L2 Think Tank\'s 2011 Beauty Digital IQ Index

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The Index ranks the digital competence of 55 brands across four dimensions: Site, Digital Marketing, Social Media, and Mobile. Brand efforts were measured against more than 350 data points and classified into five categories: Genius, Gifted, Average, Challenged, or Feeble.

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L2 Think Tank\'s 2011 Beauty Digital IQ Index

  1. 1. ® SCOTT GALLOWAY NYU Stern Beauty S E P T E M B E R 2 7 , 2 0 11 A Think TAnk for DiGiTAL innOVATiOn© L2 2011 L2ThinkTank.com
  2. 2. november 10, 2011 speakers: New speakers are being added daily. The Morgan Library Visit our event site for the most up-to-date list. new York City JEnniFER AAkER Professor | Stanford OREn MiChELS University Graduate CEO & Founder School of Business Mashery To register, visit: FORUM: http://L2innovationforum2011.eventbrite.com DAViD CAREY MAUREEn MULLEn President Research & Advisory Hearst Magazines L2 SCOTT GALLOWAY Founder | L2 ViCTORiA RAnSOM Professor of Marketing Founder & CEO NYU Stern Wildfire DAVE GiLBOA PAUL ROMER Co-CEO & Co-Founder Professor Warby Parker NYU Stern The largest gathering of TiM hWAnG RAChEL Chief Scientist | Pacific ShEChTMAn Social Architecting Founder prestige executives in North America Corporation Cube Ventures ShERiL kiRShEnBAUM Research Scientist MARC SPEiChERT Webber Energy Group, Chief Marketing Officer University of Texas L’Oréal USAOn November 10, L2 will host its third-annual elements: CAThERinE LEVEnE JULiAn TREASURE Author | Sound BusinessInnovation Forum in New York City. Presented with • high-velocity, provocative presentations by Co-Founder & CEO ArtSpace Chairman | The Sound AgencyNYU Stern School of Business, the Forum will address thought leaders from industry and academia GREG LinDSAY DUnCAn WATTSinnovation in digital marketing and implications for • Conversations and panels with industry Author & Journalist Principal Research icons and influencers Aerotropolis: The Way Scientistprestige brands in a TED-style event. We’ll Live Next Yahoo! Research • Just-released Digital iQ index® researchSpeakers include CEOs, Nobel Laureates, and thought benchmarking prestige brands in fashion, TAMáS LOChER DAViD WERnER beauty, accessories, and retail Co-Founder & CEO U.S. Navy Office ofleaders from academia and industry. The day will get LOOKK.com Information • Trends, predictions, and best practicesparticipants thinking outside of the box and leave them based on a year’s worth of L2 research ThOMAS LOCkWOODwith innovative ways to approach their business. • Performances by innovators in art, media, Author | Design GABE ZiChERMAnn Thinking and Building CEO Design Strategy Gamification Co. technology, and musicTo register, visit: • Edge-of-the-network product introductions SOniA MARCiAnOhttp://L2innovationforum2011.eventbrite.com and demos Professor of Mangagement & Organizations NYU Stern
  3. 3. DiGiTAL iQ Index ®: Beauty Want to know more about your brand’s ranking? COnTACT US inTRODUCTiOnGrowthIn the first half of 2011, U.S. prestige skincare sales were up 14 percentfrom pre-recessionary levels, while color cosmetics were up four percent.1 The ultimate emerging-markets play,in 2010 the Beauty industry posted growth of 25 to 30 percent in markets ranging from China to Argentina.A cocktail of strong brands, accessible price points, and high margins mark the sector as one of the mostattractive in business. Waste Renting vs. Owning Despite impressive growth, marketing continues to show signs Digital provides an opportunity for brands to excise the publish- of aging. Beauty executives pay lip service to “going digital,” er’s tax by establishing direct relationships with consumers and but their media allocation paints a different picture. Muscle