1. May 11, 2012
SCOTT GALLOWAY
Brazil Russia India
NYU Stern
Doug guthrie
The George Washington University
School of Business
© L2 2012 L2ThinkTank.com In partnership with:

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DIGITAL IQ INDEX®:
Brazil Russia India
Emerging Markets
+ Digital =Growth
Growing at twice the rate of an already hot global market for prestige goods,
luxury sales in Brazil, Russia and India (BRI) are projected to reach a combined
$205 billion—20 percent of the global market—by 2025.1
BRI markets boast large populations armed with rapid adoption of digital technologies en masse, fueling among the young affluent, shaping a future where
growing disposable income. Compounding the double-digit growth in internet penetration on PCs and comfort with social and mobile platforms determine a
effects of this sociodemographic transformation is the mobile devices. These trends are especially strong brand’s success or failure in Brazil, Russia and India.
Research online/buy in-store …
… and abroad
The impact of BRI wealth creation extends far 2011, second only to the Chinese.2 Brazilians spend percent today to 60 percent by 2016.4 Geographic
beyond national borders. Punishing luxury import more in the US than any other tourist group ($4,940 silos and opaque attribution increase the likelihood
duties and strengthening local currencies boost BRI per trip), and it is estimated that 8 out of 10 luxury that luxury brands will underestimate the demand
tourists’ appetites for luxury goods abroad. According goods seen in Brazil were purchased abroad.3 More they are stoking via strong, local, emerging market
to Global Blue, Russian international shoppers were arresting, the percentage of European luxury sales digital presence.
behind 13 percent of global tax-free purchases in coming from tourists is projected to grow from 50
1. “Europe: Branded Consumer Goods: Luxury Goods,” Goldman Sachs, June 2, 2010. 3. “Miami Has a Hearty Oi (Hello) for Free-Spending Brazilians,” New York Times, December 27, 2011.
2. “Global Blue, Autumn 2011 Briefing and ‘The ultra-luxe feel,’” Business Standard, 4. Barclays Equity Research, 2011.
April 6, 2012.
© L2 2012 L2ThinkTank.com 2

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DIGITAL IQ INDEX®:
Brazil Russia India
g lo b a l l u x u r y m a r k et 5 w e a lt h g a i n s 6
USD Billions Millions of Households with Overall Income
in Excess of $100,000
2008 2025 2007 2017
INDIA
RU
57
SS
IA
BRA
15
74
ZIL
IL
10
3
AZ
64
4
15
BR
2.1
REST OF WORLD 473 2.8 6.3
INDIA 29
233
8
RU
32
SS
A
IN
IA
CH
16
.7
g r o w t h i n o n li n e reta il 7
USD Billions
5. “Europe: Branded
Consumer Goods:
Luxury Goods: A Trillion
Dollar Global Industry by
2025?” Goldman Sachs,
June 2, 2010.
6. “Volume 5: Evolving
Fortunes,” Barclays
Wealth Insights,
May 5, 2008.
7. “The Internet 2010 15 12 7 2016 36 43 84
Economy in the G-20,”
BCG, March 19, 2012.
© L2 2012 L2ThinkTank.com 3

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DIGITAL IQ INDEX®:
Brazil Russia India
bric k & m o rta r pe n etr ati o n
Louis Vuitton Stores per Country
has one Local Brick
and Mortar Door for Every:
3 million
80% of luxury sales in Moscow
French By 2025, there will be 90 “Cities”
27 million
Chinese
28 million
Russians
41 million
70% of domestic luxury sales
Brazilians occur in São Paulo
By 2025, there will be 34 “Cities” 75%
301 million
of luxury stores are in Mumbai,
Delhi, and Bangalore
By 2025, there will be 177 “Cities”
Indians
Clicks for Bricks
A brick-and-mortar retail strategy limits growth a brick-and-mortar-only retail strategy. Although an 200,000+ across BRI by 2025), operational costs will
in BRI markets. High-end real estate opportunities estimated 80 percent of Russia’s domestic luxury weigh down ROIC for brands that fight this battle with
in the major cities, from where much of the demand purchases were made in Moscow in 2010, the the last war’s weapons—bricks (vs. clicks). A strong
for luxury has come from to date, are dear. More capital’s share of GDP is not expected to exceed localized site, mobile and social presence can help
important, the rising economic tide is projected 10 percent by 2025.8 As additional cities continue brands reach wealthy BRI consumers in their home
to distribute wealth across the expansive BRI to mushroom in these countries (McKinsey & Co. markets and while they are abroad.
geographies, making it costly for any brand to pursue estimates there will be 300 cities with population of
8. “Moscow’s Luxury Goods Market Collapses,” Luxury-blogger.com, Data Insight (2011), and McKinsey Global Institute, 2010.
© L2 2012 L2ThinkTank.com 4

