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Power Connections: Beauty’s Techno-Visionaries

Beauty's most forward-looking marketers and retailers are harnessing the power of technology to drive present (and future) growth.

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“Eighty-four percent of our target demographic participates in social networking and 74 percent participates in online shopping, so to be able to merge the two things together was mission critical,” says Claudia Poccia.

“Eighty-four percent of our target demographic participates in social networking and 74 percent participates in online shopping, so to be able to merge the two things together was mission critical,” says Claudia Poccia.

Courtesy Photo

The HSN site

The HSN site

Courtesy Photo

AskBobbiBrown twitter page

AskBobbiBrown twitter page

Courtesy Photo

Appeared In
Special Issue
Beauty Inc issue 10/08/2010

When U.S. Senate Republicans were threatening to filibuster over a defense appropriations bill that would, among other things, abolish the military’s Don’t Ask, Don’t Tell statute, pop icon Lady Gaga took action, making it her mission to help repeal the ban.

She kicked off her campaign at the MTV Video Music Awards, appearing on the red carpet with four gay veterans of the armed forces as her dates. Next, she posted a video call to action on Facebook, YouTube and Twitter, directly addressing senators with a passionate defense of her stance, attired now in a sober black suit rather than the dress made out of raw meat, which had garnered so much media attention at the awards ceremony. She asked her fans to post their own responses about why they wanted their elected representatives to repeal the ban and included explicit instructions on how to contact one’s state Senators in Washington on her Facebook page (where she has 18 million followers and counting), her Twitter account (the medium of which she’s been dubbed “queen of ” and of which she numbers more than six million followers) and her YouTube channel (where she has almost 350,000 subscribers. Oprah, in comparison, has about 81,000).

Thanks to election-year politics, the bill ended up dying in the Senate. But in her own words, Gaga received an “overwhelming” number of video responses, and corresponded via Twitter with Senators Harry Reid, Chuck Schumer and Kirsten Gillibrand.

So what does this have to do with beauty?

Everything.

Lady Gaga has reached icon status in an unprecedented amount of time, thanks to her deft use of the digital universe, creating a community of fans who are literally vested in her art, her commerce and her causes. Savvy beauty marketers are now pouring through the virtual door she has opened, realizing that the future of an industry once dominated by top-down broadcasting to the consumer now lies in creating robust, two-way, multimedia digital conversations with her.

“Digital isn’t just a Web site. It isn’t just social networking. It isn’t just commerce. It is the underpinning of how we think about communicating, shopping and buying today,” says Wendy Liebmann, chief executive officer of WSL Strategic Retail. “It has put the power in the consumer’s hands. Before, manufacturers and retailers had the power and they used it to inform shoppers and create the pathway to purchase,” she continues. “Technology has enabled us to put the decision making and the power into the consumer’s hands, rendering the consumer at almost equal footing with the manufacturer, the retailer and the media.”

“Customers wield power and control over your brand like never before,” agrees Marc Speichert, chief marketing officer of L’Oréal USA. “They are talking about you to each other. Either join and enable the conversation or you will be left out.”

In other words, technology has rendered the marketing monologue a dialogue. Now marketers have to not only talk to consumers, they have to listen and, most important, interact, educate and entertain. “The idea of building community and listening and engaging with the customer base, and for the customer to feel that they have contributed to your evolution and that you are listening back and using the information from your community in a constructive way to affect what you’re doing is an amazing dialogue and amazing ecosystem that puts the customer at the center of the conversation,” says John Demsey, group president of the Estée Lauder Cos. Inc. who oversees the Lauder, MAC, La Mer, Bobbi Brown, Jo Malone, Tom Ford Beauty, Smashbox Cosmetics and Prescriptives brands.

Demsey has seen firsthand the impact of Lady Gaga’s community. Along with Cyndi Lauper, the singer was the latest face of Viva Glam, MAC’s lipstick program in which 100 percent of the proceeds raised go to the MAC AIDS Fund. Prior to the launch, in March, MAC had about 235,000 fans on Facebook. Today, the brand has more than one million, an increase Demsey attributes directly to Gaga.

