Revenue: In 2021, Chanel generated €15.6 billion in estimated total revenue, up over 50% from 2020.
Growth: Over the past 5 years, Chanel’s revenues have grown at an estimated compound annual rate of 13%.
Profits: As a privately held company, Chanel does not disclose detailed financials. Industry estimates put Chanel’s operating profits at €3-4 billion annually.
Customers: Chanel serves an elite luxury customer base including over 100 million high net worth individuals worldwide. In the US alone, there are over 16 million people who can afford high-end luxury brands like Chanel.
Stores: Chanel operates over 200 boutiques globally with a heavy presence in fashion centers like Paris, New York, London, and Singapore. Flagship stores can generate over $100 million per year.
Market Share: In luxury fashion, Chanel holds around 4% global market share behind LVMH, Estée Lauder, and Kering. Among luxury leather goods specifically, Chanel leads with 24% share.
Iconic Products: Chanel’s classic women’s suits, No. 5 perfume, leather handbags, and Little Black Dress resonate globally as iconic luxury items.
So in summary, Chanel is one of the world’s most prestigious and profitable luxury fashion houses with annual revenues exceeding €15 billion globally driven by their iconic branding and elite customer base.
About Chanel’s marketing agency
Chanel’s global media agency is Omnicom Media Group. Chanel chose Omnicom after a competitive pitch and was impressed by their strategic approach and understanding of the brand. Omnicom’s agency, PHD, took over the account from WPP’s GroupM. Chanel had worked with WPP for 21 years.
Emmanuelle Walle has been the head of global PR and influence at Chanel fragrance and beauty since 2019. Chanel’s digital marketing strategy is one of the most robust in its category.
Additionally, Chanel has worked with global celebrities like Keira Knightley, Nicole Kidman, and Kristen Stewart as brand ambassadors.
About Michael Nguyen – CEO of Produce Results Agency, aka the “Extreme Ads Makeover” Host
Since 1999, Produce Results Agency has helped clients double assets from $5ooM to $1B and generated 4000% ROI for a regional bank turning their $66K marketing budget to $2.8M in revenue.
In this post, I will perform an ad audit on Chanel ads, analyze what’s missing from the ads, come up with new ads, and eventually validate those new ads by running paid traffic on my own dime to see how new ads perform.
I am using Meta Ads in this case study but the same principle applies to other mediums such as Google, Youtube, Programmatic Ads, and short forms.
The ad for “The PREMIERE EDITION ORIGINALE watch” is certainly descriptive and provides a clear connection to CHANEL’s legacy and design aesthetics.
Obviously, the quality of the creatives: the featured model Lily-Rose Depp, and the close-up shot of the Chanel watch are just magnificent.
I like how Chanel team used vivid words to describe the watch: “interlaced with leather”, and “echoes” (auditory word) which activates the auditory sense besides the visual.
Message-Creative matched: Model Lily-Rose Depp wears the watch and the close-up photo of the watch to highlight.
Room for improvements:
While the control ad is pretty decent, I’d love to see more angles such as prestige, FOMO, the ability to wear “history” on your wrist, etc. There are a lot more angles yet to be shown, displayed, activated, and demonstrated from just one control ad.
Emotional Appeal: The ad lacks a strong emotional connection. While it describes the watch’s design and its ties to CHANEL’s legacy, it doesn’t evoke a strong feeling or emotion in the reader. Emotions play a crucial role in decision-making, especially in luxury purchases.
Benefit to the Customer: While the ad describes the watch in detail, it doesn’t clearly state the benefit to the customer. Why should they choose this watch over others? What makes it special for them, beyond its design?
Engagement: The ad could benefit from a question or a statement that engages the reader directly, making them reflect on their own style, aspirations, or desires.
Social Proof or Testimonials: Mentioning any celebrities or notable figures who have worn or endorsed the watch could add credibility and appeal, especially in the luxury market.
