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Growth in global beauty ad spend will rise from -1.2% in 2018 to 2.7% this year totaling US$14.4bn, and will increase 4.7% reaching US$15.8bn in 2021, according to Zenith’s Beauty Advertising Expenditure Forecasts, published today. After two years of decline, this acceleration of growth will be driven by e-commerce advertising and superior premium digital environments.
Magazines and television have traditionally absorbed the lion’s share of ad spend by beauty brands in the past. Seen as preferred platforms for their sharing bold imagery, high quality production and evoking emotional connections through storytelling, the internet has encouraged attention to move from offline mediums to online channels. While print and television still have a place in the marketing mix, circulation and ratings have declined in favor of social media and digital publications.
Print magazines accounted for 21% of beauty ad spend in 2014, but fell to 13% in 2018, with a further anticipated decline by 2021, when magazines will account for only 8% of beauty ad spend. Ad spend on television dipped below 50% for the first time in 2016 and fell to 40% in 2018. It’s forecast to fall to 35% by 2021, still higher compared to 27% for all categories.
Brand loyalty is harder to maintain in an increasingly fragmented and competitive industry. The previously unchallenged influence of the larger conglomerates is increasingly under pressure from new competitors: direct-to-consumer (D2C) brands, eco-brands and own-label brands. Many of these new brands, particularly D2C, have sought growth through targeted activities, appealing to smaller and more niche audiences rather than targeting the masses. This combination of contracting audiences and emerging competition from indie brands has led to sustained weakness in the beauty ad market. As a whole, beauty ad spend only grew once between 2014 and 2018, which was by just 0.9% in 2016.
Digital platforms, like Instagram or Facebook, are maturing rapidly and facilitating access to potential consumers that are already spending time on the platform. The advanced targeting options and access to attention that has never been available through traditional media is attracting big budgets. At the same time, direct-to-consumer brands are realizing the limitations to capturing market share by solely focusing on modern media channels and are beginning to invest in traditional brand-building campaigns.
Digital Brand Building Compensates For Declining TV & Magazine Audiences
As e-commerce sales continue to rise, beauty brands are investing in partnerships with e-commerce platforms as retailer media becomes more available. At the same time beauty brands are investing in direct-to-consumer platforms to foster better relationships with their audience and remove the middle man to improve the bottom line growth. These are not necessarily complementary investments: spending on retailer media can cannibalize D2C sales, and vice versa. Brands need to choose which course of action is in the best interest of their business.
This growth in online brand-building and e-commerce advertising is stimulating rapid growth in online advertising, and growth in beauty ad spend generally. In 2018 internet advertising overtook television to become the largest advertising channel for the beauty category, and is expected to sustain double-digit growth through until 2021, when it will account for 50% of all beauty ad spend.
However, despite the shift in attention from offline to online channels, the majority of beauty purchases are still made in bricks-and-mortar stores. As many consumers want to try a product before they buy it, the online experience is primarily acting as a gateway to an offline purchase.
The way consumers discover, purchase and appreciate beauty products has seen a dramatic shift in recent years. Purchasing make-up and skin care is no longer just a case of buying a product online or purchasing from a store. Beauty brands have recognized that although online retail has opened new markets and created new opportunities, they must provide inventive, new and exciting offline to approaches to reach and entice to their audience.
“Brands need to work with retailers to create more in-store experience opportunities, and use new technology like Augmented Reality to create digital brand experiences that allow consumers to try before they buy online,” said Matt James, Zenith’s Global Brand President. “By tying together their e-commerce and in-store experiences, beauty brands can lead consumers down the path to purchase more effectively.”
Although print and television advertising continue to remain an important part of many beauty brands marketing strategy, companies of all sizes are now dividing their marketing budgets to include digital marketing activities as well as print and legacy publications. The combination of effective brand building and a direct channel to sales is allowing brands to gain a competitive edge over more traditionally aligned beauty companies.
“The advertising landscape for beauty marketers is changing, enabling brands to build more personal and direct relationships with loyal consumers,” said Lauren Hanrahan, CEO of Zenith USA, Moxie and MRY. “Beauty brands are investing more in native content partnerships, video and newer search categories like voice search and e-commerce marketplaces.”
China Leads By Total Spend, While India Leads Growth
With an estimated US$6.2bn spent in 2019, China is the leading market for advertising spend within the beauty industry. The early adoption of e-commerce advertising has been the main driver of China’s strong beauty performance. Ad spend is expected to grow to US$6.9bn by 2021 through continued investment. Male beauty has also been a contributing factor behind the rapid growth in the beauty and personal care market, along with Chinese tourists that are shaping ad spend in foreign markets through targeted advertising in airports, shopping centers and other high-traffic areas.
The U.S. is the second-largest market, spending US$2.6bn on beauty advertising in 2019. Marketing budgets are still primarily focused on traditional media such as print and television, where 40% and 37% of budgets will be spent this year respectively, while 23% will be spent on digital advertising. U.S. beauty brands have been slow to unlock the potential of online advertising to drive business growth, in contrast to their Chinese counterparts.
India is the fastest-growing market for beauty ad spend and is the only market that hasn’t experienced a decline since 2014. Zenith forecasts 19% average annual growth to 2021. India has the least mature market – accounting for 0.3% of GDP, less than half the global average of 0.7% – and is therefore developing quicker, lifting beauty ad spend rapidly along with other categories.
It seems wise in today’s marketing environment to utilize a number of different strategies to determine which avenues are working best for a brand, and which ones are not generating new customers or revenue. Now that digital advertising is at the forefront of beauty industry marketing strategy, legacy beauty brands need to assess how to compete against newer competitors that have been quick to take advantage of the online opportunities. Adaptability is important: the world is changing fast with new technology and instant information sharing, and consumers are changing with it.