potentially reducing broadcast spend. Furthermore, the increas- memory, coupled with limited digital understanding, has re- ing growth of e-commerce could shift the traditional balance of sulted in what appears to be massive marketing inefficiencies. power between brands and retailers. Cosmetics continues to lead all industries in U.S. magazine advertising spend, doling out more than $1.4 billion in the first More than Skin Deep half of 2011, up a staggering 16 percent from 2010.2 Many cite The pace of digital innovation in beauty has increased since editorial sway as the primary driver of huge magazine invest- the release of the 2010 Index. Integrated online/offline cam- ments despite the corresponding declines in the channel. paigns, sampling programs, and advertising on social media However, in an era where new tastemakers are increasingly platforms have driven significant community growth on Face- found online, the traditional gatekeepers don’t command the book and Twitter (346 percent and 349 percent average year- space they occupy. over-year, respectively). Meanwhile, site innovation, including transaction orientation, incorporation of user reviews, and 1. “NPD Reports Prestige Makeup and Skincare Categories Surpass Pre-Recession Volumes in First Half 2011,” NPD Group, August 2011. 2. Publisher’s Information Bureau (PIB) cited in MPA Press Release, July 2011. © L2 2011 L2ThinkTank.com 3
  4. 4. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USinTRODUCTiOnFacebook sharing technology, has become nearly ubiquitous.Additionally, a third of brands boast a mobile site (up from just 5 2 -W E E k C h A n G E i n S T O C k P R i C E12.5 percent in 2010). Finally, in 2011, a digital powerhouse in (N=44 brands, 14 public companies)Beauty is beginning to emerge: Estée Lauder Companies nabbedthe four top spots, including the industry’s two Genius designa- 56.6%tions for M·A·C and Clinique.Digital iQ = Shareholder ValueOur thesis is that digital competence is inextricably linked to share-holder value in the Beauty industry. Furthermore, our 2011 analysisdemonstrates a significant relationship between Digital IQ and year-over-year change in stock price, suggesting organizations committedto digital are achieving superior financial returns. Like the medium weare assessing, our methodology is dynamic, and we hope you willreach out to us with comments that improve our methodology, investi-gation, and findings. You can reach me at scott@stern.nyu.edu. 23.9%Regards, 19.4%SCOTT GALLOWAY 12.6%Founder, L2Clinical Professor of Marketing, NYU Stern 8.5% 0% Genius Gifted Average Challenged Feeble Source: L2 Analysis, Yahoo! Finance© L2 2011 L2ThinkTank.com 4
  5. 5. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USABOUT ThE RAnkinGS M E T h O D O LO G Y D i G i TA L i Q C L A S S E S Site: 40% IQ Range IQ Class Effectiveness of brand site 140+ GEniUS FunCTiOnALiTY & COnTenT: 75% BRAnD TRAnSLATiOn: 25%: Digital competence is a point of • Technology • Aesthetics differentiation for these brands. • navigation, Product & Site Search • Messaging & Visuals Site content is searchable, share- • Social Media integration able, and mobile-optimized. Social • Customer Service & Store Locator media efforts complement broader (Representative Finder for Direct Sales) digital strategy. Virtual storefront • Product Display & Content seamlessly extends to mobile. • E-Commerce & Transaction Orientation • Account Signup & Functionality • innovation & interactivity 110-139 GiFTED • European E-Commerce Footprint Brands are experimenting and (United Kingdom, France, Germany, Netherlands, Switzerland, Spain, and Italy) innovating across site, mobile, and social platforms. Digital presence Digital Marketing: 30% is consistent with brand image and Search, display, and email marketing efforts larger marketing efforts. • Search: