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"Indie" newcomers are shaking up the beauty industry, bolstered by platforms like YouTube and Instagram, as well as e-tailers like Amazon.

These brands are quickly encroaching on the Old Guard. M•A•C Cosmetics sales dropped by almost 5% in Q3 2016, a decrease matched by their drop in mentions by top vloggers during the same time period.

While a strong social presence can make or break up-and-coming beauty brands, investments must be made across other digital dimensions in order to scale success—since last year, indies like Anastasia Beverly Hills have invested in sophisticated direct-to-consumer experiences.

Select mass brands have taken a different route, disrupting the industry by taking a page from the book of fast fashion, being first to market with trending product launches, followed by nimble SEO strategies that translate into high search visibility and outsized editorial mentions.

Many of these brands, like NYX and e.l.f., are also going vertical, opening brick-and-mortar retail locations to further enhance brand visibility.

On the etailer front, ULTA and Sephora continue to serve as effective discovery platforms for consumers and register strong E-commerce growth.

However, Amazon offers an outlet for brands to reap returns on replenishment, enjoying higher margins than Sephora and making inroads into the luxury beauty territory. Prestige brands Anastasia Beverly Hills and Elizabeth Arden defied expectations this year by embarking in an official relationship with Amazon.

Urban Decay retains its top spot in the Index this year as the sole genius, using Snapchat filters and a matching Augmented Reality app to support the launch of its Vice Lipstick line.

This year’s Digital IQ Index benchmarks 99 Beauty brands across the Color Cosmetics, Fragrance, Nail, and Skincare categories. Members can download the full report at L2inc.com.

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Giulia Prati Associate Director of Research, Beauty, L2

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