There's gold in luxury ads: Magazine publishers see sales gains

NEW YORK Thu Jan 31, 2013 7:04am EST

NEW YORK (Reuters) - Glossy products still look best on the glossy page.

Advertising for luxury brands is driving increases in first-quarter ad pages at big magazine publishers, a welcome dose of good news for companies that have grappled with layoffs, restructurings and general malaise in a business whose fortunes have fallen as the online world has grown.

Conde Nast, Hearst Magazines, Time Inc and Rodale all expect a rise in ad pages sold in their magazines for the first quarter.

Conde Nast, whose magazines include Vogue, GQ and Vanity Fair, expects its strongest first-quarter in five years, with a 5 percent increase in ad pages. The news was so unusual that the company even issued a press release on the subject, something it hasn't done in sometime.

And as Europe remains mired in an economic slump, high-end fashion brands like Hermes are finding a ripe audience in U.S. magazines.

"What I hear continually from research about luxury advertising is that consumers like the actual experience of print," said Brenda White, a senior vice president and a director of publishing at Starcom USA, a division of Publicis Group SA.

Company executives said the gains are not coming at the expense of lower prices.

"I'm knocking wood," said Lou Cona, chief marketing officer at Conde Nast. "Anything can happen, (but) the early signs are very positive.

"The page numbers you see from us are real; they are fully paid for," he said.

Hearst is projecting a first-quarter rise in ad pages of 6 percent and an even greater gain in ad revenues. Rodale, the publisher of Men's Health, is anticipating to be up 10 percent in ad pages for the same period. Time Inc, which is owned by media conglomerate Time Warner Inc, expects a 6 percent rise in ad pages for the first quarter.

Even so, the print magazine industry is troubled and publishers are curtailing spending as they put a greater focus on the digital world. Time Inc announced on Wednesday that it was cutting 6 percent of its staff, saying it needed to be "more innately multi-platform" and would focus on "critical investments and new initiatives."

In the most prominent example, Newsweek last year shuttered its print edition after almost 80 years.

Last year, ad revenue industry-wide fell 3 percent, according to the Publishers Information Bureau, which tracks magazine ad sales and revenue.

U.S. GAINS FROM EUROPE'S LOSS

Europe's woes have provided a boon for U.S. magazine publishers. Specific categories such as luxury and beauty advertisers that represent high-end fashion brands like Hermes and Proenza Schouler and automakers such as General Motor's Cadillac and Ford's Lincoln are turning their focus on U.S. audiences.

Michael Clinton, Hearst Magazine's president and marketing and publishing director, said Harper's Bazaar, Elle and some of the company's other fashion books that cater to high-end fashion brands are setting records. Harper's Bazaar recently closed its biggest March issue ever, with ad pages up 21 percent. Elle's February issue, up 33 percent in ad pages, was its fattest issue ever.

"Europe is so challenged that luxury fashion brands are shifting to North America," Clinton said.

At Time Inc, ad pages are up 5 percent at InStyle and up almost 32 percent at People, according to Paul Caine, executive vice president and chief revenue officer, who also said the rise is not because of reduced ad rates.

Hoping to tap brands that are eager to get in front of upscale audiences, The Wall Street Journal increased the publication of its luxury WSJ Magazine this year to 11 issues. It was a quarterly when it launched in 2008.

"Luxury and fashion have been the categories immune to the broader economy," said George Janson, managing partner, director of print for Group M, the parent company of WPP's media agencies.

In addition, publishers have become more sophisticated in offering what is best described as marketing services that include sponsored driven events and digital packages along with traditional ads.

"Publishing companies have really upped their game in the marketing partnership area," Starcom's White said. "They have been doing it for a while, but it's more robust."

(Reporting By Jennifer Saba in New York; Editing by Peter Lauria and Leslie Adler)

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