Exclusivity: One of the driving factors for luxury purchases is the feeling of exclusivity. If the watch is a limited edition or has unique features available only for a short time, highlighting this can create urgency and desire.
Effect on Ad Performance:
Reduced Engagement: Without emotional appeal or a clear value proposition, the ad might not capture attention or resonate with viewers, leading to lower engagement rates.
Lower Conversion Rates: Without urgency or a clear CTA, viewers might not feel compelled to take immediate action, leading to lower conversion rates.
Less Memorability: Without strong visuals or emotional triggers, the ad might be less memorable, meaning consumers might not recall the brand or offer later on.
Broad Targeting: Without specifying a target audience, the ad might reach individuals who aren’t interested in the offer, leading to wasted ad spend.
Lower Click-Through Rates (CTR): Without a compelling reason to click, viewers might just scroll past.
Lower Conversion Rates: Even if they do click, they might not be as motivated to purchase without clear value, differentiation, or emotional resonance.
Less Retention: Without a clear connection or reason to remember the brand or offer, even those who click might forget about it shortly after.
Having one control ad can put your campaign into the following risks:
Lack of A/B Testing
Limited Insights: With only one ad, you won’t be able to perform A/B tests, which are essential for determining what aspects of the ad are working and what aren’t.
Targeting Limitations
Missed Opportunities for Segmentation: Different ad sets can target different customer segments. A single ad may not be as effective across all segments, missing out on some potentially lucrative opportunities.
Reduced Personalization: Multiple ad sets allow you to customize messages based on user behavior, geography, or other demographics. A single ad will be less personalized and potentially less effective (more on this below when I do an ad makeover)
Creativity and Message Fatigue
Ad Fatigue: Over time, the same ad is likely to become less effective as users get tired of seeing it. Multiple ad sets can help mitigate this effect.
Limited Creative Testing: Having multiple ads allows for testing different creative elements like headlines, images, and call-to-actions. A single ad limits this flexibility.
Risk Management
Higher Risk: If your one ad doesn’t perform well, you don’t have other ad sets to fall back on. This all-or-nothing approach can be riskier.
Budget Allocation: With multiple ad sets, you can allocate more budget to higher-performing ads. A single ad does not offer this flexibility.
Optimization Challenges
Limited Learning: If your single ad isn’t performing well, it’s harder to pinpoint what exactly is going wrong. Multiple ad sets can provide you with more data, making it easier to optimize.
Inability to Leverage Platform Algorithms: Many advertising platforms use machine learning algorithms to automatically allocate budget to the best-performing ads in a campaign. With just one ad, you can’t take advantage of this feature.
Data and Analytics
Limited Data for Analytics: Having only one ad will provide you less data, reducing the reliability and validity of your performance metrics.
Maybe you are perfectly okay with one control ad and burn your ad budget without ROI.
But if you would like to have a second-opinion ads critique so that you can see the gaps and areas where you can extract MORE juice out of your ads, click on the link below to have me critique your ads.
Audience avatar: Based on the landing page, I can draw some conclusions about the target audience:
Demography:
Gender: Primarily female. The watch is described with feminine attributes and is worn like a piece of jewelry.
Age: Adult women, likely in the age range of mid-20s to 60s. The reference to timeless style, classic CHANEL handbags, and the history of the brand suggests an appeal to a mature audience, while the inclusion of Lily-Rose Depp, a younger model, indicates an attempt to appeal to younger generations as well.
Income Level: High. CHANEL is a luxury brand, and the detailed descriptions of the watch’s design and materials suggest a high price point.
Geography: Global, with a particular emphasis on regions that value luxury fashion. The mention of Gabrielle Chanel’s apartment at 31 Rue Cambon in Paris indicates a connection to European luxury and fashion.
2. Avatar (Psychographics):
Fashion-forward: The target audience values high fashion and is likely to be aware of fashion trends and iconic brands.
Appreciates Heritage: The mention of the watch being a reissue of the first CHANEL watch and references to Gabrielle Chanel suggest an audience that values brand heritage and history.