Traffic, SEM, SEO, Web Authority • Advertising & innovation: Display, Retargeting, Recent Brand Initiatives • Blog & Other User-Generated Content: Mentions, Sentiment 90-109 AVERAGE • Email: Frequency, Language, Content, Social Media Integration, Promotion, Use in European Markets Digital presence is functional yet predictable. Efforts are often siloed Social Media: 20% across platforms. Brand presence, community size, content, and engagement on major social media platforms in the U.S. and Europe • Facebook: Likes, Growth, Tabs & Applications, Responsiveness, Interaction Rate 70-89 ChALLEnGED • Twitter: Followers, Growth, Frequency, Online Voice Limited or inconsistent adoption of • YouTube: Views, Number of Uploads, Subscriber Growth, Viral Videos mobile and social media platforms. Site lacks inspiration. Mobile: 10% Compatibility and marketing on smartphones and other mobile devices in the U.S. and Europe <70 FEEBLE • Mobile Site: Compatibility, Functionality, Transaction Orientation Investment does not match • iOS Applications (iPhone & iPad): Availability, Popularity, Functionality, iPad Differentiation opportunity. • Other Platforms (Android, Blackberry): Availability, Popularity, Functionality • innovation: SMS, Geolocal, Recent Brand Initiatives© L2 2011 L2ThinkTank.com 5
  6. 6. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USD i G i TA L i Q R A n k i n G PARenT COMPAnY: COTY L’ORéAL REVLON ESTéE LAUDER LVMH SHISEIDO JOHNSON & JOHNSON PROCTOR & GAMBLE OTHER Rank Brand Parent Company Digital iQ Class Description Digital “M·A·C Over” includes launch of social shopping and upgrades across every 1 M·A·C estée Lauder 142 Genius online platform Extends virtual beauty counter with in-store iPads; mascara sampling drove dramatic social 2 CLiniQue estée Lauder 141 Genius media growth Fastest-growing Twitter handle and m-commerce site place ELC namesake among 3 eSTée LAuDeR estée Lauder 137 Gifted category leaders 4 BOBBi BROWn estée Lauder 136 Gifted Digital innovation continues to be “Pretty Powerful”; latest launch: The Everything Bobbi blog 4 ViCTORiAS SeCReT Limited Brands 136 Gifted IQ benefits from massive social media following, but beauty-specific innovation remains a secret 6 SePhORA COLLeCTiOn LVMh 132 Gifted Mobile leader is both brand and retailer; launched Beauty Talk online community to facilitate Q&A 7 L’ORéAL PARiS L’Oréal 130 Gifted Well-designed site with advanced third-party e-commerce integration makes visit well worth it 8 AVeDA estée Lauder 126 Gifted Facebook sampling leader, increased “likes” by 50 percent Just when we thought it couldn’t get more playful, new site relaunch extends brand personality 8 BeneFiT COSMeTiCS LVMh 126 Gifted without compromising e-commerce Best-in-class site interactive tools and enviable super-social Facebook community have become 8 BARe eSCenTuALS Shiseido 126 Gifted a “Force of Beauty” 11 SMAShBOx estée Lauder 121 Gifted Site social shopping tool contributes to rapid rise in rankings Strong localized Facebook ad“app”tation, but Hypnôse Doll Eyes and 3D Dollhouse raise the 11 LAnCôMe L’Oréal 121 Gifted question, “Scary or chic?”; YouTube partnership remains Phan-tastic “NYC365” campaign featuring a daily “it girl” entertains, giving this mass-market brand a 13 MAYBeLLine neW YORk L’Oréal 117 Gifted sophisticated edge 14 L’OCCiTAne LOccitane 116 Gifted M-commerce site and presence on iOS and Android platforms demonstrate mobile leadership© L2 2011 L2ThinkTank.com 6
