issues covertly. Just donate money to folks who will get out the pitchforks and keep quiet and hide behind the scenes.

Douggollan.com is dedicated to marketing and selling to the Super Rich, so I want to look at it from that perspective. The other day on Bloomberg Television, they dedicated a segment to Trump’s company 401k plan.  It is something that you can get details of through public records. But we can be sure, as things move forward, there will be more things that will come to the surface, and they will be reported without context in the race to get headlines.

For luxury sellers, I think the lesson is quite straightforward. As private jets became a lightening rod for critics of the rich during the Great Recession, if you are selling or marketing to UHNWs remember privacy is paramount, not just for today but for 10 years from now. While it is fine if they post pictures of their yacht or earrings on Instagram or Twitter – some do, most don’t – building a successful relationship means honoring that what you and me do and don’t think twice, for the Super Rich is a potential land mine. What do I mean? Did you take a vacation to a luxury Caribbean resort the same year that you had to restructure your team. Did you buy your partner a nice watch three months after you had to close the branch office in Cleveland, forgetting that you offered everyone transfers and actually opened new offices in Buffalo and Cincinnati. Oh, and did you get a new car at the same time people in your company had their wages frozen. Yes, your wages were frozen too and certain workers got raises per contract. But lots didn’t and you got a new BMW!

In a Google search world, it’s relatively easy to dig up stuff on anybody and put it in a bad light. That’s not what happened to Trump. But luxury marketers should make sure they have “best practices” in making sure they don’t provide any fodder when customers get caught in a firestorm. Now critics of this column may get a bit irate, but the worst thing is to “scare” down Super Rich purchasing, particularly when one considers that their lifestyle spending alone creates over 5 million jobs, many that simply are lost when their money stays in the bank.

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Marketing To The Super Rich Is More Complicated Than Knowing Where They Go

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Robert Frank is one of the foremost trackers of the Super Rich. The New York Times is the paper of record.  Wealth-X is one of the best sources of market information about where the Ultra High Net Worth are from, how they made their money, and what they are spending it on.  Thus, I have to say I was a little disappointed to read, For The New Super Rich, Life Is Much More Than A Beach in the gray lady.

While nothing in the story was inaccurate, not much was new, and further, if your business is about marketing and selling luxury products and services to the rich, it missed a few key points,  in a forest through the trees sort of way. Then again, if you just happened to be enjoying a lazy weekend and never gave a thought about the lifestyles of the very rich, it would have served as a good primer.

Frank’s notable book, Richistan,” published in 2007 was and still is a must-read if your business depends on luxury consumers. If you put that together with “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else,” by reporter turned politician Chrystia Freeland, you will be a few miles ahead of many of those you are competing against. If you are looking for a third read, that takes focuses on where the rubber hits the road when it actually comes to selling your products and services to UHNWs, the 2007 book I co-authored with Russ Alan Prince, “The Sky’s The Limit: Marketing to the New Jet Set,” was based on over 600 interviews with owners of private jets. In it, we created three pyschographic buying personalities designed to help marketers better target their efforts in both audience, messaging and content.

So where was Frank’s NYT piece spot-on?   Identifying the Super Rich as a global species that is constantly on the move, hopping from one spot to the other and hard to pin down, is something I have been on my soapbox about for more than a decade, so to have two top figures in such prestigious media stating this, brings me to a happy place.  It is a key reason traditional media strategies are not effective in targeting the UHNW segment, which Wealth-X notes accounts for $234 billion in luxury lifestyle spending, about 20 percent of the total luxury market!

To give you a two-sentence recap of the article:  Today’s Super Rich fly around the world in their private jets, mainly keeping within the same circuit that includes New Year’s in St. Bart’s, Davos, some winter weekends in Palm Beach, The Milken Institute Global Conference in Beverly Hills, Art Basel in Basel, New York art auctions, The Masters golf championship in Augusta, Cannes Film Festival, Royal Ascot, dividing your summer between the Hamptons, south of France and Sardinia, and then onto the fall winding down with Miami’s version of Art Basel. Frank and David Friedman, President of Wealth-X, accurately point out that off the highway are many side routes, such as The Kentucky Derby, Wimbledon, the media confab in Sun Valley, the car collector’s delight at Pebble Beach every summer and so on.