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DIGITAL IQ INDEX®:
Brazil Russia India
Lost in Translation
To date, the opportunity to establish a local digital
presence and engage BRI consumers has been
largely ignored by the Digital IQ Index® brands. Brazil Russia India Video Click to Play
• Only 22 percent have sites in Portuguese and 27 percent
in Russian.
• Only 21 percent maintain local Facebook pages.
• Paid search is virtually nonexistent: in Russia, only 9 percent
of brands invest in Google.ru, and only two brands are spending
on Russian market leader Yandex.
• Just five percent of brands have a Russian language
mobile presence.
Without investing in a robust localized digital presence, brands
forego sales in both emerging and mature markets.
Emerging Markets IQ = Growth
Our thesis is that success in the world’s fastest-
growing prestige markets is inextricably linked
to digital competence. This study attempts to quantify
the digital competence of 100 iconic brands and highlight 15
brands with a strong presence in Brazil, Russia and India. Our
aim is to provide a robust tool to diagnose digital strengths and
weaknesses and help managers achieve greater return
on incremental investment.
Like the medium we are assessing, our methodology is dynamic,
and we hope you will reach out to us with comments that
improve our approach, investigation, and findings. You can
reach us at scott@stern.nyu.edu and guthrie@gwu.edu.
Regards,
Scott Galloway Doug guthrie
Founder, L2 Dean, The George Washington
Clinical Professor of Marketing, University School of Business
NYU Stern Founder, Guthrie & Associates
© L2 2012 L2ThinkTank.com 5

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DIGITAL IQ INDEX®:
Brazil Russia India
ABOUT THE RANKING
20% 30%
India: Mobile
Brazil & Russia
Mobile 25% Site
Brazil, Russia, & India
The Methodology
Effectiveness of brand site
Compatibility, optimization, and marketing on
• Site Technology
smartphones, tablets, and other mobile devices
• Site Load Time
• Mobile Site:
• Site Translation
Compatibility, Translation, Functionality, Transaction
• Content Localization
• iOS Applications (iPhone & iPad):
Availability, Translation, Popularity, Functionality • Site Search & Navigation
• Product & Promotions
• Android & Symbian:
Availability, Translation, Popularity, Functionality • E-Commerce
• Social Media Integration
• Customer Service
• Account & Payment Services
30% Social Media
Brazil, Russia, & India
India:
20%
Digital Marketing
Brand presence, community size, content, and
engagement on major social media platforms
on global and local accounts Digital Marketing
Brazil & Russia
15%
• Facebook:
"Likes", Growth, Post Frequency, Applications, Search, brand presence, and email marketing efforts
Responsiveness, Content, Interaction Rate,
F-Commerce, BRI-Related Content, Geo-targeting • Search:
Global & Local Traffic, SEM, SEO, Web Authority
• Twitter: (Google (all), Yandex (Russia)
Followers, Growth, Tweet Frequency, Online Voice,
BRI-Related Content • Innovation:
Cross-platform Digital Initiatives, Social
• YouTube: Programming, and Presence on Additional Social
SEM, SEO, Views, Number of Uploads, Subscriber Platforms: LiveJournal, Odnoklassniki (Russia),
Growth, Content, Translation Instagram, Google+, etc.
• VKontakte (Russia): • Brand Buzz:
Community Size, Growth, Post Frequency, Mentions on Social Media platforms (Orkut (Brazil,
Responsiveness, Content, Interaction Rate India), VK, LiveJournal (Russia), Odnoklassniki (Russia)),
• Orkut (Brazil, India): Monthly Searches (Google (all), Yandex (Russia)),
Official and Unofficial Community Size Foursquare Check-ins
and Growth • Email:
Localization—Language & Content, Frequency, Social
Media Integration, Mobile Optimization
© L2 2012 L2ThinkTank.com 6

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DIGITAL IQ INDEX®:
Brazil Russia India
BRANDS EVALUATED
Beauty & Cosmetics Fashion Hospitality Luxury Retail Watches & Jewelry
= Brazil
= Russia
= India
© L2 2012 L2ThinkTank.com 7