Values Luxury: Descriptions like “golden hands,” “onyx cabochon,” and “interlaced with leather” indicate a preference for luxury materials and craftsmanship.
Seeks Exclusivity: The term “ÉDITION ORIGINALE” suggests a limited or special edition, appealing to those who seek unique and exclusive products.
Elegant & Sophisticated: The watch’s design, inspired by the N°5 fragrance bottle and classic CHANEL handbags, targets an audience that appreciates elegance and sophistication.
Bold & Audacious: The watch embodies a “spirit of freedom and audacity,” suggesting an audience that is confident and bold in their fashion choices.
Appreciates Art & Culture: The involvement of directors Inez & Vinoodh and the setting in Gabrielle Chanel’s Parisian apartment indicates an appeal to those who value art, culture, and cinematic storytelling.
In other words, the target audience for CHANEL’s “PREMIÈRE ÉDITION ORIGINALE” watch is affluent, sophisticated women, ranging from mid-20s to 60s, who have a global awareness and a penchant for luxury and exclusivity. These women value the heritage and history of iconic brands, are fashion-forward, and appreciate elegance and craftsmanship. With a bold and audacious spirit, they resonate with the watch’s embodiment of freedom, its connection to CHANEL’s legacy, and its association with art and culture, as highlighted by its cinematic storytelling and ties to Parisian luxury.
Ads Makeover
Here’s the disease that most marketing agencies and businesses running paid ads:
“They think they’ve tested 20 ads but they really just tested 2 ads 10 different times.”
The best analogy for this is if you play the game “Battleship”.
Battleship is a strategy-type guessing game for two players. It is played on ruled grids (paper or board) on which each player’s fleet of warships is marked. The locations of the fleets are concealed from the other players. Players alternate turns calling “shots” at the other player’s ships, and the objective of the game is to destroy the opposing player’s fleet.
Using the context of the Battleship game, the fact that you just tested 2 ads 10 different times is like you are calling “shots” for the same spot 10 different times at the other player’s ships.
The lack of ideas for ad angles is making your ads dull and boring and ultimately leads to ad fatigue.
Using the proprietary Bionic Framework leveraging 17-layer analysis to come up with ad ideas touching different aspects of human relationships, fears, shame, language structures, and pop culture rather than the boring feature/benefit-driven ads that most marketing agencies default to.
Here are possibilities for ad makeovers:
Headline Options
“Rediscover Timeless Elegance with CHANEL’s PREMIÈRE ÉDITION ORIGINALE”
“A Timepiece That Echoes CHANEL’s Legacy: The PREMIÈRE ÉDITION ORIGINALE”
“Wear History on Your Wrist: CHANEL’s Iconic PREMIÈRE Reissued”
“From Paris with Audacity: CHANEL’s PREMIÈRE ÉDITION ORIGINALE Watch”
“CHANEL’s Craftsmanship Meets Timeless Design: The PREMIÈRE ÉDITION ORIGINALE”
“Experience the Spirit of Freedom: CHANEL’s PREMIÈRE ÉDITION ORIGINALE”
“Missed Out on CHANEL’s First Watch? Don’t Let History Repeat Itself!”
“Still Wearing That Old Thing? Time for a Real Watch Upgrade!”
“If You Don’t Know CHANEL’s Legacy, You’re Missing Out Big Time!”
“Curious About CHANEL’s Timeless Elegance? Wait No More!”
“Ever Wondered Why CHANEL Stands Out? Discover the Secret!”
“Ready for a Timepiece That’ll Leave Others in Awe?”
Body Copy Options
“A reissue of CHANEL’s first-ever watch, the PREMIÈRE ÉDITION ORIGINALE is more than just a timepiece—it’s a statement. Inspired by the iconic N°5 fragrance bottle and interlaced with leather reminiscent of classic CHANEL handbags, this watch is a testament to audacity and freedom. Dive into Gabrielle Chanel’s world with a film featuring Lily-Rose Depp, and let the golden hands on a black-lacquer dial remind you of timeless elegance.”