  7. 7. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USD i G i TA L i Q R A n k i n G PARenT COMPAnY: COTY L’ORéAL REVLON ESTéE LAUDER LVMH SHISEIDO JOHNSON & JOHNSON PROCTOR & GAMBLE OTHER Rank Brand Parent Company Digital iQ Class Description Site COLORMATCH tool brings beauty consultation to the mass market; leads beauty-only 14 COVeRGiRL Proctor & Gamble 116 Gifted brands in Twitter followers 16 PeRRiCOne MD Perricone MD 115 Gifted Strong prescription of branded content and interactive tools 16 AVOn Avon Products 115 Gifted Avon Connects social networking platform facilitates digital sales relationships with Avon reps 18 BuRBeRRY Burberry 110 Gifted Beauty extension is buttressed by brand’s burgeoning digital presence 19 PROACTiV Guthy-Renker 108 Average Recently launched Proactiv®365—an online support system that’s all about creating stickiness urban Decay 19 uRBAn DeCAY 108 Average Average digital offerings are inconsistent with the brand’s edgy reputation Cosmetics LLC Released the much-hyped Rouge Coco Shine lipstick exclusively on Facebook, but poor site 21 ChAneL Chanel 106 Average navigation hampers IQ The Clorox Burt’s Bees “Give(s) Some Good” digital through successful Facebook sampling and 21 BuRT’S BeeS 106 Average Company coupon campaigns 23 kiehL’S L’Oréal 105 Average “Say Kiehl’s: 160 Years and Counting” Facebook campaign solicits user videos 24 DiOR LVMh 103 Average E-commerce launch and huge Facebook growth make Dior one of 2011’s biggest gainers 24 nARS Shiseido 103 Average Site relaunch showcases brand heritage through the “World of NARS” 26 ORiGinS estée Lauder 101 Average A Facebook sampling campaign and launch of m-commerce spur the brand’s rapid rise in IQ 27 CLARinS Clarins Group 100 Average August site relaunch introduces interactivity and video but not product reviews 27 MARY kAY Mary kay 100 Average iPhone app “The Look” serves as a shopping guide for all Mary Kay products© L2 2011 L2ThinkTank.com 7
  8. 8. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USD i G i TA L i Q R A n k i n G PARenT COMPAnY: COTY L’ORéAL REVLON ESTéE LAUDER LVMH SHISEIDO JOHNSON & JOHNSON PROCTOR & GAMBLE OTHER Rank Brand Parent Company Digital iQ Class Description 27 OLAY Proctor & Gamble 100 Average The other P&G brand to offer F-commerce 27 PhiLOSOPhY Coty 100 Average Celebrates its Facebook fans through contest soliciting their pics for campaigns and packaging YVeS SAinT LAuRenT 31 BeAuTY L’Oréal 98 Average Functional yet uninspiring site; released iPad app in December 32 GiORGiO ARMAni BeAuTY L’Oréal 97 Average Top-notch product comparison tool; just average everywhere else 32 DOVe unilever 97 Average Strong social presence; site falls short with limited transaction-orientation and poor aesthetics Facebook pop from Oprah can’t be underestimated, but site is little more than a digital 34 CAROL’S DAuGhTeR Carols Daughter 95 Average product catalog 34 ReVLOn Revlon 95 Average Spokesmodels are well utilized on site, but e-commerce usability issues distract 36 neuTROGenA Johnson & Johnson 93 Average Interactive and engaging content is relegated to microsites Dabbles with some innovative site features but misses on execution; content on site is 37 eLizABeTh ARDen elizabeth Arden 90 Average not shareable 37 ViChY L’Oréal 90 Average Fastest-growing Facebook page, but no Twitter presence 39 LAuRA MeRCieR Gurwitch Products 89 Challenged Slow to innovate; site virtual makeover tool isn’t enough 40 SkinCeuTiCALS L’Oréal 87 Challenged Monthly Q&A expert sessions on Facebook page, but needs a site upgrade to compete 41 GARnieR L’Oréal 85 Challenged One of the industry’s fastest-growing Facebook pages; site is a disappointment 42 ShiSeiDO Shiseido 84 Challenged E-commerce launch and Facebook growth are merely a start© L2 2011 L2ThinkTank.com 8
