Making Up Rules

Make-Up Art Cosmetics (aka MAC) is a company too cool to advertise, too blunt to tell women makeup will make them beautiful, too hip to care what critics say about its drag queen and lesbian spokesmodels.

“It’s trendy, street, New York, RuPaul, and rock ‘n’ roll,” said Laurie McQuillan, a 28-year-old Los Angeles screenwriter and loyal MAC user.

When it comes to marketing, MAC is a master at breaking the rules. And by showing irreverence, the 12-year-old Toronto-based company embraced by the urban chic has taught the cosmetics industry some lessons on what sells.

MAC’s iconoclastic approach is regarded as one of the most unexpected successes in the prestige-cosmetics industry. Before MAC, most would have scoffed at a marketing strategy that included making spokesmodels out of drag queen RuPaul and singer k.d. lang, who is known to go sans makeup. But with MAC’s sales this year estimated at $240 million, no one is laughing now.

“MAC was the first cosmetic company to say, ‘We don’t advertise,’ ” said Jim Hicks, executive publisher of the Toronto-based Cosmetics magazine. “They’ve very much the maverick who has taken on the big boys by changing the rules.”

But while MAC has proven an alternative style can sell, questions remain about its future, whether it can sustain its “bad boy” image when it has teamed up with the quintessential good girl of the industry, Estee Lauder Cos. (Estee Lauder owns 70% of MAC, with an option to buy the company outright by 1999.)

Also, there are questions about whether MAC can remain a hot makeup line as the competition increases and MAC goes global.

*

“It’s always a question because it’s hard to be trendy and big,” said cosmetics analyst Michael Grant of J.P. Morgan Securities. “Once everyone knows about something, is it still trendy?”

Frank Toskan founded MAC in 1985 with Frank Angelo, owner of a chain of hair salons who died last year. As a makeup artist and photographer, Toskan had been frustrated with the dearth of products suitable to fashion professionals.

With the help of his chemist brother-in-law, he concocted his own line of cosmetics, characterized by rich colors and made to withstand harsh lighting. Soon, industry types began asking Toskan for his products, which inspired him to launch MAC.

“We developed our cosmetics for professionals and geared it to the professional industry,” said Toskan, adding that anyone who uses makeup for their work receives a discount. “That philosophy hasn’t changed.”

Because the two partners had limited funds, they decided not to advertise. As it turned out, they didn’t have to.

Through word of mouth, makeup artists created a buzz about MAC’s brown-toned lipsticks and matte foundations. Soon, fashion magazines began touting MAC’s Spice lip liner as the must-have of supermodels, and Madonna announced her affection for MAC’s Russian Red lipstick.

The fact that MAC didn’t advertise in women’s magazines and other conventional channels only added to its cachet.

“Before MAC, there was a vacuum,” said Suzanne Grayson, author of the Grayson Report, a Santa Barbara-based cosmetics marketing newsletter. “There were all these young people looking for something to call their own. They weren’t looking for Cover Girl, Revlon, Lancome or Estee Lauder. All of a sudden MAC came along, and the market sucked it up.”

Sharon Gault, a Los Angeles celebrity makeup artist, said MAC still is a Hollywood favorite because the company continues to come out with cutting-edge products and colors.

“As a makeup artist, it’s really important to have the newest latest makeup, and MAC is always coming out with new, fun things,” she said.

Despite the raves, MAC did receive some flak when it hired RuPaul and k.d. lang to promote its Viva Glam lipstick. (All proceeds of Viva Glam I or II go to the MAC AIDS fund, which has so far raised more than $10 million.)

Some believe MAC promoted promiscuity with posters for the AIDs fund that showed the drag queen--clad in spiked heels and a skin-tight red body suit--in various poses to spell the words “Viva Glam” with his legs. Others didn’t understand the point of having a lesbian singer known for her manly appearance touting lipstick.

“We picked RuPaul because we figured if you’re going to make a statement, you might as well make it loud and clear,” Toskan said. “We picked a 7-foot-tall man to be a beautiful woman because we wanted to send the message, ‘You can be who you want to be.’ ”

MAC tapped k.d. lang because it wanted to send another message, namely that, “You don’t have to wear makeup to be beautiful and respected,” he added.