“CHANEL’s PREMIÈRE ÉDITION ORIGINALE is not just a watch, but a journey through time. With lines evoking the N°5 fragrance and a bracelet echoing classic CHANEL handbags, it’s a piece of jewelry that tells a story. Witness Lily-Rose Depp in Gabrielle Chanel’s Parisian apartment and embrace a spirit of audacity unique to CHANEL. [DISCOVER]”
“Step into a world where time meets elegance. The PREMIÈRE ÉDITION ORIGINALE, inspired by CHANEL’s rich heritage, is a masterpiece that intertwines the past with the present. From its design reminiscent of the N°5 bottle to its bracelet that mirrors CHANEL handbags, every detail speaks of luxury. Join Lily-Rose Depp in a cinematic experience and embrace CHANEL’s audacious spirit.”
“CHANEL’s legacy is reborn with the PREMIÈRE ÉDITION ORIGINALE. A watch that’s more than just a timekeeper, it’s a piece of history. With design cues from the N°5 fragrance and a bracelet that’s a nod to classic CHANEL handbags, it’s luxury redefined. Experience it through a film with Lily-Rose Depp and let CHANEL’s spirit of freedom inspire you.”
“Evoke the spirit of Paris and CHANEL’s timeless elegance with the PREMIÈRE ÉDITION ORIGINALE. Inspired by the N°5 fragrance and adorned with a bracelet reminiscent of CHANEL handbags, this watch is a tribute to audacity. Dive into a cinematic journey with Lily-Rose Depp and let every tick remind you of CHANEL’s legacy.”
“The PREMIÈRE ÉDITION ORIGINALE is where CHANEL’s heritage meets modern luxury. Drawing inspiration from the iconic N°5 fragrance and classic CHANEL handbags, this watch is a testament to timeless elegance. Join Lily-Rose Depp in a film that captures the essence of Gabrielle Chanel’s Paris and let yourself be captivated by CHANEL’s audacious spirit.”
“If you didn’t snag CHANEL’s first-ever watch, here’s your shot at redemption. The PREMIÈRE ÉDITION ORIGINALE ain’t just a watch—it’s a statement. But here’s the kicker: if you don’t grab it now, you’re setting yourself up for another defeat. Don’t be that person who missed out twice. It’s a tragic tale you don’t wanna be part of.”
Models Applied: Emotions (anger, envy, defiance, disgust), Types of Statement (condition), Future (warning), Language Devices (slang, tragedy), Shame (defeat).
“Still rockin’ that outdated watch? Time to level up with CHANEL’s PREMIÈRE ÉDITION ORIGINALE. But if you think this is just another watch drop, think again. Miss out, and you’re looking at a world of regret. Don’t let envy eat you up when you see others flaunting it. It’s a tragedy waiting to happen.”
Models Applied: Emotions (anger, envy, defiance, disgust), Types of Statement (condition), Future (warning), Language Devices (slang, tragedy), Shame (defeat).
“If you ain’t part of the CHANEL legacy yet, you’re doing it wrong. The PREMIÈRE ÉDITION ORIGINALE is here, and if you don’t get on board, you’re setting yourself up for a major letdown. Don’t be the one watching from the sidelines. It’s a tragic look, trust us.”
Models Applied: Emotions (anger, envy, defiance, disgust), Types of Statement (condition), Future (warning), Language Devices (slang, tragedy), Shame (defeat).
“Ever wondered why some watches just stand out? Why does CHANEL’s PREMIÈRE ÉDITION ORIGINALE make such a buzz? Because it’s not just a watch, it’s a promise of timeless elegance. But here’s the real kicker: miss out, and you’re just setting yourself up for a world of “what ifs”. Don’t be that tragic tale.”
