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The Digital World of BeautySean Singleton, Group Managing Partner, Skiveat in-cosmetics, Milan, March 29th, 2011

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1. Beauty and the digital marketplace2. Audience trends for the future of beauty3. Online platforms, technology and innovationStructure of presentation

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1. Beauty and the digitalmarketplace

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Changes in consumer behaviour

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Consumers of offline mediaTraditional media like magazines arepassively consumed Why are we having this discussion?

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Consumers of Consumers of offline media online mediaTraditional media like “Browsing the web” magazines arepassively consumed The first iteration of the web was consumed in a similar way Online display advertising is dominant channel Why are we having this discussion?

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Consumers of Consumers of Participants in offline media online media mediaTraditional media “Browsing the web” Today, consumers spend like magazines a vast amount of are The first iteration of the time online passively web was consumed in a consumed similar way And online is a space where people are Online display advertising participants, not just is dominant channel consumersWhy are we having thisdiscussion?

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Tools and sites that allow people to share ideas, A constant hubbub of experiences, and virtually conversations any type of contentSocial media is the ultimateexample of this participationtrend

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What does this all mean forbrands?

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Loss of control

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• Brands are already topics of conversation online• No way of stopping this, whether the sentiments aregood, bad, or indifferent• Beauty, in particular, is a category that generates alot of interest, and consequently a lot of noise withinsocial media

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... but incrediblenew opportunities

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• A brand can monitor social media to learn whatcustomers feel about it and its products• Brands can get involved with existingconversations or start conversations of their ownwith consumers•Ultimately, a successful brand can encourageand enable customers to act as its advocates

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S o u r c e : S e n t i me n t Me t r i c s

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They can listen to what consumers are sayingabout their brands and measure the level ofinterest and buzz around their marketing activity –to see if the level of sentiment is positive ornegative Source: Sentiment Metrics

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3% 4% 5% Internet 24% Television 9% Press Display Direct Mail 10% Press Classified Outdoor Directories 26% Radio 18% Cinema Source: IAB, 2010Brands are nearly spending asmuch online as they are on TV

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10% -7.8% -15.6% -14.5% -16.1% -22.0% -20.4% -25.0% -37.3% Year on year growth for 2010 Press Directories Outdoor Press TV Radio Direct Mail Cinema InternetClassified Display ...and spend is still rising, even in a recession Source: IAB 2010

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But spend is only part of thepicture...

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The key to digital success is innovationand weaving together a wide variety ofchannels, including social media

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Beauty industry products areinnovative, creative and consumerdriven

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The beauty industry holdsinnovation, creativity and consumerbehaviour on the highest pedestal whenit comes to product development. It is anindustry which is constantly evolving tomeet the ever evolving needs of thefemale consumer.

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But when it come to the web, thebeauty industry has traditionallybeen a slow adopter

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Lauren Luke believes many beauty brands arestill coming through the “reactionary stage” andhaven‟t fully adjusted to what‟s happening to thebeauty industry online. “Most of the bigcompanies are still using traditional methods orusing their financial weight to buy into what‟shappening online rather than innovating” Source: New Media Age

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2. Audience trends

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A digital revolution?

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This is due to the massive growth in theinternet audience, the readership decline ofnewspapers and magazines, broadband allowsthe delivery of much richer experiences andthe rise of the beauty blogger

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Bloggers vs. Editors

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• Blogs give tips – comments, photos, videos – ofhow to put on your make up but• Bloggers generally don‟t endorse things they don‟tactually like• Bloggers are passionate and know their honestygives them credibility (92% trust peerrecommendations as opposed to 14% who trustadverts)

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Beauty is no longer elitist

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In the past people have felt distant and excluded fromthe shiny, perfect, polished luxury worldbut sharing personal styles empowers a wider audienceto be involved.The bloggers have filled unmet need of the audience –to allow them to show their creativity and also to givegood advice.

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However some bloggers, like LaurenLuke, are becoming beauty brandsthemselves

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At the same time a make up company has finallycapitalised on the world‟s disdain for overly-photoshopped adverts and made a point ofdifference that they don‟t need to retouch theirs

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Here is another example of how digital ismaking beauty less elitist It is a site calledmake up alley and is the “moneysupermarket” of make up

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Brands are trying to emulatesuccess of bloggers by beinghelpfulby offering tools, tips, hints, service throughinsights from professionals

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Engagement Pyramid Curating Producing Commenting Sharing Watching

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Engagement PyramidThe engagement pyramid shows the different types of activityThe large majority of people at the bottom of the pyramid willjust want to watch and learnOthers will want to share advice and tips others will want tocomment

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Engagement Pyramid Curating Creative Producing Commenting Sharing Guidance Watching

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Engagement PyramidAt the top of the pyramid a smaller but influential number ofpeople will want to produce content and curateThose at the bottom of the people want guidance and supportand those at the top will want the chance to show theircreativity.

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CreativePersonalisation, customisation & co-creation

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Being able to personalise your productmakes you feel part of the process and helpsin engage with the brand and some womenso brands can let them mash-up, changecreate their ideal of beauty using yourproducts. For example...

