Sunday, November 26, 2017

Cosmetic Sales Boosted By Millennial Social Media?

How social media and millennials are boosting the cosmetics industry..

A growing number of cosmetics companies are partnering with social media influencers to endorse their products, and millennials are their primary targets.

Meghan Roark isn't too proud to admit she has an addiction. Her habit? Makeup.

Roark, 27, who works in retail in Abingdon, Va., estimates she spends $300 (U.S.) a month on cosmetics and skin care. She watches at least three hours of tutorials each week on YouTube, learning new techniques or keeping up on emerging brands. Her morning makeup routine takes 30 minutes and involves up to 15 products.

Young shoppers like Roark are the driving force behind a boom in the cosmetics industry. Always camera ready, they are buying and using almost 25 per cent more cosmetics than they did just two years ago and significantly more than baby boomers, according to the research firm NPD. And millennials who identify themselves as "makeup enthusiasts," NPD found, are using six products each day.

Roark, after setting aside money she had received as a birthday gift, spent $109 during a recent shopping spree at Ulta Beauty, picking up primer, foundation and a new eye shadow palette. "I think every girl likes buying clothes, but for me, I prefer to spend my money on makeup," she said.

The striking expansion in cosmetics is a bright spot in what is otherwise a challenging environment for retailers and packaged goods companies.

Big jumps in the sale of shimmery highlights, lush liquid stain lipsticks and dewy foundations have propelled the stocks of cosmetics giants Est'e Lauder and L'Oreal to record highs.

Revenues at Ulta Beauty, which sells both prestige and drugstore brands and has been opening about 100 new stores annually in recent years, are expected to top $5.9 billion this year, up from $3.9 billion two years ago. Revenues at Sephora, part of the luxury giant LVMH Moet Hennessy Louis Vuitton, have doubled since 2011.

Moreover, the growth in the cosmetics industry is probably understated, since most estimates fail to capture sales at online retailers such as Amazon.

Kylie Cosmetics, the online retailer where 20-year-old Kylie Jenner sells $27 lip kits and $42 "kyshadow" palettes, racked up more than $420 million in sales in just 18 months. Its advertising efforts are minimal, largely consisting of Jenner's Instagram account, which has more than 99 million followers.

The brand's success illustrates the way millennials -- who may spend hours on social media platforms watching video bloggers and following so-called influencers -- are rewriting the rules.

And brands are racing to evolve with the quickly changing market.

Cosmetic companies are shifting ad dollars from traditional television and print platforms to Instagram and YouTube. Trips to exotic locations that were once reserved for editors from glossy magazines now go to influential social media personalities from all over the world who have thousands or even millions of subscribers hanging on their every post. And brands that once partnered with actresses or models to create a new shade of lipstick or blush are now collaborating with these influencers.

When Ulta held a meet-and-greet in November at a store in Los Angeles with Jaclyn Hill, a YouTube beauty personality, nearly 700 followers stood outside for hours -- some even camped overnight -- to meet her.

"It was stunning," said Mary Dillon, the chief executive of Ulta, standing inside the retailer's first store in Manhattan just days before its grand opening in November.

Even products that have been around for decades are being "discovered" by millennials through social media. Est'e Lauder's Double Wear foundation, a product that was launched 30 years ago, is experiencing double-digit growth rates, said Jane Hertzmark Hudis, group president at Est'e Lauder.

"It's popular among millennials because it looks great in a selfie," said Hertzmark Hudis, who also reported big jumps in sales of skin care products -- particularly masks, which play well on social media and video blogs, or vlogs.

Beauty vlogging isn't new, but brands have rapidly ramped up their involvement with it after seeing the power it has to influence consumers.

Some of the earliest adopters of the social media influence strategy were smaller brands that lacked the ad budget or experience for a traditional campaign. Those brands instead got noticed by putting their products into the hands of a growing army of beauty vloggers.

The indie brand Becca Cosmetics took it a step further in 2015 when it partnered with Hill to create a $38 highlighter called "Champagne Pop."