Models Applied: Emotions (anticipation, sadness, surprise), Types of Statement (question), Future (promise/prediction), Language Devices (slang, tragedy), Shame (Stupidity, Vulnerability).
“What makes CHANEL’s PREMIÈRE ÉDITION ORIGINALE the talk of the town? Why are folks always so shook when they see it? Because it’s more than just a watch—it’s a prediction of the future of fashion. But here’s a heads up: if you don’t get in on this, you’re just setting yourself up for a major facepalm moment. Don’t play yourself.”
Models Applied: Emotions (anticipation, sadness, surprise), Types of Statement (question), Future (promise/prediction), Language Devices (slang, tragedy), Shame (Stupidity, Vulnerability).
“Why does CHANEL’s PREMIÈRE ÉDITION ORIGINALE get all the love? Why does it leave everyone else in the dust? Because it’s not just a promise—it’s the future. But here’s the tea: if you’re not part of this journey, you’re just exposing your own fashion blind spots. Don’t be that tragic story.”
Models Applied: Emotions (anticipation, sadness, surprise), Types of Statement (question), Future (promise/prediction), Language Devices (slang, tragedy), Shame (Stupidity, Vulnerability).
Validate New Ads
This is where the rubber meets the road as I am going to validate ad concepts from the previous step by running paid traffic to see which ad concepts would resonate most with the customers.
Here’s how I set the adset on Facebook
Budget: $10 Lifetime
Product/Service: Watch
Targeted audience:
Women from 30 – 60
Target with interest in Chanel
Placement: News Feed
Optimization: Optimized for Traffic
Here are all the 12 ads being launched.
Fast-forwarding 24 hours to let the ads run.
Here’s the results
Campaign Numbers:
Ad budget: $13.37
Total Impressions: 1,537
Total Reach: 1,351
Total Clicks: 48
Cost Per Click (CPC): $0.28
CTR (all): 3.12%
Ad results
Summary
Reach and Impressions:
‘Headline 9’ has the highest reach with 351 and the highest impressions with 382.
‘Headline 10’ has the lowest reach with 31, and ‘Headline 3’ has the lowest impressions with 52.
Amount Spent:
‘Headline 9’ had the highest amount spent at $3.28.
‘Headline 6’ had the least amount spent at $0.40.
CPM (Cost per 1,000 Impressions):
‘Headline 3’ has the highest CPM at $11.15, indicating it’s the most expensive ad per 1000 impressions.
‘Headline 6’ has the lowest CPM at $6.35.
Link Clicks and CTR (Click-Through Rate):
‘Headline 9’ has the highest number of link clicks at 13.
‘Headline 3’ stands out with a whopping CTR of 9.62%, making it the most effective ad in terms of engagement.
‘Headline 4’ has the lowest link clicks at 3 and a CTR of 1.28%.
CPC (Cost per Link Click):
‘Headline 4’ has the highest CPC at $0.68.
‘Headline 3’ has the lowest CPC at $0.12, making it the most cost-effective ad in terms of link clicks.
Ad Performance:
‘Headline 3’, despite having a lower reach and impressions, stands out with the highest CTR and the lowest CPC, indicating that it’s the most effective ad in terms of engagement and cost-effectiveness.
‘Headline 5’ and ‘Headline 6’ have the lowest and second-lowest amount spent, respectively, but their CTRs are above average, indicating good performance for their cost.
In conclusion, while ‘Headline 9’ reached the most people, ‘Headline 3’ was the most effective in terms of engagement and cost-effectiveness for link clicks. It’s essential to consider both reach and engagement metrics when evaluating the performance of ads.
Analytics:
Winning Ads:
If the goal were to get maximum reach and impressions, ‘Headline 9’ would be the top performer.
Headline: “If You Don’t Know CHANEL’s Legacy, You’re Missing Out Big Time!”
Ad body: “If you ain’t part of the CHANEL legacy yet, you’re doing it wrong. The PREMIÈRE ÉDITION ORIGINALE is here, and if you don’t get on board, you’re setting yourself up for a major letdown. Don’t be the one watching from the sidelines. It’s a tragic look, trust us.”
