Magazines fighting for fair share
To hear publishers tell it, the benefits of magazine advertising for luxury marketers haven't shifted much in recent years. Magazines are both tangible and portable. The lush, glossy pages play out a tapestry for marketers; the surrounding editorial and abutting ads nicely complement the marketer's message and brand image.
But magazines are by no means the only kid on the lux media block anymore. Sponsored events are staking a spot, and other media are trying harder to get attention.
There's no evidence of a full-force lux exodus from magazines: According to Publishers Information Bureau data for the first seven months of 2004, nearly every publication catering to upscale readers comfortably exceeded the industry's overall 0.8% increase in ad pages. Two exceptions were Architectural Digest (down 1.2% against the year-ago period) and Conde Nast Publications sibling Bon Appetit (down 7.8%).
Still, even marketers and agency executives who continue to steer dollars toward magazines sense a slight shift in perceptions.
MAGAZINE ADS, AND MORE
"Upscale marketers are looking to distinguish themselves in bigger, bolder campaigns," says George Fertitta, founding partner and president of MDC Partners' Margeotes/ Fertitta & Partners, New York. "This can mean magazines, or this can mean any number of other things."
The most commonly heard complaint about publications catering to affluent readers is, simply, that there are way too many of them. In the upscale travel segment alone, advertisers have five or six options from which to choose. "It is out of control," says Andrew Sacks, president of AgencySacks, whose clients include Leading Hotels of the World.
There's also a belief that the general image advertising commonly found in upscale publications isn't driving sales to the extent of more immediate newspaper and specifically targeted e-mail offers.
And for all the rhapsodizing about magazines being a "trusted friend" to their readers, marketers wonder if this notion has been exaggerated. Cole McWilliams, VP-men's fashion director at Neiman Marcus, expresses concern that "lots of the publications out there don't have very loyal readers. Loyalty is what we're after."
Magazines still boast more than their share of selling points. Many marketers love that surrounding stories often report on the products and categories being advertised. "You don't get that in direct mail or anywhere else," notes Michael Clinton, exec VP-chief marketing officer and publishing director of Hearst Magazines, whose titles include Town & Country and Harper's Bazaar.
Even as many luxury experts perceive the market to be expanding to more income groups, publishers continue to tout how well they can target consumers.
Luxury magazines "don't pretend to be mass and they don't pretend to be low [cost per thousand]. But if you need to go somewhere to capture this segment, they deliver it," contends James Dimonekas, VP-publisher of Robb Report.
And very importantly in this era of ROI fixation, magazine ads remain relatively inexpensive. In terms of production costs alone, a company might hire a top-flight photographer for a print ad at a total cost of around $100,000. By comparison, the lowest-end TV spot a luxury marketer might consider runs in the neighborhood of $300,000-$500,000.
Beyond magazines, sponsored events seem to be gaining the most traction as a medium for luxury marketers. The general idea: Give affluent individuals an experience they can't replicate on their own and one that places them in the exalted company of like-minded peers. Most events are capped at 100 attendees, with many including far fewer.
Kathi Doolan,VP-publisher at American Express Publishing's Departures, recalls an intimate 10-person dinner in which her publication united Patek Philippe principals with C-level executives. "You're getting more situations where somebody says, `We want 10 people, but the right 10,' " she says.
The best argument for in-person tastings, testings and touchings is that a printed page or TV screen does little to convey the full effect of a luxury item.
Luxury brands are also teaming up with each other more than they have in the past. A posh hotel chain, for example, might partner with a jewelry marketer and offer a handful of its top customers a $1,500 bauble the next time they stay in one of its properties. On the surface, this seems quite pricey and its reach negligible. If the hotelier gets the item at cost-say $750 each-and extends the offer to only 50 top customers, the tab comes to $37,500.
"It's a big investment, but you're starting a real relationship with those people, who will ideally each tell a few friends about it. It can pay for itself pretty fast," Mr. Sacks says.