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DIGITAL IQ INDEX®:
Brazil Russia India
SPOTLIGHT Brazil
A Protectionist Past to
m
ia
m
s
• Western brands only entered in the ‘90s
i
ri
pa
n
thy: Doubling in a De
TO
la
• Foreign brands remain heavily taxed mi
l cade
to
Wea
prices 25–80% higher
• Vibrant local brands:
hello.
85% Traveling Shoppers
The world’s highest social
24%
media penetration
Speak some english 52% of trips are
to Europe 29% to the U.S.
$4,940
Spend more than
Population anyone else when
2nd 205m (2010)
visiting the U.S. (per trip)
Largest country on
Facebook and Twitter
Median Age No. of Millionaires
São Paulo
29 155,000
70%
4
GDP per Capita of domestic luxury sales
$11,769 (2010)
out of
5 luxury goods seen in Brazil,
were purchased abroad.
Internet Penetration Internet Users 4.5%
39% 79m
Online Retail Growth, 2010–2016 Of total retail sales
16%
CAGR projected to be online
to
$36 billion
by 2016
© L2 2012 L2ThinkTank.com Sources: McKinsey, Global Wealth Report, CIA World Factbook, CNBC, Jomao do Brasil, eMarketer, NYT, Barclays Wealth Insights, IMF 8

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DIGITAL IQ INDEX®:
Brazil Russia India
BRAZIL
L’Occitane
DIGITAL IQ TOP 15 Brazil Sephora / Sack’s
Avon
Melissa
InterContinental Hotels & Resorts
Natura
NET-A-PORTER
RANK BRAND DESCRIPTION RANK BRAND DESCRIPTION Burberry
• Only brand with full f-commerce capability via dedicated JW Marriott
custom tab on Facebook One of the few brands sending Portuguese-language Lancôme
• Brazilian Facebook page reached 100,000 fan milestone 8 emails; boasts nearly 11,000 followers on Macy’s
1 in January with hand cream giveaway, acquiring 40,000
fans in 12 days
@burberry_brazil Westin Hotels & Resorts
Calvin Klein
• E-commerce site provides payment with Boleto Bancário Clinique
and payment in installments Sofitel
Portuguese-language e-commerce site; Marriott mobile
• Strong local social presence—55,000 followers
@sephorabrasil, 193,000 views on YouTube channel,
9 app provides Brazil-specific customer service RUSSIA
L’Occitane
268,000 likes on Sephora Brasil Facebook
2 • I Love Beauty Blog
Yves Rocher
Dolce & Gabbana
• Display ads on F*Hits—Brazil’s leading network Estée Lauder
of beauty bloggers Market-dedicated blog is well-promoted on site
10 and social media
Clinique
TSUM
• AvonBR has almost 73,000 followers, 55,000+ likes on Avon
AVON Brasil Facebook page and 20,000 members on Orkut NET-A-PORTER
• Avon Renew campaign targets Brazilian consumers with
3 dedicated mobile apps, Facebook page and microsite Makes shopping at Herald Square from São Paulo a reality,
InterContinental Hotels & Resorts
• Highly rated Adivinhe Minha Idade app solicits user photos 11 providing pricing in Brazilian Reais and international shipping
Bobbi Brown
Cartier
and comments and provides product recommendations Macy’s
Jumeirah
Ritz-Carlton
YouTube channel boasts more than 5 million views, Clarins
4 including “Power of Love” video with more than 1 million 12 Portuguese-language e-commerce-enabled site
views alone INDIA
Westin Hotels & Resorts
ITC Hotel Group
Burberry
InterContinental São Paulo maintains a presence Sponsorship of Lollapalooza Brasil generated local
5 on Facebook, Twitter, Orkut, and Foursquare 13 fan engagement on Facebook
Macy’s
Taj Hotels Resorts and Palaces
InterContinental Hotels & Resorts
Le Méridien
Clinique’s Brazil YouTube channel localizes global content NET-A-PORTER
Local leader maintains several communities on multiple with Portuguese descriptions and subtitles; site offers L’Occitane
6 social platforms catering to its bevy of brands 14 popular Brazilian payment options: Boleto Bancário and JW Marriott
installments Tanishq
Four Seasons Hotels and Resorts
Kiehl’s
E-commerce-enabled Portuguese-language app De Accor Titan
Transparent local pricing discloses duties and taxes
7 prior to checkout 15 lets Brazilian consumers manage their rewards points and Armani
book hotels
© L2 2012 L2ThinkTank.com 9