Here is where the article from my perspective is a bit off course. Even at the headline events, there is only a small fraction of the global UHNW population in attendance. At the World Economic Forum in Davos, the grand daddy of elite hobnobbing according to the hosts, there are only 2,500 participants. St. Bart’s between its hotels, villas and yachts can only handle a couple thousand of the Super Rich at one time, if that. At the same time, Wealth-X pegs the global Super Rich population at 212,000 households, and since households include a partner and children, you are talking about around 800,000 actual people. While this may not be relevant to the general consumer readership of The New York Times, if you are involved in selling or marketing to the Super Rich it definitely is. If you are selling luxury travel or hard goods, again, reaching the spouse and kids is often critical in getting the sale!

In media and marketing, they talk about Reach. Reach is simply the percentage of your target audience your activity has a chance to connect to. If you are running an ad in a magazine that reaches 50,000 people with a $1 million + Household Income, there is a chance they will read that issue and perhaps see you ad. That’s the reason in the world of media, there is another metric, Frequency. Most people agree, that one ad or being at one event has little impact, so the key is to have enough Frequency against your target that you get noticed.

Research by Ogilvy & Mather back in the Eighties suggested your target consumer needs to read or hear about you (TV, radio, billboards, editorial, events, POP, word-of-mouth, etc.) about a dozen times before they were likely to seriously consider buying from you. Now I don’t want to equate advertising for dish soap to marketing to the Super Rich, but the theory is something worth keeping in mind. For the last decade, many marketers were hoping the Internet would solve the problem of figuring out what part of their marketing was actually working and driving ROI. Of course, we now know that over $6.3 billion per year of whatever is being spent to drive clicks is actually fraudulent, picking your pockets with such agility that you actually thought those were real people who were interested in your message.

Back to the Super Rich:  The challenge with the circuit described in The New York Times article is at even the largest of these stops, as a marketer you are reaching a very small percentage of the universe you can buy your product. If your business is based on getting a half dozen or less new UHNW customers per year, each of these events alone may provide a broad enough platform. However, the reverse challenge is that most companies that fit this profile (the guy who does six-and-seven figure home theaters, the specialist in landscaping, an independent financial advisor, etc.) is not a brand, therefore the obstacle is like the old McGraw Hill grumpy old man ad (see top of story), where he brings you down to earth, by reeling off, “I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s records. I don’t know your company’s reputation. Now-what was it you want to sell me?”

While I totally buy into Frank and Friedman’s Super Rich on the move thesis, let me add, where it gets more complicated is there is lots to add beyond the several dozen events they mentioned. Big college football games can attract more private jets than Art Basel Miami. Don’t forget the NBA All-Star Game and of course the Super Bowl, which draws over 1,000 private jets. There is the Olympics, the World Cup, and the list obviously goes on and on and on. Hot spots such as Ibiza and Turkey are drawing the Super Rich from traditional Med destinations. There are major fishing tournaments like the Bisby in Cabo that draw dozens of private jets, and today’s more active UHNWs can be found running in triathlons, fishing in Scotland, hunting in Mexico, hiking in Nepal, kite-surfing off Puerto Rico, riding big wave surf of Costa Rica one week and Indonesia, maybe today at the U.S. Open Golf Championship, or just somewhere with family celebrating Father’s Day.

In other words, where I think the story misses, is the insinuation that a large percentage of the Super Rich can be found in any one place at one time. Numerically, that is just not true. At certain times there are more than normal, but still not a significant portion of the UHNW population. This doesn’t mean that it doesn’t make sense to set-up a pop-up shop in the Hamptons as Hermes has done (of course most people know the Hermes name, if not all of the products they make), and explore opportunities to sell your services at these places.

Just keep in mind, you’re as likely to find the Super Rich at Levi’s Stadium to watch the San Francisco 49ers as Art Basel Miami. Finding them amongst the throngs is not often as straight forward as one would hope. Moreover, each of these events will only bring you to a small segment of the population. The larger challenge is 90 percent of this target audience, having not necessarily come from money, and being first generation wealth, is not as familiar with what you are selling as you may think. To create an effective UHNW strategy there is a lot of work to be done before you meet your prospect face-to-face, as our friend from the Mc Graw-Hill ad suggests.

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