*

This is the type of thinking that has had marketing executives scratching their heads. Why would a cosmetics company promote the idea that makeup is unnecessary?

But comprehending such a rebellious strategy is key to understanding MAC.

Toskan said MAC was the first cosmetics company to recognize that consumers don’t want to be told lies. People don’t want to be lured into buying products just because they’ll receive a free gift, he said.

“The cosmetics industry has been guilty of making promises to people that makeup could change their lives by making them more beautiful,” he said. “We came around with an honest approach. We tell people makeup is only makeup.”

The MAC chief also believes many people are tired of seeing only “blue-eyed blond” models being held as standards of beauty.

“I think there’s lots of consumer disgust,” he said. “The industry has definitely changed, and we’re part of that change.”

After 12 years in business, MAC has impressed even some earlier skeptics with its continual phenomenal growth. But questions remain about whether MAC can maintain its edge as it goes global amid increasing competition. Some also wonder whether MAC is due for changes if New York-based Estee Lauder exercises its option to buy out the company.

*

MAC now has 171 stores in 13 countries, including four in Southern California. MAC also is available at some Nordstrom, Macy’s, Saks Fifth Avenue and Bloomingdale’s stores.

Just this year, MAC opened stores in Manchester, England; Zurich, Switzerland; Berlin and Dusseldorf, Germany; Guam; Paris; Dublin, Ireland; Taipei, Taiwan; and Glasgow, Scotland. Next year, it will set up shops in Tokyo and Thailand. A new location was scheduled to open today in Milan, Italy.

Toskan said the 1994 deal with Estee Lauder gave MAC access to funds needed for expansion.

“Lauder has allowed us to focus on things we wanted to focus on,” he said. “We could’ve gone global on our own, but it would’ve taken us 10 years.”

MAC needs to expand quickly. Since 1985, when it essentially created a new sector of prestige, urban cosmetics, companies such as Nars, Trish McEvoy, Stila and Estee Lauder’s Bobbi Brown have tried to lure away the same trendy consumers around the globe.

“We’re making a push in Europe because lots of people have been nibbling at our heels,” Toskan said.

MAC must forge into new areas also because it has become a victim of its own marketing success. Women across the world have heard of MAC through fashion magazines and the ever-powerful word of mouth. This has created a black market for MAC products in countries where MAC has yet to establish a presence. Rip-off products trying to pass for authentic MAC makeup also have emerged.

“If we don’t get there, the products will get out there anyway,” Toskan said. “I don’t want our makeup brand to be contaminated.”

But marketing the makeup line globally poses challenges, because the company must appeal to a more diverse consumer base, but yet remain fresh to its core users, the makeup artists, celebrities and other trendsetters who typically are the first ones to bolt from mass-marketed brands.

Toskan understands this dilemma well. That’s why, he said, MAC will continue to sell products such as fluorescent eye shadow, which appeals to a more avant-garde sector. And to protect its underground image, MAC won’t use traditional magazine or TV ads as it expands.

Like Toskan, Grayson believes MAC’s growth will not dull its edge. “They’re still the bellwether by far in the makeup field,” she said.

*

Another question many wonder about is whether Toskan will leave MAC if Estee Lauder buys the 30% it doesn’t already own.

“I speculate that Frank will get out earlier than planned because of the death of his partner,” said magazine publisher Hicks. “There also are rumblings in the industry that he has lost some of his love for the market. This could change MAC because when someone talks about MAC, they’re talking about Frank Toskan.”

Toskan does not deny that Estee Lauder may very well buy out his company. But he said that even if it does, he will remain in charge. “This is my life, my love and what I built,” he said.

Analysts say there is little fear that Estee Lauder will try to redo MAC. The company is well known for maintaining the integrity of its companies, including Prescriptives, Clinique, Bobbi Brown and Aveda.

“They would be foolish to come in and tamper with the success of our company,” Toskan said. “They’d be foolish to question what we’ve been doing, because it’s obvious it’s worked.”