All 25,000 units of the shimmery powder sold in 20 minutes on Last year, Est'e Lauder acquired Becca in a deal reportedly worth $200 million.

What has also changed is the insatiable appetite of millennials for social media. The same group that might tune out a 30-second television ad will consume hours of videos and postings. In the past year, global views of beauty videos on YouTube surged 60 per cent, to 219 billion, according to Pixability, a Boston-based company that tracks influencers and provides data to brands. Pixability estimated that millennials make up 60 per cent of the beauty audience on Facebook.

While it is easy -- and cheap -- for brands to fling free products at beauty vloggers in hopes of a positive review, brands are now forming closer relationship with them.

Influencers are being actively pursued for sponsorships -- videos or posts in which the brand pays the influencer to, presumably, endorse its product.

Under Federal Trade Commission rules, video bloggers must disclose if a post has been paid for, often using #ad or #spon and #companyname to do so.

But brands and influencers are walking a fine line as they form tighter bonds. Beauty influencers who grew their subscriber base by providing honest reviews risk losing that trust if their audience believes that they have been paid to give only glowing reviews.

A flash point for some fans are influencer trips. Some cosmetic companies have flown groups of influencers to Bora Bora; Necker Island, the private enclave of Sir Richard Branson in the British Virgin Islands; and Kauai in Hawaii for lavish, all-expenses-paid vacations. In exchange, most influencers agree to post a certain number of YouTube videos or Instagram posts about the company's products.

"The trips are being villainous in a way because people feel since we're going on the trips that we won't be genuine about the products and our reviews."

Samantha Ravndahl, a 24-year-old influencer from Canada with 2.4 million Instagram followers who has gone to Bora Bora and the Cannes Film Festival with cosmetics companies. "But the reality of the situation is, with the amount of money that people are making in this industry, a trip to wherever is a drop in the bucket. It's simply not enough to buy people."

For brands, there are other risks. Unlike scripted commercials with paid actresses, the brands lose some control over the messaging and content on a video blog. And many influencers, especially mega-influencers with followers that number in the millions, typically have relationships with multiple brands, raising the prospect that an unlucky product will get lost in a mix of hashtags.

Gabriel Zamora, a 24-year-old "beauty boy" vlogger from Los Angeles, said he has relationships with about 20 brands. He said he mostly receives free products from the companies and has been selective about his paid endorsements. Earlier this year, Zamora partnered with Mac Cosmetics, owned by Est'e Lauder, for his own lipstick.

"A lot of brands are still playing with the idea, 'How do we work with influencers and have them not bash our products?" Zamora said.

"There are brands that do get their feelings hurt when you do speak badly about a product but the fact is, not every brand is going to launch an entire line of products that are all going to be good. There is going to be a miss."

During a weekend at the music festival Coachella, one mega-influencer posted for 12 brands, said Tarang P. Amin, the chief executive of e.l.f. Beauty.

A company that started on the internet, e.l.f. has eschewed celebrities, including mega-influencers, to tout its relatively inexpensive products. Instead, e.l.f. focused its efforts on locating micro-influencers, up-and-coming beauty vloggers who are still building their audiences.

Guest Authored By Julie Creswell. Julie is a reporter for The New York Times. She's a farm girl in the big city. Follow Julie on Twitter.

“Executives say staying ahead of millennials is a tricky business.

"Five years ago, no one talked about Instagram, and today, Instagram is probably the No. 1 social media platform for our products," said Amin, who has spent 30 years in the packaged goods industry. "And five years from now, it will be something else.." -Julie Creswell

    • Authored by:
      Fred Hansen Pied Piper of Social Media Marketing at & CEO of Millennium 7 Publishing Co. in Loveland, Colorado. I work deep in the trenches of social media strategy, community management and trends.  My interests include; online business educator, social media marketing, new marketing technology, skiing, hunting, fishing and The Rolling Stones..-Not necessarily in that order ;)
    Follow Me Yonder..                     Instagram

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