Back in the print world, newspapers are receiving increasingly high marks from marketers of luxury goods. In the past, many big-ticket purchases were made around a particular event such as end-of-year holidays. Now, consumers snap up costly items whenever the best deal presents itself. As a result, companies are shifting dollars away from long-lead media and into others, like newspapers, where they can realize immediate returns. The high-end retail and travel/lodging sectors in particular have taken advantage of this.
Additionally, national newspapers likely to appeal to luxury marketers-The Wall Street Journal and The New York Times-are considered essential daily reading for affluent consumers. "We are must-read, as opposed to nice-to-flip-through-every-once-in-a-while. We are not the kind of publication that sits on a shelf," says Scott Schulman, senior VP-sales and marketing at The Wall Street Journal. He cites a recent push by the Journal to include more high-end retail advertisers.
At jewelry marketer Links of London, North American President-CEO Sharon Buntain agrees, saying her company has a "franchise position" in The New York Times. "Some people don't have time to linger around magazines," she says. "Everybody has time for the paper."
The downside? Even though boosters tout more advanced color capability, newspaper reproductions of luxury products still more closely resemble smudges of ink than the sharply hued ads seen in magazines.
Additionally, there are only a handful of luxury marketers that would buy anything less prestigious and demographically desirable than the Journal, Times, Chicago Tribune or Los Angeles Times.
As for broadcast options, luxury marketers generally agree that print is considerably more targeted than TV can be. Similarly, study after study has noted that the high earners likely to dip into their pockets for a seven-figure second home watch less TV than just about every other demographic group.
Jeffrey Stier, president and co-founder of the Luxury Television Network, believes those perceptions can be chalked up to a lack of options that would make TV palatable for luxury marketers. He hopes to solve that with the planned debut of his cable channel in late 2005.
"[Luxury] brands are used to controlling their message and, to a large extent, who sees it, and they want adjacency to other luxury marketers and content consistent with their brands," Mr. Stier says. "So far, that environment hasn't existed in TV."
He concedes, however, that simply getting on the air will prove a major challenge: "We have commitments from advertisers who see the opportunity and want to get in on this early, but there's a difference between getting an enthusiastic response and getting the contracts done."
catering to business
Though "luxury" might not instantly be equated with work, Bloomberg Senior VP-Media Sales Michael Rosen sees an opportunity for luxury marketers in any medium, especially TV, that caters to well-off business aficionados.
Business is as much a lifestyle as travel or dining or anything else, Mr. Rosen contends, adding, "It is a passion point. These people are getting huge bonuses, and they want to go out and spend it on something nice, whether it's a Maserati or a Rolex."
Many luxury marketers scoff at the notion that they'd be able to create enough impressions via TV to justify the costs. Even those intrigued by the idea of niche-focused TV advertising don't have a ton of confidence in the medium.
"A luxury-only network? Frankly, we'd probably just go to our PR company and make sure they get us highlighted from an editorial perspective," says Dianna Balabon, VP-marketing, the Americas and Europe, for Peninsula Hotels.
The Internet has also failed to mesmerize many luxury marketers. While they laud Web sites as a second-tier branding tool and a source for the in-depth information that can't be crammed into a single ad, few lux marketers are buying what Internet publishers have to sell. Agency executives and marketers alike dismiss the possibility that top-tier brands will ever invest in banner ads.
"I'm sure Rolls-Royce has a lovely site that allows you to see features of new models and directs you to the nearest dealer, but you aren't going to get romance and magic from it," Mr. Fertitta says.
If there is indeed less demand for luxury-focused publications or advertising within them, major media companies haven't been spooked by it. Robb Report parent CurtCo Media, for example, added to its luxury arsenal by snapping up ShowBoats International in August. American Express Publishing, parent to Departures and Travel & Leisure, plans to introduce a limited-edition publication for Centurion cardholders later this year; the unnamed title has already sold out its four sponsor slots.