The famous designer said the brand's Christmas campaign, called "from London with love", which stars David and Victoria Beckham’s 12-year-old son, Romeo, was about "celebrating, engaging… and joining the dots through storytelling".
In an interview with Bloomberg Television, Bailey said digital is "integrated into the fabric of the organisation [Burberry]".
He said: "With digital I love the fact that things are instant, it's real time and you can share stories and you can share your experiences and create your experiences.
"That's something that I think as a creative brand and a creative organisation it's a very seductive place to play."
As well as the TV ad, the campaign features an interactive store window in its London and Paris’ upmarket Printemps stores enabling visitors to interact with individual scenes through their mobiles.
Consumers are also able to shop for items directly through Twitter.
Bailey said the idea was about combining a "physical experience with something that is online" and working with Twitter meant the brand could "do that on different platforms in a physical location".
Watch the full interview below.