Having one million Facebook friends is one thing. Monetizing them is quite another. “It has fundamentally changed how we look at business, because it allows us to have a consumer-centric point of view and to target message points based on purchase behavior,” says Demsey. “With one million friends, they tell me what I want to hear. We send them information. If they live in a certain city, we direct them to special events there. We direct them to our Web site, where we host live-streaming videos of content that can’t be seen anywhere else. We drive people into stores. It is a two-way street and a multilateral communication network.”

That communication matrix is an increasingly important influencer network across all demographics. According to a recent study called “From Buzz to Buy,” conducted by WSL, when consumers were asked their top destinations for shopping advice, manufacturers’ Web sites were number one with 67 percent, followed by friends and family at 63 percent, retailer Web sites at 49 percent, TV and magazines at 46 percent and sales associates at 25 percent. Social networking came in at 13 percent.

Though the number seems small compared with the others, its implications are huge. “One in eight people said they go to Facebook or follow a tweet to find out about a product before they buy it. They’re using [social networking] as a resource,” says Liebmann, noting that 75 percent of the respondents had used a social-networking site in the last month. Moreover, she continues, as the Millenials come of age, the influence of social media will grow exponentially. “Right now they’re too young to be spending a lot of money of their own, but as they move into purchasing power, the power for them to use this medium as a key driver is mind-boggling,” says Liebmann.

P&G’s Old Spice brand has seen that effect firsthand. Geared toward young men, the brand was locked in a fierce market-share war with Unilever’s Axe brand. Then came Isaiah Mustafa, better known as the Old Spice Guy and star of the “Smell Like a Man, Man” campaign. According to Gina Drosos, group president, P&G Beauty, the campaign has received four billion impressions since its launch in February, is the number one all-time most viewed video on YouTube and number two most subscribed channel, while the brand’s Twitter following is up 2,900 percent and its Google search is up 2,000 percent. As for Old Spice’s sales? They’ve doubled.

P&G isn’t just using the digital space to spark sales of heritage brands. The company has become adept at using technology to pre-seed its product-launch efforts and drum up anticipation and desire before a product even hits counters. For example, prior to the launch of the premium-priced Olay Pro-X range, consumers could visit Olayforyou.com for a personalized skin care analysis and to buy a Pro-X starter kit for $60. The kit sold out in 17 minutes. Similarly, when Gillette launched its Fusion ProGlide Razor, it first sent the razor to bloggers who write about male grooming, along with a widget that allowed them to give away free razors to their followers. In the end, close to 150 bloggers either wrote a review, posted a widget or created an article, and more than 80,000 razors were distributed via the widget.

Likewise, prior to its launch of Advanced Night Repair Eye Synchronized Complex, Lauder created a microsite as a key driver, in conjunction with an in-store initiative in which consumers received a 10-day supply of the product. Sales were up 45 percent for the entire franchise versus the year before, according to Demsey.

“It used to be you had to wait 12 months before turning on the media, because distribution built so slowly,” says Drosos. “Today, not only are retailers moving faster, but if we can create premarket buzz, we’ve already built enough awareness that the retailer has demand from the beginning, so they aren’t reticent to bring in large quantities. It helps us with our timing.”

For its part, Avon’s Mark brand, geared toward the Gen Y consumer, has combined social networking with commerce to drive its sales and build community. Last December, it launched a commerce app on Facebook. This July, the brand introduced the Storecast Facebook Shop, which allows the brand’s sales representatives to customize their own shops on their Facebook pages. “We created a repository of assets, which they can use to create their own boutique, which they can then customize and send to specific customers,” explains Claudia Poccia, global president of Mark. So, for example, if one customer is into the latest fall makeup looks while another is into antiaging skin care, each would receive a personalized page from her Mark rep.

 

“This is about co-creating a brand,” says Poccia. “This is a generation that seeks self-expression. We know that 84 percent of our target demographic participates in social networking and 74 percent participates in online shopping, so to be able to merge those two things together was mission critical.”

