American Marketer


What luxury media planners must really require of publishers

December 10, 2012

Douglas Gollan is group president and cofounder of Elite Traveler Media Group


By Douglas Gollan

As everyone in the print media business knows, this is the peak time of year for Requests for Proposals (RFPs) with publishers and ad agencies scrambling on short turnarounds with late nights and lots of stress.

Advertisers have now set their strategy, and are finalizing budgets and planning their media for 2013. They want to see what is on offer from media providers.

Run for cover
The RFPs, of course, ask for data from media companies on the audiences they are delivering – age, sex, household income and so forth.

For print titles there are elaborate positioning grids and requests, demands and ultimatums that include “first watch, first jewelry, first fashion, first hotel,” and so forth with many advertisers often saying they will only settle for “first” this or that.

Naturally, every advertiser wants the Inside Front Cover Spread, First Table of Contents or Back Cover.

On any given day at Elite Traveler we may be reviewing RFPs from nearly dozens of watch, jewelry or fashion companies, each stipulating they will only run in an issue if they are first in their category.

Even though we have a unique and desirable audience, with only six issues it can be a challenge juggling requests. Thankfully, this is just a starting point and there is often times room for compromise and creativity, although sometimes not.

Frankly, I think the process is missing two key elements: A stronger focus on “who” the true “heavy user” of luxury products is and “the company you keep” in the print publications where you advertise.

After all, what good is the ad position you want if 90 percent or more of the audience financially cannot buy your product and you are in the same auditorium – think magazine issue – with brands that actually devalue your brand?

Company carp
As a contrast, let us look at how these same successful luxury companies select their retail locations, particularly watches, jewelry and fashion where image is everything.

It is all about the company you keep and also the company you avoid.

Madison Avenue and Rodeo Drive are the hot spots and command rents two and three times those of similar space a couple blocks away.

CEOs of global companies actually get involved in scouting locations. Even on prestige streets some blocks are more valuable than others.

Several years ago at an International Herald Tribune Luxury Conference in Hong Kong, LVMH Chairman Bernard Arnault speaking specifically about retail location noted it is critical as consumers relate the brand to where they see it.

In other words, a luxury store located between two fast food stores conveys a different image than a location between two other luxury brands. Does one expect to see a Versace boutique in the lobby of a Days Inn?

Needless to say, few luxury brands would locate themselves next to a Walmart, JC Penney, a cat food store or McDonald’s, yet at the same time they advertise in magazines where a large portion of the advertising is non-luxury – and I do not mean accessible luxury, but Kia,, Walmart, Banana Republic and Diet Coke. It is a long list.

We also know today’s heavy user of luxury goods has to have the household income and net worth to be a consistent shopper. There is less room on credit cards, and aspirational consumers are not getting second mortgages or big bonuses.

In other words, they need the cash to buy.

Know your rich
Ron Kurtz, CEO of the American Affluence Research Center, recently wrote, “Media buyers for luxury brands do not seem to understand the importance of highly targeted focus on their true prospects.”

Prince & Associates, a leader in research of ultra-high net worth consumers (UHNWs), pegs the minimum HHI required to be a “heavy user” of luxury goods and services at $1 million. That is not net worth. That is household income.

Luckily, the 185,000 families (according to Wealth-X) that are considered UHNW (net worth of $30 million-plus) are estimated to have a combined net worth of some $40 trillion, according to Citi Private Bank. Obviously, these folks can spend lots of money on luxury if they want.

At the same time when one does the math, how much does somebody making $200,000 in a major metro market really have to spend? What is left after taxes, rent or mortgage, energy, commutation, schools for kids or paying off school loans for those who do not have families yet, gym memberships, ever more costly mobile phone and cable television service contracts?

In fact, a 2010 study by the Washington Post looking at a family of four in six major metro suburbs – New York, Chicago, Dallas, Miami, Los Angeles and Washington – found no luxury autos, no designer fashion and only $3,000 allocated to vacation travel, none of the families was in the black and the New York based family was actually running a nearly $30,000 deficit.

In speaking of the heavy users, more than 90 percent of these UHNWs according to Prince are first generation, mostly coming from middle class and upper middle class families.

In other words, growing up they did not go shopping for saddles on the way to the polo club. More likely dad was security guard or factory manager and mom was a nurse or teacher.

These super rich consumers of today then spent the first 10 to 25 years of their adult life figuring out a better way to make widgets – after all, that is the business they sold for $400 million that made them super rich.

Along the way credit cards were used to fund the business, not buy designer handbags and making the business successful was the focus of the family.

These heavy users were never aspirational consumers. They were more likely to read Widgets Weekly or be visiting customers and seeing their local banker than reading lifestyle magazines.

Of course, now that they are rich beyond imagination, they have their private jet, a few homes, they are the ones with the money and are ready to spend, but they need to be educated and motivated about what is out there. They know less about luxury brands than brand executives think because they were not focused on luxury as they built their businesses.

These new rich may know the names, but they do not know everything you do. They might like if they knew about it.

Watch out
As Luxury Marketing Council chairman Greg Furman often points out, the storm of brand extensions by luxury companies means that a company known for raincoats now sells watches, while another known for pens has a significant business in jewelry and accessories.

Traditional men’s watchmakers make women’s watches and vice versa. Brand salespeople can barely keep up with their own makes and models. Does the UHNW consumer really know about all of this and each brand’s unique propositions and products?

Of course, that is why the company you keep where you advertise is so important. These consumers are making judgments about your brand based on where they see you – be it your store location or where you advertise or what other companies are advertising in that media you use.

THIS LEADS me back to the RFP process.

Next to more scrutiny about whether readers are actually financially qualified to buy what you sell, one important question I have never seen asked is, “Please list all the non-luxury and accessible price-point advertisers in your magazine?”

Berkshire Hathaway chairman and billionaire investor Warren Buffett famously said, “It’s only when the tide goes out you learn who’s been swimming naked.”

I think many luxury executives and media planners would be surprised how long the list of non-luxury advertisers is from some titles.

Douglas Gollan is group president and cofounder of Elite Traveler Media Group, New York-based publisher of private jet lifestyle magazine Elite Traveler. Reach him at