While other ad sectors have collapsed, luxury goods advertisers continue to spend big. Why is this, and what are the international business titles doing to encourage them? Anna Griffiths reports.

Human nature is such that men and women will always have aspirations and advertising plays on that desire. Consequently, one sector which seems to be holding up during the downturn is the luxury goods industry.

When Vogue polled 2,500 female magazine readers recently, it revealed an incredible leap in the number of people buying into designer brands.

In 1995, 43 per cent of those surveyed said they wore designer labels; this year, the figure climbed to a staggering 83 per cent, with Gucci leading the way. Stephen Quinn, the publishing director of Vogue, notes there has been no cutback in advertising from the leading players who continue to support their brands. "It's like having a mortgage on a house," he says.

The Asian Sars epidemic and the war in Iraq may have dented this sector slightly, but during 2001 and 2002, while the technology, financial services and car sectors were struggling, luxury goods advertising remained robust.

Figures from CMR International reveal that the UK was the biggest luxury goods spender in the 12 months to June this year. And British adspend on luxury goods increased by almost 12 per cent in the 12 months to June this year. Total luxury goods adspend for the top 13 countries remained stable over the same period.

Whether things are tough economically or not, there is a solid consumer base that continues to be able to afford the likes of Prada, Chanel or Gucci. The pattern of buying these goods and, consequently, advertising them, bucks the trend, as Nat Swift, MediaCom's international strategic planning manager, observes. "All major global consumer economies have low interest rates, so credit is readily available, and there are record levels of consumer debt in the UK. We've seen lots of City redundancies here, yet the City jewellers have been announcing record sales," Swift says.

In the past year, international media owners seem to have woken up to this new market.

Time launched a bi-annual fashion supplement last year, targeting the elite sector of its readership base, to attract new advertisers. Called Time Style & Design, the business magazine hopes advertisers will see the benefits of tapping into the top layer of its readership who can afford luxury goods. Eileen Norton, the Time president, says: "There have been recession-proof sectors and retail and luxury goods advertising are two of them. Fashion advertisers knew the Time brand and our editorial authority to cover any subject in depth. We were able to introduce new advertisers to the Time magazine environment."

The supplement brought new names on board, including Gucci, Hugo Boss, Rolex, Valentino and Versace. Taylor Gray, Time's publisher, hopes the initiative will "make advertisers comfortable enough to come within the pages of Time magazine itself".

To take advantage of this new revenue stream, Time is increasing the frequency of the fashion supplement next year in the US, as well as providing additional editorial within Time's elite readership to build on this revenue.

BusinessWeek's international advertising director, Paul Maraviglia, says he never envisaged luxury goods advertising replacing technology or finance advertising, but realised that the magazine's wealthy readership base was a great opportunity for such advertising. Given its profile, the title attracted surprisingly little. "We knew our readers would spend a lot of money on items such as suits and shoes and I wanted to move into luxury goods. We created FashionWeek, which is aimed at our predominantly male readership," he says.

The A5 64-page magazine was distributed with BusinessWeek's European editions during the Paris and Milan fashion weeks and brought 17 completely new advertisers into the magazine's fold. Maraviglia, like Gray, is keen to bring these advertisers into the main magazine.

The International Herald Tribune is more familiar with fashion advertising, with the presence of its high-profile fashion correspondent, Susie Menkes, who has attracted advertising interest in the newspaper in her own right.

The newspaper's new owners, however, believe it can offer international luxury goods advertisers greater opportunities. Stephen Dunbar-Johnson, the commercial director of the IHT, says: "We are now fully owned by The New York Times and are looking to collaborate with it to offer a global buy for advertisers. We already have a lot of high-end advertising in the daily and weekly editions, but we are now going to advertisers such as Burberry, Armani and Versace."

The newspaper recently introduced a section for luxury goods advertisers every Thursday and a franchise position on page three. Dunbar-Johnson says: "We have exceeded expectations and I think this has been much easier than expected. A lot of advertisers allocate budgets on a country-by-country basis and there are not many that have pan-regional budgets, but more advertisers are beginning to see the advantages of doing this because they are getting their brand image across to an elite market."

The habit of luxury goods advertisers planning their media spend country-by-country is something that needs to be broken if international media owners are to make inroads into this revenue stream. Swift explains: "It 's a structural problem - some of the advertisers are looking at how to address this. There are very few consumer magazines that operate on a regional basis. They're really just starting to look at it: the next step would be flexibility in booking on a regional basis as well as market-by-market."


COUNTRY USdollars Jul 02-Jun 03

Great Britain 38,318,240

Brazil 38,136,033

Switzerland 35,015,589

Japan 18,990,553

Germany 13,953,234

France 13,713,228

Singapore 11,962,384

Australia 8,682,966

US 8,652,225

Hong Kong 5,509,058

Total 192,943,510

Source: CMR International.

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