Real is the New Luxury

Seraphinne Vallora

The controversy around AI generated models in the latest Guess campaign has raised a lot of ethical questions around how brands can and should use AI. However, it has also brought up some issues from a strategic point of view.

For smaller or challenger brands, AI can be a great tool to bring previously unattainable ideas to life. But for luxury brands, their ability to spend big on their media buy and creative production has always indirectly built trust through what economists call "bond signalling". Demonstrating commitment to quality by making costly, hard-to-fake investments. A $10 million campaign with A-list talent signals that a brand has resources and is willing to invest them in maintaining its reputation.

Here's the paradox: the seemingly "wasteful" spending on elaborate productions isn't actually waste. It's the part that works. Customers don't just buy the product; they buy into the story that a brand wealthy enough to spend spectacularly on campaigns must offer something truly special. The waste is the signal.

So if premium brands are now cutting corners in production with AI, how is that going to cut into their perception of being premium? When brands eliminate this conspicuous expenditure, they may also eliminate the psychological foundation of their luxury positioning. And has trying to push the boundaries cost a brand its substance?

Luxury brands face a genuine strategic dilemma: they need to innovate to stay relevant, but innovation that reduces their signalling costs could undermine their core value proposition.