Beauty is a digitally savvy category. Digital spend in the U.S. Beauty industry has increased 23% year year over year while traditional media spend has remained flat or declined. Paid search – which captures the lion’s share of that growth – is up 75% year over year. Social channels are beginning to live up to their promise as well. Facebook will count $12.4 billion in revenue in 2014, which is a threat to Beauty’s traditional advertising partner: print. We decided to discuss this environment with L2 researcher Jenny Shen, who led the Beauty study.
Sophistication is definitely increasing, especially when you look at Digital IQ distribution by class. Nearly 40% of Index brands now fall into the Gifted category, compared to 30% last year. But digital savvy among Beauty tends to break down along product categories. Fragrance brands, in most cases licensed Fashion brands, all cluster in the Challenged category due to licensing agreements that leave the licensees with limited creative control. On the other hand, multi-category (e.g., Clinique, Estée Lauder) and color cosmetics brands average in the Gifted.
Does this year’s Index have any newcomers that stood out?
NYX and Marc Jacobs. L’Oréal acquired the mass brand in June. It’s a great complement to our Index, as NYX is largely absent from traditional media and advertising channels and has really built its online presence on the back of user-generated content and brand buzz. Between L’Oréal’s launch of vlogger-originated em Cosmetics line in 2013 and the NYX acquisition in 2014, it really demonstrates the importance of digital savvy as a differentiating factor for Beauty brands.
Marc Jacobs Beauty launched in August 2013, and we included it in this year’s Index. MJB is owned by Kendo brands, a subsidiary of LVMH (also the majority owner of Marc Jacobs), while the Fragrance line is licensed to Coty, so it was interesting to compare the two brand presences, since from a consumer’s perspective, both have the Marc Jacobs name. Both brands actually fell into the Challenged classes, but Marc Jacobs Beauty ranked slightly higher than the Fragrance line. When you look at the Marc Jacobs Fashion site, there’s some clear enterprise synergy going on, as Beauty products are in the primary product navigation, while in order to see the Fragrance products, you have to navigate to the Women’s page first.
On the whole, however, there’s room for improvement in both brands.
Did you see any surprises? Did any brands do especially well or poorly?
Not surprising, but I think the fact that L’Oréal Paris topped our Index this year says a lot about the sophistication of mass brands, as this is the first year a mass brand has been the No. 1 brand in the Index.
Essie and Philosophy were the biggest winners in this year’s Index. They both moved up from average to Gifted. What were some of their key strategies, and how can other brands follow their example?
Essie recently started distributing through Amazon, and Nail brands as a whole perform well on e-tailers due to a relatively concentrated market compared to some of the other Beauty categories we look at. What Essie does well, as a non-direct-to-consumer brand, is to incentivize reviews in its emails, and it really made strides in email marketing.
Philosophy’s biggest improvement year over year is the launch of mobile site, which really helped them in the mobile dimension, and in fact Philosophy had one of the top 10 mobile sites in the Index. But with 91 percent of Index brands having a mobile-optimized site, mobile optimization is quickly becoming table stakes, and I think the bigger question is how to address the omnichannel consumer, as more and more Beauty searches are now occurring on the mobile device.