  9. 9. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USD i G i TA L i Q R A n k i n G PARenT COMPAnY: COTY L’ORéAL REVLON ESTéE LAUDER LVMH SHISEIDO JOHNSON & JOHNSON PROCTOR & GAMBLE OTHER Rank Brand Parent Company Digital iQ Class Description Facebook contests and Co-Star with Rihanna app demonstrate that the brand is firing across 43 niVeA Beiersdorf 83 Challenged multiple platforms, but it often misses the target 43 MAke uP FOR eVeR LVMh 83 Challenged Best-in-class interactive microsite is not enough to compensate for lack of e-commerce SOS Summer of Skincare Sweepstakes on Facebook led to huge growth, but site needs 45 LA ROChe-POSAY L’Oréal 81 Challenged a facelift DOLCe & GABBAnA 46 MAke uP Proctor & Gamble 76 Challenged Site is brochure-ware; only innovation points here are spillover from fashion efforts Brand provides opportunity to earn Recyclebank points via Facebook, but needs YouTube 47 AVeenO Johnson & Johnson 74 Challenged presence to clean itself up online 48 RiMMeL Coty 72 Challenged Social media integration is the lone bright spot Stunted site showcases Kate Hudson, but not much else; social media presence limited 49 ALMAY Revlon 71 Challenged to Facebook Autoreplenish functionality scores points, but digital efforts stalled after shutdown of U.S. 50 LA MeR estée Lauder 70 Challenged Facebook page last summer 51 FReSh LVMh 69 Feeble Stale 52 iMAn COSMeTiCS iman Cosmetics 64 Feeble Site lacks intuition; YouTube contest falls flat 53 TRiSh MceVOY Trish Mcevoy Ltd. 59 Feeble Desperate for a makeover 54 Sk-ii Proctor & Gamble 50 Feeble Social media presence is scarce, and site functionality is not pretty 55 CeTAPhiL Galderma 46 Feeble Site redirect to Facebook can’t conceal limited digital investment across platforms© L2 2011 L2ThinkTank.com 9
  10. 10. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS PA R E n T C O M PA n Y D i G i TA L i Q BY D i M E n S i O nestée Lauder Pulls Ahead Estée Lauder Brands vs. L’Oréal BrandsWith M·A·C and Clinique holding on to their 2010 Geniusdesignations, and Estée Lauder and Bobbi Brown joining themin the top four, the Estée Lauder organization appears to bepulling away from the pack. The conglomerate registered anaverage Digital IQ of 122 across its eight brands, 18 points SITE DIGITAL MARKETINGhigher than any other multibrand organization. Origins and La Highest Highest Possible 40 Possible 30Mer were the only Estée Lauder brands not to achieve Genius Score Scoreor Gifted distinction. 25.5 18.0Estée Lauder’s success is the result of a strong e-commerce 20.7 14.4 20 15legacy and shared best practices across the organization.Smashbox, a May 2010 Estée Lauder acquisition, is theconsummate example. The brand was one of the biggest 2011winners, registering a 38 percent increase in IQ as a result of its 0 0 Estée Lauder L’Oréal Estée Lauder L’Oréalmuch-improved e-commerce presence. In addition, four of the Brands Brands Brands Brandscompany’s eight measured brands hosted Facebook samplingcampaigns, 2011’s surefire tactic to increase Facebookcommunity size.A Tale of Two Cities SOCIAL MEDIA MOBILE Highest HighestLast year, L’Oréal was “nipping at Estée Lauder’s heels.” Possible 20 Possible 10 Score ScoreThe 2011 Digital IQ, however, reveals that the gap betweenthe two heavyweights has widened on all dimensions with theexception of social media. L’Oréal’s strategic foray into content 9.2 9.4 10 5curation and partnerships with such individuals as YouTube 2.9sensation Michelle Phan continue to keep it in the social media 1.7arms race. However, the organization has struggled to maintaina coherent approach to e-commerce and mobile across the 0 0 Estée Lauder L’Oréal Estée Lauder L’Oréalportfolio. Surprisingly, drugstore brands L’Oréal Paris and May- Brands Brands Brands Brandsbelline New York registered some of the organization’s highestsite scores despite hand-offs to third-party e-commerce sites.© L2 2011 L2ThinkTank.com 10