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DIGITAL IQ INDEX®:
Brazil Russia India
SPOTLIGHT Russia
Luxury Market Tied to Price of Commodities 100m+ 9.8
hours spent per month
users on local social on social media
network VK
• Luxury market cut in half during 2008 crisis
ope’ s Largest Internet Mar
• Several brands had to close shop in 2009
DVF, Vivienne westwood, versace
Eur ket
60%
market share
• 2011 luxury rebounds on average crude oil for search
prices +23% (vs. 2010) leader Yandex
only 13% of GDP by 2025 hello.
DO
N
St. Petersburg
5%
N
LO
TO
ARIS
to P
Moscow Speak English
80% Population
of domestic luxury sales
138m (2011)
TO n
yc Median Age No. of Millionaires
39 134,000
Traveling Shoppers GDP per Capita
Online Retail Growth, 2010–2016
35–50% $12,993 (2011)
24%
lower prices for luxury
CAGR
$43
goods when abroad
13% Internet Penetration Internet Users
to billion
of global tax-free purchases
(second to China)
44% 61m
© L2 2012 L2ThinkTank.com Sources: Russian census, CIA World Factbook, Source Data Insight, World Internet Stats, BCG, IMF 10

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DIGITAL IQ INDEX®:
Brazil Russia India
BRAZIL
L’Occitane
DIGITAL IQ TOP 15 Russia Sephora / Sack’s
Avon
Melissa
InterContinental Hotels & Resorts
Natura
NET-A-PORTER
RANK BRAND DESCRIPTION RANK BRAND DESCRIPTION Burberry
JW Marriott
• Russia-dedicated Facebook page (11,000+) and Twitter Lancôme
accounts, communities on VK (8,000+) and Odnoklassniki Net-A-Porter Live tracks consumer purchases globally
(9,000+) pages and a LiveJournal blog 8 Macy’s
1 • E-commerce-enabled Android and iPhone apps available
including Russia Westin Hotels & Resorts
Calvin Klein
in Russian complement a robust Russian-language e-
commerce and mobile site Clinique
Sofitel
Site features prices in rubles for InterContinental
9 Russia locations RUSSIA
• Purchasing Russian and English brand terms on Google.ru L’Occitane
2 • Virtual Bouquet game promoted on Facebook,
VK and Odnoklassniki
Yves Rocher
Dolce & Gabbana
Estée Lauder
“Pretty Powerful” Facebook app attracted 10,000 monthly
10 Russian users
Clinique
TSUM
• Russian-dedicated social presence on Twitter (2,600)
Avon
and VK (58,000)
NET-A-PORTER
• VK community grew 55 percent, to almost 58,000
3 followers in March InterContinental Hotels & Resorts
• Live-streamed Winter 2013 show on Russian sites;
posted live updates and behind-the-scenes pictures
11 Hosts a Russian version of bridal microsite Bobbi Brown
Cartier
to its VK page Macy’s
Jumeirah
• One of only two brands purchasing ads on Russian Ritz-Carlton
search leader Yandex Paid search advertising on Google.ru supports Russian Clarins
4 • One of three brands sending Russian-language emails 12 e-commerce
• “Revitalizing Supreme” campaign hosted on both VK INDIA
and Estée Lauder Russia Facebook page Westin Hotels & Resorts
ITC Hotel Group
Burberry
“3-Step System” Facebook-integrated campaign Russian-language site, but Russia Facebook page and VK
5 drives consumers from social platform to Russian- 13 page have less than 100 followers
Macy’s
Taj Hotels Resorts and Palaces
dedicated website
InterContinental Hotels & Resorts
Le Méridien
NET-A-PORTER
• Facebook page, but no official VK presence Ritz-Carlton Moscow site features user-generated content L’Occitane
6 • LiveJournal blog features celebrities but fails to link 14 and city information JW Marriott
to e-commerce site Tanishq
Four Seasons Hotels and Resorts
Kiehl’s
Giveaway drove “likes” on fledgling Russian Titan
Leverages its almost 150,000 followers on VK to push
7 inventory and tap into evangelists 15 Facebook page
Armani
© L2 2012 L2ThinkTank.com 11

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DIGITAL IQ INDEX®:
Brazil Russia India
SPOTLIGHT India
Barriers to Growth of Luxury Market
to
LO
N
D
60%
• High Luxury Tax: Indians buy abroad of Indians online engage
O
in social networking
N
in Dubai, Hong Kong, and London
fast est growing econo KO N
G
2nd my
• Limited Real Estate: few “luxury” HO
NG
to
locations available at affordable places
• Less Choice: perception that local
selection not as appealing
• Investment Restrictions: easing but New Delhi
still exisit
to DUB
AI hello. 75% Traveling Shoppers
Mumbai of domestic luxury stores
20% 60%
3
Speak English
4
of wealthy Indians shop for
luxury goods abroad out of
Population luxury goods were
1.2b (2011)
Bangalore purchased abroad
59% Median Age No. of Millionaires
of internet users access
solely from mobile phone 26 153,000 67%
of e-commerce comes
from mobile device
GDP per Capita
$1,388 (2011)
Online Retail Growth, 2010–2016
51%
CAGR
$84
Internet Penetration Internet Users Mobile Penetration Mobile Users
10% 121m 39% 470m
to billion
© L2 2012 L2ThinkTank.com Sources: McKinsey, Global Wealth Report, CIA World Factbook, CNBC, eMarketer, NYT, Barclays Wealth Insights, IMF 12