Mark was the first beauty company to launch an e-commerce app on Facebook, but for Poccia, it’s only the beginning. The next generation of technology will enable true social shopping. “Social shopping and sharing apps are pioneering the next platform,” she says. “That will allow consumers to visit a Web site and invite their friends to visit at the same time, and they can then shop together virtually while sharing comments on different products.”

Similarly, marketers are looking at aggregators of social-network information as the next significant sphere of influence. “Right now, we have various digital experiences, via portals or apps like Facebook or Twitter, through which we can search, connect, interact or purchase,” says Tina Hedges, co-president of Twist New Brand Ventures, who notes Americans collectively spend 906 million hours a month on social-media networks. “Unless you are completely dedicated to being plugged in, it’s still a bit random. If you haven’t logged on to Facebook in a few days and don’t have it synced with other apps, chances are fiftyfifty that you’re not getting the real-time experience.

“But if you care about what your friends do, think or say,” she continues, “there are ways to live ‘plugged in,’ so that anytime you are about to make a decision, you can plug into your network collective of opinions, ratings and comments without having to search for them,” says Hedges, citing GetGlue.com and Stumbleupon.com as leaders in the category.

GetGlue is an entertainment-oriented network, which allows users to rate movies, music, books, TV shows, etc., and then tailors suggestions based on what one’s friends like. StumbleUpon looks to improve on the traditional search experience (think Google or Yahoo) by searching the user’s network of friends for the sites they recommend as being the most relevant or viewed for their search. “This is a way to get information that’s weighted by your friends’ perspectives,” Hedges says. She goes on to cite research from Emarketer.com, continuing: “The number-one reason people ‘fan’ pages on Facebook is to let their friends know what products they support. People want other people to know what they care about, and if they find something they like, they want to share that.”

Google’s new platform, Google Instant, also has the potential to significantly alter the search landscape. Now when someone uses Google for a search, the site instantly populates the query field based on what it thinks you’re looking for. “It’s still early, but the results are showing that potentially the long tail of key words that retailers and marketers have historically bought may go away,” says Darren Herman of the interactive agency The Media Kitchen, a division of Kirshenbaum Bond Senecal + Partners. “If there are less key words to buy, the value and price of each will increase because of the increased competition.”

The implications of all of this for retailers are clear. First and foremost, eschewing an online presence—even for a luxury brand—is no longer an option. “There isn’t a choice anymore,” says Liebmann. “One thing that stuns me is how few of the specialty retailers have a really strong online presence, especially the designers.”

As a model of success, they would do well to look at HSN Inc., which has married its multiplatform network of television, computers and mobile with a three-pronged strategy comprised of commerce, content and community to drive sales. The strategy seems to be working. For the second quarter ending June 30, 2010, the company reported a net sales increase of 8 percent, with Internet sales up 16 percent. “The customer is looking for an immersive, integrated experience that is easy,” says Mindy Grossman, chief executive officer of HSN Inc. “People don’t want anything to get in their way. We’re busy. We have things to do. The expectation is that if you can’t deliver that, I’ll go somewhere else. That is the power of the consumer today. They are information rich and they have choices. They are not location captive anymore, because they can access product anywhere.”

Just consider the numbers: Two years ago, the Internet was the seventh most shopped channel on a weekly basis in WSL’s “How America Shops” survey (out of about 30 channels). This year, it ranked third, following mass merchandisers and supermarkets at one and two, respectively.

Those figures presage a new reality for retailers, says Liebmann, one in which they must not only accept but facilitate behavior that historically they discouraged. As an example, she cites taking pictures. Who hasn’t been stopped from snapping a picture in a store before? To meet the demands of the new consumer, retailers must now allow shoppers to take pictures in their stores and provide their customers with free Wi-Fi so that they can go online and compare prices with that of other stores, send a picture of a proposed purchase to someone for an outside opinion or find the product elsewhere should you not have it in her desired size, shape or color. “If you’re really transparent and want to build an open relationship, you have to let people do all of that,” says Liebmann. “You know how offended you get when you go to a hotel and you have to pay for Internet access? Rightly or wrongly, we feel as consumers it’s in the ether. From the retailer point of view, those who open the doors and invite people in will succeed.”

