For Luxury Brands, Less Money to Spend on Ads, NYT
Gold was raining from above for luxury brands in the good old days of 2007.
By Stephanie Clifford, November 24, 2008, New York Times
Last December, the designer Marc Jacobs held his annual holiday
party for 800 guests, including revelers from Vogue, W, and Harper’s
Bazaar, in the Rainbow Room at Rockefeller Center. With the theme of
Arabian Nights, Mr. Jacobs had arranged for tableaux vivants,
contortionists, five open bars, bare-chested women bedecked in gold
necklaces, bare-chested men balancing candelabras on their heads and,
at one point, a shower of gold glitter poured over the guests.
Mr. Jacobs has held the party for each of the last 18 years, but on
Nov. 4, a short e-mail message was sent out by his business partner,
Robert Duffy: “Due to the financial climate, I had to make the decision
to cancel the 2008 holiday party.”
After getting through most of this year unscathed, luxury brands
are suffering. Rich consumers who were relatively insulated from the
economic downturn continued spending, but that has changed in the last
few months. While luxury spending began to fall slightly from June, in
October alone, it dropped 20.1 percent, according to MasterCard
SpendingPulse, which estimates consumer spending in the retail and
service sectors.
That drop-off means more bad news for magazines and newspapers in
the United States that had grown increasingly dependent on luxury
advertising.
Ad pages at the top luxury magazines fell 22 percent year over year
for the December issues, according to Media Industry Newsletter. Vogue,
for example, dropped from 284 pages last December, to 221 pages this
December, while Food & Wine went from 160 pages to 126, according
to the newsletter.
That has meant cutbacks at publishers. In October, Condé Nast
announced it would reduce Men’s Vogue from 10 issues a year to two,
reduce the number of issues of Condé Nast Portfolio and cut magazine
budgets by 5 percent. Niche Media, which publishes Gotham and Hamptons,
laid off some employees and closed a shelter magazine. American Express
Publishing, which owns Departures, Travel & Leisure and Food &
Wine, is laying off 4 percent of its staff.
“It’s definitely an environment that most have never seen,” said Ed
Ventimiglia, the publisher of Departures. “Everyone is very concerned
and somewhat confused as to what they should do.”
High-end advertising was one of the few strong advertising
categories earlier in the year. Luxury ad spending in categories
measured by Nielsen Monitor-Plus actually rose 6.7 percent through
August of this year over last year, even as almost all other areas
slashed their spending.
Link to article
