The move will allow Lauder to pay retail ad rates, a savings of 10% to 15%, according to executives close to the publishing giant.
`A BUSINESS DECISION'
"We are doing [retail] taglines on our Conde Nast ads . . . This is a basic business decision which allows us to get the most value for our advertising investment," said a Lauder spokeswoman.
"It's on the rate card," said Conde Nast President-CEO Steve Florio. "They have changed to retail from display."
He said the cosmetics giant is maintaining its volume of ad pages.
Lauder executives acknowledged cost savings were the driving force behind the shift, though a desire to telegraph the prestige nature of Lauder's business among a sea of mass-market ads also played a role.
They said no decision has been made if the tagging will continue beyond the fall.
Lauder in the past has preferred not to single out stores.
According to Competitive Media Reporting, for the period July 1996 to June '97-which mirrors Lauder's fiscal year-Estee Lauder brands not including Clinique, Aramis or Prescriptives spent $16.4 million with Conde Nast titles, for a total of $32.3 million. In Hearst titles, Lauder brands spent $12.4 million during that period.
To qualify for the Conde Nast retail rate, an ad must carry a prominent display of a retailer's name in at least 14-point type, and no more than three stores can be listed.
In some of the ads, the tags run upward and, in the gutter, are at times obscured.
SOFT RETAIL MARKET
Industry observers believe an overall softness in department-store traffic and sales, which is affecting the cosmetics industry, is another reason for the move.
"Business appears soft for almost everyone. Department store traffic is slow and, as a result, cosmetics companies are having a difficult year to date," said Andrew Shore, an analyst at PaineWebber.
The action by Lauder with Conde Nast is indicative of how competitive magazine publishers have become in trying to secure business with large advertisers.
A Hearst Magazines spokeswoman said its business with Estee Lauder brands is not using retail rates.
"All the pages come in at the Lauder corporate rate," said one Hearst publisher.