  11. 11. DiGiTAL iQ Index ®: Beauty Want to know more about your brand’s ranking? COnTACT US kEY FinDinGS D i G i TA L i Q BY PA R E n T C O M PA n Y Organizations with More than One Brand Represented in index170 Genius Disparity140 72 M·A·C Clinique Disparity 63 Estée Lauder Disparity Bobbi Brown Disparity Sephora 49 42 L’Oréal Paris Gifted Aveda Bare Escentuals Benefit Cosmetics AVG IQ Disparity 122 Smashbox Lancôme 66 Maybelline New York CoverGirl110 Disparity 28 AVG IQ Kiehl’s 104 AVG IQ Average NARS Disparity Origins 103 Dior AVG IQ 101 Giorgio Armani Yves Saint Philosophy Olay Disparity 19 24 Laurent Beauty Revlon Beauty Neutrogena90 Vichy SkinCeuticals AVG IQ AVG IQ 86 Challenged AVG IQ Shiseido Garnier 86 84 AVG IQ MAKE UP FOR EVER La Roche-Posay 83 Dolce & Gabbana Aveeno70 Rimmel Make Up La Mer Almay Fresh Feeble SK-II30 n=der n= ido n= H 10 l n= ty n= ble n= lon n= réa s & M o 8 3 5 4 2 2 hn n C m e v n on u LV L’O Jo nso Re is La 2 Ga = Sh e h r& té Jo Es to oc Pr © L2 2011 L2ThinkTank.com 11
  12. 12. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS D i G i TA L i Q D i S T R i B U T i O n % of Brands per Digital iQ Classin the Company of GeniusM·A·C and Clinique swapped the number one and two spots GeniuS M·A·C DiGiTAL iQthis year, remaining the only Geniuses in the 2011 study. >140 Clinique 4%Sixty-five percent of brands fell into the Gifted and Average Estée Lauder Bare Escentuals GiFTeDclasses. Notable year-over-year changes include such brands Bobbi Brown Smashboxas Laura Mercier, Aveeno, Rimmel, and La Mer slipping down Victoria’s Lancôme Secretthe rankings, while Dior and Shiseido ascended as a result of Maybelline Sephora New York DiGiTAL iQe-commerce launches. Collection 29% L’Occitane 110-139 L’Oréal Paris CoverGirlThree out of five Feeble brands offer e-commerce, but the abil- Aveda Perricone MDity to transact alone does not make brands competitive. Even Benefit Avon Cosmeticsbrands that still link to third-party retailers to complete transac- Burberrytions have invested in streamlining the shopping process and AVeRAGe Proactiv Philosophybuilding communities via social media. Urban Decay Yves Saint Laurent Beauty Chanel Giorgio Armani Burt’s Bees Beauty Kiehl’s DiGiTAL iQ Dove 36% Dior Carol’s 90-109 NARS Daughter “ For Beauty marketers, social media makes it Origins Revlon possible to create one-to-one relationships with Clarins Neutrogena customers. Those companies that embrace social Mary Kay Elizabeth Arden channels as touch points will continue to resonate with today’s Olay Vichy socially-wired consumer. ” Laura Mercier La Roche-Posay ChALLenGeD —karl heinz Land SVP & Chief Evangelist, Network Intelligence | MicroStrategy, Inc. SkinCeuticals Dolce & Gabbana Garnier Make Up DiGiTAL iQ Shiseido Aveeno 22% Nivea 70-89 Rimmel MAKE UP FOR Almay Fresh EVER La Mer Iman Cosmetics FeeBLe Trish McEvoy DiGiTAL iQ SK-II 9% <70 Cetaphil© L2 2011 L2ThinkTank.com 12
  13. 13. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS in the Company of Genius M·A·C M·A·C Cosmetics is the second highest- viewed beauty-only YouTube channel Unique “color play” navigation and “shop together” functionality contrib- ute to M·A·C’s top-10 site score© L2 2011 L2ThinkTank.com 13
  14. 14. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS in the Company of Genius M·A·C “ The Social CRM is ushering in entirely new ways for brands to interact with customers. From online casting calls to behind-the-scenes photos and videos, M·A·C is connecting with its fan base in fun, informative, and engaging ways. ” —karl heinz Land SVP & Chief Evangelist, Network Intelligence | MicroStrategy, Inc. Customized Facebook tabs integrate the “like” API while highlighting rich content. Online contest “M·A·C Me Over!” resulted in six consumers be- ing featured as the new faces of M·A·C’s Fall Color Collection© L2 2011 L2ThinkTank.com 14
  15. 15. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS in the Company of Genius CLiniQUE Diagnostic tools help garner Clinique a top-10 site The Clinique site features both user and “insider” reviews Victoria’s Secret: iPad app provides the mobile portal for dynamic branded content© L2 2011 L2ThinkTank.com 15