Models Applied: Emotions (anger, envy, defiance, disgust), Types of Statement (condition), Future (warning), Language Devices (slang, tragedy), Shame (defeat).
Total Impressions: 382
Total Reach: 351
Clicks: 13
CPC: $0.25
CTR: 3.4%
If the objective were to get clicks at the lowest cost, ‘Headline 3’ would stand out.
Headline: “Wear History on Your Wrist: CHANEL’s Iconic PREMIÈRE Reissued”
Ad Body: “Step into a world where time meets elegance. The PREMIÈRE ÉDITION ORIGINALE, inspired by CHANEL’s rich heritage, is a masterpiece that intertwines the past with the present. From its design reminiscent of the N°5 bottle to its bracelet that mirrors CHANEL handbags, every detail speaks of luxury. Join Lily-Rose Depp in a cinematic experience and embrace CHANEL’s audacious spirit.”
So in this thorough case study, I extensively analyze, examine, and audit Chanel’s ads relating to the watch, then come up with new ad ideas based on 17 analysis “lenses”, and finally validate ad ideas by running them through paid FB traffic to determine the winning ad.
Ad #9 using Emotions (anger, envy, defiance, disgust) andShame (defeat) commands the highest impression, reach, and clicks but with a high CPC. It appears when users saw & heard a message using a different tone (defeat, anger) vs. joy & anticipation, the ad could probably catch their attention.
Marketing 101 says the first thing is that you need to capture the attention of users. Without attention, all other marketing objectives become useless.
Ad #9 achieves the goal of attracting attention and spreading the message.
What I would recommend is to modify the landing page accordingly to match the tone of the landing page with the message to increase the overall CTR.
For a complex product like the Chanel watch, being different and standing-out works.
Having only one control ad can seriously underperform your entire campaign because of the lack of A/B Testing, targeting limitations, ad fatigue, risk management, and optimization challenges.
Having multiple analysis “lenses” is the foundation to come up with ad ideas addressing customers’ needs, wants, objections, pains, and frustrations. Without additional analysis “lenses”, you are more likely to get “stuck” with boring and mediocre “features & benefits” angle.
Ideas & creatives are the name of the game.
I’d recommend Chanel create more ad angles for each of their products. The path of “Extreme Ads Makeover” doesn’t stop and should be continuously evolving with the market.
What-If Revenue Impact Analysis
What If Chanel went ahead and doubled down on ad #3 with the lowest CPC, what would be the revenue impact?
Let’s make some assumptions:
The conversion rate is 1% (given the normal conversion rate of 2%)
Double down on ad #3 by increasing the number of clicks to 100,000 clicks (Cost = 100,000 clicks x $0.25 = $25,000)
Let’s calculate the potential revenues
At 0.01% conversion rate, 100,000 x 0.01% = 10 buyers purchased
Revenue = 10 x $5950 = $59,500
ROI = 138% ($59,500- $25,000) / $25,000)
At 0.05% conversion rate, 100,000 x 0.01% = 50 buyers purchased
Revenue = 50 x $5950 = $297,500
ROI = 1090% ($297,500- $25,000) / $25,000)
At 0.1% conversion rate, 100,000 x 0.1% = 100 buyers purchased
Revenue = 100 x $5950 = $595,000
ROI = 2,280% ($595,000- $25,000) / $25,000)
Next Step
Double down on the winning ad and amp up the budget on it because I’ve done the homework for you, all you need is to increase the ad budget.
I share with you the 17 proprietary models I used to create ad ideas. While those 17 models appear easy for me because I’ve used them to generate thousands of ad ideas, for you, generating ideas may not come easily. That’s why I want to introduce the…
“Second Opinion” Package
If you are a 7-figure business owner and already run paid ads and need someone to critique your ads for a potential makeover, go ahead and order my “Second Opinion” package.
