Art sales hit an all-time high during the pandemic thanks to social media

By Rebecca Farah Al-Lahiq

When times are tough, the art market booms. How social media aided art sales and shifted the buyer demographic.

When the world went into lockdown, the buyers came out online. In 2020, online art and antique sales reached $12.4 billion globally, an increase of nearly 107% over 2019.

Given that exhibitions were canceled, and galleries closed, the high sales totals were surprising. But not shocking – as lock down ordinances forced galleries to close, they took their business online. As the pandemic carried on, galleries across the world had to shift focus from in-person sales to making the most of digital tools to reach clients. At the same time, with High Net Worth (HNW) collectors sitting at home and doing most of their shopping online, social media channels became a preferred tool to connect with buyers online.

In 2019, online art sales totaled just 9% of all art sales. However, the options were limited, and galleries and art dealers were looking for ways to reach customers who were not walking into physical locations. In 2020, one third of art collectors purchased art via Instagram. In many cases, the buyer never saw the artwork in person before the sale.

As the pandemic and its effects on buying have lingered, buyers are becoming more comfortable with online art purchases, and galleries and art dealers are able to reach a wider, more diverse audience than ever before.

A little art history

What a change from just 20 years ago. Then, the art world was a more insular community that catered to high-net-worth collectors. To buy art required being an accepted part of an inside group of dealers, galleries and auction houses. Viewing and purchasing art was by invitation only.

With the advent of internet auction and art viewing, the audience widened and democratized, though much of the art world was reserved for the ultra-wealthy. Moreover, sales were localized. A dealer in Vancouver, for example, would rely on word of mouth or direct connection to reach their buyers.

Now with the Internet, collectors from all over the world can have access to art from nearly any seller. The internet has also allowed new buyers into the market. Researching artists and the market itself is now much easier, and buyers can quickly locate and research emerging artists.

As the pandemic bore down, buyers working from home, thinking about the interior design of their space and without travel or social outings, they had money to spare. Such sales increases during tough times are not surprising. During the 2008 financial crisis, many auction houses had record-breaking years as investors looked for safer investment options. Much like amid the pandemic, buyers then had turned toward the art world.

Yet today’s buyers have shifted, as well. Aided by the internet, a new buyer demographic emerged. In 2020, millennials spent the most, with a median expenditure of $228,000, and with 30% spending over $1 million.

The artwork they were interested in shifted, too. As social causes emerged, such as Black Lives Matter and the #MeToo movement, buyers were refocusing where they wanted to direct their support. Minority artists, female artists and others were becoming sought after, and their market value rose.

Traditionally, artists would have to get gallery representation and hope that within that network, buyers could be found. Today, artists are successfully showing their work online, many bypassing the galleries and formal representation, in hopes of reaching more followers and buyers.

Yet while social media tools like Instagram have heightened awareness of an artist’s work, that awareness is not translating into automatic sales. Sales are still strong within the gallery, dealer, and auction house realm. Approximately 90% of high net worth collectors say they visited a gallery or art fair during the year, and dealers report that the majority of their online sales were to established clients.

Protecting the investment

Whether bought online or in person, artworks need to be protected, oftentimes from the point of sale. New buyers should be aware that not all sellers insure the piece while it is in transit. Over half of the claims AXA XL receives are for accidental damage in transit, so it is critical that buyers ensure that the insurance coverage is in place before it is shipped.

Likewise, buyers need to review their current homeowners policies and understand what is protected and what isn’t. Many homeowners policies fail to provide adequate coverage for valuable artwork, if any. Even if there is a modicum of coverage in place, there could be limits and exclusions that leave your artwork unprotected.

Work with an insurance carrier that specializes in protecting art and antiquities who can help you understand the various policy options and market valuations for your artwork. Are you exhibiting or lending the artwork? Your insurance policy may not cover those activities unless you have worked with your carrier to put such added protection in place.

Collecting with confidence

As social media leads the revolution of the art world and introduces new buyers into the mix, protecting the investment is essential.

The art industry today is going through some exciting changes with new and diverse voices and perspectives being considered of high value in the art world. As such, protecting one’s investment becomes critical. Make sure to review with your insurance carrier each year to determine if your policy coverage amounts are in line with the value of your artwork.

Look for an insurance carrier that has specialized expertise in fine art and collectibles. Working with a carrier that understands valuation, trends, and coverage options can ensure that your investment is protected for generations to come.

Authored by AXA XL