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DIGITAL IQ INDEX®:
Brazil Russia India
BRAZIL
L’Occitane
DIGITAL IQ TOP 15 India Sephora / Sack’s
Avon
Melissa
InterContinental Hotels & Resorts
Natura
NET-A-PORTER
RANK BRAND DESCRIPTION RANK BRAND DESCRIPTION Burberry
JW Marriott
Lancôme
Provides shipping to India and convenient and transparent
Facebook and Twitter extend “Heavenly Bed” campaign 8 Macy’s
1 in India
checkout process Westin Hotels & Resorts
Calvin Klein
Clinique
Sofitel
Facebook campaign provided consumers in New Delhi,
9 Mumbai and Ludhiana a free hand-cream gift at retail RUSSIA
WelcomZest Lounge blog features local points of interest, L’Occitane
2 video blogs from hotel chefs and allows guests to post
ratings and reviews
Yves Rocher
Dolce & Gabbana
Estée Lauder
Bombay property Facebook page links to reviews
10 on TripAdvisor
Clinique
TSUM
Avon
Injected its successful “Art of The Trench” campaign with NET-A-PORTER
some Indian flair by enlisting images from street photographer
3 Manou; hosted a digital exhibit to celebrate the opening Mobile app available for iOS, Android and Symbian
InterContinental Hotels & Resorts
of its seventh store in India 11 simulates the rituals of the traditional Indian festival,
Karva Chauth
Bobbi Brown
Cartier
Macy’s
Jumeirah
Ritz-Carlton
Global Facebook page translation allows fans to read posts Superior English-language site delivers; publishes prices Clarins
4 in Hindi 12 in local currency INDIA
Westin Hotels & Resorts
ITC Hotel Group
Burberry
Local leader, live-streamed BRICS Summit 2012 on its #KiehlsMumbai trended for three days, generating buzz
5 Facebook page 13 for store opening
Macy’s
Taj Hotels Resorts and Palaces
InterContinental Hotels & Resorts
Le Méridien
NET-A-PORTER
“Memorable Weekends” Facebook campaign gave away L’Occitane
6 free hotel stays, garnering 9,000 new fans 14 Twitter #WinAWatch contest has netted new followers JW Marriott
Tanishq
Four Seasons Hotels and Resorts
Kiehl’s
Ships to India, where it is the third most-searched Titan
Global Facebook page is “most popular” with
7 New Delhi residents 15 prestige brand
Armani
© L2 2012 L2ThinkTank.com 13

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DIGITAL IQ INDEX®:
Brazil Russia India
Key Findings
T O P 1 0 B R I GOOG L E S E A R C H E D B R AN D S
Inquiring Minds (March 2012)
MARKET-SPECIFIC SITE
The number of organic monthly Google searches in BRI, NO MARKET-SPECIFIC SITE
Hermès
which account for five percent of global monthly searches
Prada
for Digital IQ Index® brands, serves as a proxy for their
brand equity in these markets. Dominated by luxury
fashion, similar brand preferences can be seen across the 125,000
markets, with gold-obsessed India demonstrating a jewelry
bent. In each market, no more than five of the top 10 most
nel
ton
Cha
searched brands on Google maintain a translated brand
it
Vu
site. Valentino in Brazil and Tiffany and Prada in India have
uis
Ca
BR
75,000
A
DI
Lo
lvin
yet to open stores in those countries.
AZ
IN
Lo
IL
Kle
ui
Gucci
s
in
Vu
itto
n
ei
n
Kl
TAG Le
n
lvi
Heu Mé ni
Ca
er rid ma
ien Ar
Tiffan
y & Co.
et
Piag
Rolex
Valentino
Dior
Armani
,000
300
el i
Chan cc
Gu
0
,00
o
tin
Calv
500
Armani
ès
en
12
l
rm
Va
0
in Kle
,0
He
da 00
Pra
a
Ch
Di
o.
ban
in
or
an
Tiffany & C
el
Pra
Gab
da
20
0,
ce &
00
Lo
0
Dol
ui
s
Vu
itto
n
RUSSIA
© L2 2012 L2ThinkTank.com 14