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Taaz allows users to upload a photo oruse a celebrity photo for virtualmakeovers

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Illamasqua ran a nail varnish colourcompetition which had over 6000 entries

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GuidanceAnother role that brands can play to ensure that theydigitially engage with consumers is that of expert orguide....

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Some bloggers are fulfilling this role withmassive success. Miss chievous hascreated this smokey eyes video and ithas had nearly 4.3 million views - manybrands would kill for that exposure

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One brand that is trying to play this roleis nice‟n easy which has its ownbranded video channel on YouTube

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Here we have a good example of utility –Cosmo gives has given its readers tipson how to have a great Facebook profilepicture

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Another great example of guidance is max factortwitter party. Max factor sponsored British MumBloggers Twitter party. It allowed consumers toshare tips and ask max factor experts questions onhow to get ready quickly.

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Clairol‟s site allows users to upload apicture and virtually try our different haircolours – an excellent example ofinteractivity and personalisation

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L‟Oreal Are trialling interactive kiosks In someBoots stores in the UK and Walmat in the US.Customers snap a digital self-portait, using thesystems touchscreen interface to select differentcolours or get recommendations for shades orproducts that match their skin tone or eye colour

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3. Onlineplatforms, technology andinnovation

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Social Media

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Clearly social media is a key channel forreaching influencersIt can be used at early stage of productdevelopment to get instant feedbackIt allows people to share their views andstyles, and allows beauty and fashion toinclusive

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The lines are blurring

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However the lines are blurring between regular websitesand social networks as user-experience focused websitesmakes shopping, learning, creating and viewing moresociableAlso cosmetics are a regular or impulse purchase sosocial commerce should be a massive opportunity for themarketIntegration across platforms can create a more involvedand interesting experience for brand fans.more interaction with fans will deliver greater loyalty andconsideration which leads to higher propensity forswitching

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The masters of this are MAC – their digitalcampaigns span itswebsite, YouTube, Facebook, Foursquare andTwitter.

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Online behaviour mirrors offline behaviourFor example, women shop together andinfluence each others purchases beauty brandsacknowledge this offline –MAC have side-by-side make-up chairs at theircosmetic counters for a friendSo why not enable this behaviour more easilyonline as Levis have with their Friend Store?

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L‟Oreal have announced a new program that will enablemore than 4,000 salons carrying it‟s professional line ofproducts to begin marketing systematically on FacebookSalons will now be able to set up a separate tab with anumber of customizable modules that allow them todisplay their respective logos, business hours, a menu ofservices, inspirational and how-to videos (many of whichwill be supplied by L‟Oreal) as well advertise – althoughnot sell – products, among other things.

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Social Commerce

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Mark Zuckerberg, believes that socialcommerce will be the next big digital trend.Many believe that Facebook Credits couldbecome the first global currency to buy bothphysical and virtual items.As previously mentioned, cosmetics are eithera regular or impulse purchases so veryappropriate for social commerce

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Both max factor and mark allow consumers to makepurchases through their Facebook pages

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as are fashion retailers like Asos

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TechnologyA few examples

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this is a cool mobile app by Modiface and MakeupLive which claims to be the first augmented realityvirtual make up tool

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When French connection launched its„YouTique‟ video shop, where you can buy itemsfrom the videos on YouTube, it was seen by theindustry as an interesting innovation from abrand, yet few have followed so far.

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Mobile

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It is predicted in a few years the vast majorityof web browsing will be carried on mobilephones25% of women in the uk accesses mobilewireless in the last 3 monthsTherefore its important brands ensure that theyoptimise their sites for mobile devicesHere are couple of examples of good mobilecampaigns:

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Stila have a created a mobile app that allows usersto try on make up looks, purchase, share their lookswith friends and enter a contest to win loads of Stilamake up

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Allure magazine gave away $725,000 worth ofbeauty products via Microsoft TAGThis is the single largest deployment of MicrosoftTAG in a magazine to dateMobile tagging allows marketers to link real-worldobjects to deeper experiences on mobile phonesThis is a fast, easy and convenient way forreaders to participate in beauty promotion

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And finally...Online meets Offline

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This trend of online meeting offline is going toget bigger and biggerDigital will be used in store to enhance theshopping experienceFor example Shisheido have used augmentedreality to create a virtual mirror in theirJapanese stores for customers to see make-upresults on their own faces

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Summary

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In summary, I think that over the last 18 months there hasbeen a tipping point within the beauty and luxury worlds anddigital marketing is at the top of everybody‟s agendaHowever it is important to recognise the different useractivity and develop your digital content accordinglyFundamentally, beauty consumers do not want to be sold tothey want brands to help them express their creativity andtheir want advice & guidance on how to improve their look.

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I think those beauty brands that crack social media first willbe able to exploit the opportunities of within socialcommerceand finally,The beauty world is incredibly creative and innovative interms of product development, however they need to usethese abilities in develop even more powerful connectionswith the beauty consumer

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Graziehello@skive.co.uk @helloskiveResearch and design by Lloyd Williams