  16. 16. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS in the Company of Genius CLiniQUE Clinique’s Facebook fan base continues to grow “ Facebook contests allow for frictionless exchange rapidly due to sampling of fan data. ” contests and useful —karl heinz Land content such as replace- SVP & Chief Evangelist, Network Intelligence | MicroStrategy, Inc. ments for discontinued products Clinique’s m-commerce- enabled site and useful geo-location iPhone app result in a top-five mobile score© L2 2011 L2ThinkTank.com 16
  17. 17. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS G R E AT E S T Y E A R - O V E R -Y E A R G A i n O R LO S S 2010 vs. 2011 Digital iQ Percentile Rank Dior Aveda ChALLEnGED AVERAGE -11% GiFTED GiFTED The launch of e-commerce and accelerated efforts on Facebook and YouTube elevate Dior from Challenged to Average. +45% Playing it safe—few updates since 2010. That said, it’s hard to stay ahead when you are already near the top. Smashbox nARS AVERAGE GiFTED -14% GiFTED AVERAGE Acquisition by Estée Lauder has been good for Smashbox. Launch of Social Shop on site and a strong loyalty program (Pretty Points) keeps +38% New site presents vast improvement, but lack of mobile presence and decreased Twitter frequency drops the brand from Gifted to Average. the brand on innovation’s edge. Origins Perricone MD AVERAGE AVERAGE -17% GiFTED GiFTED One of the first brands to experiment with Facebook sampling, Origins led the way in social in the first quarter of 2011. +28% Early innovator needs to accelerate with the pace of innovation to compete with the big guys. estée Lauder La Mer GiFTED GiFTED -19% AVERAGE FEEBLE M-commerce launch and addition of autoreplenish functionality on site help ELC’s signature brand maintain Gifted status—and bump its +25% La Mer’s outdated site and lack of U.S. social presence lower Estée Lauder’s parent company average IQ. ranking to number three. Shiseido neutrogena FEEBLE ChALLEnGED -21% AVERAGE ChALLEnGED Launch of e-commerce site and gated Facebook tabs help boost Shiseido from Feeble to Challenged. +22% After riding the “Wave for Change” philanthropic campaign, Neutrogena’s social media has fizzled.© L2 2011 L2ThinkTank.com 17
  18. 18. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS‘Like’ is Commoditized B R A n D S i T E S O P h i S T i C AT i O nAdoption of site features and functionality increased dramati- % of Brand Sites With the Following Attributes in 2010 vs. 2011cally from 2010 to 2011. Features previously considered cutting (August 2011)edge, such as user reviews and Facebook sharing buttonson products pages, are now commonplace as the pace of in- = 2011 = 2010novation accelerates. Live Chat functionality and e-commerceautoreplenish still remain points of differentiation. 70% 69%Although no longer scarce, social features continue to paydividends by boosting traffic. i MPACT OF S OC iAL F EATURES & F UnCTi OnALi TY Three-Month Traffic Growth for Sites With & Without the Following: Feature Adoption (%) (August 2011) 41% 42% = SITES WITH = SITES WITHOUT 32% 31% 29% 23% 22% 19% 16% 17% 3.8% 16% 15% 16% Site Traffic Growth (%) 3.6% 13% 10% 10% = SITES WITH 1.1% = SITES WITHOUT0% 0% 0.3% 0% Facebook Ability to Share “Like” API for Social Sharing Facebook User Reviews Product Tweet Live Chat Autoreplenish Widget Content Brand Products Like, Share, Recommend Source: L2 Analysis, Alexa Social Sharing User Reviews© L2 2011 L2ThinkTank.com 18
  19. 19. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGS UPSTREAM & DOWnSTREAM TRAFFiC TO BEAUTY SiTES: To and From Sephora.com & Amazon.com (2010 vs. 2011)Sephora’s Loss is Amazon’s Gain Upstream Traffic Downstream TrafficYear-over-year traffic patterns to and from brand sites suggest From Brand Site To Brand Sitesignificant shifts in the online beauty ecosystem. Surprisingly,fewer brand sites registered Sephora as a top upstream site, 100%and the beauty behemoth accounted for 4.53 percent less = SEPHORA.COM (2010)upstream traffic and 3.61 percent less downstream traffic in = SEPHORA.COM (2011)2011 than in 2010. Meanwhile, Amazon has emerged as a = AMAZON.COM (2010)significant source and destination for traffic on brand sites. = AMAZON.COM (2011)With Amazon currently accounting for one-third of U.S. e-com- 80%merce sales,3 brands have to consider the short- and long-term 36%implications of this giant playing in their space.Unexpectedly, the sites where Amazon is a top-eight down-stream destination are not drugstore brands linking to the 60% 28%third-party retailer; rather, 90 percent of brand sites that registerAmazon among their top destinations host e-commerce 25%themselves. It appears consumers are browsing on brand sites 23% 22%and then purchasing on ... Amazon. 20% 40% 17% 16% 20% 0% 2010 2011 2010 2011 2010 2011 2010 2011 % of Brands % of Brands for whom the following for whom the following are a top eight source are a top eight source3. “Amazon.com: the Hidden Empire,” faberNovel, May 2011. of upstream traffic of downstream traffic© L2 2011 L2ThinkTank.com 19
  20. 20. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGSDior: impressiveIn mid-May, the brand had 700,000 “likes” on its Facebook FA C E B O O k C O M M U n i T Y S i Z E v s . E n G A G E M E n T R AT E Spage. By mid-August, the Facebook community had exploded U.S. & Global Facebook ‘Likes,’ Excluding Pages With < 2000 Fansto nearly 4.5 million. Even more impressive has been the level (August 2011)of engagement on its Facebook page, with an average interac-tion rate of 0.18 percent (compared to an average interactionrate of 0.06 percent across the Index). This balance of size and FAMILIES Mary Kay TRIBESengagement makes Dior the only brand to achieve the elusive Dior“Tribe” status on Facebook.Although the brand received a boost from its fashion andaccessories businesses and the controversy surrounding keY:designer John Galliano, beauty-specific content leads the way. = “TRIBES” BRANDS: Brands with Large FacebookWall posts for the “Le Vernis” nail color collection and the “Fall Estée Lauder Communities and High Engagement2011 Blue Tie collection” garnered an impressive average = BRANDS NARROWING ON “TRIBES” CATEGORIzATIONinteraction rate of 0.30 percent, and Dior’s beauty posts had onaverage a 0.25 percent interaction rate, versus a 0.12 percentaverage interaction rate for its fashion-related content. Olay A Blue Tie collection post generated an interaction rate of 0.33 percent LEVEL OF EnGAGEMEnT COHORTS CROWDS A Dior Vernis post generated an SiZE OF COMMUniTY interaction rate of note: Horizontal axis (Size of Community) is graphed on a logarithmic scale. 0.26 percent© L2 2011 L2ThinkTank.com 20
  21. 21. DiGiTAL iQ Index ®:Beauty Want to know more about your brand’s ranking? COnTACT USkEY FinDinGSit’s All About MeBeauty fans want to talk about themselves—posts soliciting A V E R A G E i n T E R A C T i O n R AT E BY C O n T E n T T Y P Euser comments generated the highest interaction rates on (July-August 2011)Beauty Facebook pages. Second to questions are posts pro-viding information about products.Surprisingly, “How-To” content and posts referencing celeb-rities—two of the more commonly employed tactics in the QueSTiOnS 0.26%industry—generated the least interaction. Beauty fans seem tobe more receptive than most fans in other prestige industries tocontests and promotional posts.Question posts by Almay, hOW-TOMary kay, and La Roche-Posay 0.12% PRODuCT hiGhLiGhTS 0.24% CeLeBRiTieS 0.12% eVenTS 0.21% COnTeSTS & SWeePSTAkeS 0.19% PROMOTiOnS 0.18%© L2 2011 L2ThinkTank.com 21

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