To truly succeed, whether retailer or manufacturer, complete transparency is key in every digital interaction with consumers. “This is a community that is unforgiving relative to truths, information and brand experiences,” says Demsey. “There is no escaping the ramifications of your behavior or your words anywhere. Everyone has an opinion, everyone wants to be heard and that creates a tremendous infrastructure stress on companies to manage it properly.”

Mark is harnessing that desire to be heard by having its reps actually create its online training videos for YouTube and Facebook—an idea suggested to Poccia by a plugged-in intern, and one she immediately embraced. “Our interns said that they should be creating the training content based on their experience,” says Poccia, giving as examples videos that explain how to plan a successful sales party, what it takes to get a business up and running and what products are easier to sell than others. “To have [our reps] speak with that authority and be vested in the business and in the success of other reps—that has been a true ‘aha!’ moment,” says Poccia.

Moreover, the consumer has to be at the center of the message today, not the brand. “Consumers have no patience for self-serving messages,” says Speichert. “If you’re not relevant, if you don’t entertain, if you don’t make creative use of rich media, you won’t be tolerated for three seconds.” As an example of a successful program, he cites Lancôme’s newest partnership with YouTube star, makeup artist Michelle Phan. “Video bloggers are the new celebrities,” he says, noting that Phan’s first few Lancôme how-to videos have been viewed more than 7.5 million times on YouTube and the Lancôme site.

For its part, P&G has partnered with Yahoo’s lifestyle channel Shine to sponsor The Thread, which features videos, photos and blogs related to celebrity fashion and beauty trends. Its brands like Olay, Clairol, Herbal Essences and Cover Girl are seamlessly woven into the content rather than overtly trumpeted. “It’s about content generation that is relevant to consumers,” says Drosos, “and brands are the enablers that allow consumers to get the looks that they see and desire.”

 

Going forward, Drosos sees interactive technology as further cementing that emotional connection, particularly gaming technology. “Gaming has really taken off, primarily with men and primarily with competitive games relating to sports or war,” she says. “But the whole technology where your TV screen can recognize your movements is something that can open up gaming for women in different ways. You can imagine a game where a woman is applying her makeup but getting advice interactively on whether she’s doing it correctly, because the screen is able to monitor her movements,” Drosos continues. “You can see how that whole area of technology can grow and be fun. We are working on that in a variety of ways.”

Mobile, too, is a huge area of opportunity that is fundamentally altering the interaction of consumers with brands and retailers. Though the spending on mobile commerce and marketing is still relatively small compared to the Internet, particularly in the U.S., it’s only a matter of time given the ubiquity of smart phones today. Berg Insight estimates that the total value of the global mobile marketing and advertising market was about $1.35 billion in 2008, with Asia- Pacific accounting for about 75 percent of the total value. Despite the shrinking advertising market, mobile has continued to increase over the past year. Growing at a compound annual growth rate of 43 percent, Berg estimates the market will be worth $11.6 billion in 2014, accounting for almost 12 percent of the total digital advertising market.

“Mobile is the main event in Japan and Scandinavia and is strong in other parts of Asia as well,” says Demsey. “It’s one of the only platforms that exists in Africa, because most homes don’t have telephones and aren’t wired for the Internet.

“People are used to going on their phone and ordering product and it gets delivered to their homes,” he notes. “Everything is becoming when I want it, how I want it, in the way I want it. It’s a paradigm shift.”

Sephora, which declined requests for an interview, has been at the forefront of developing e-commerce mobile apps. In August, it launched an m-commerce app for smart phones, with access to e-commerce, content sections such as rate and review and a store locator that uses GPS technology to find the closest Sephora. The LVMH Moët Hennessy Louis Vuittonowned retailer is reportedly readying an iPhone app, which is expected to launch this quarter, according to published reports.

“The proliferation of smart phones means that mobile will ultimately be the most used screen, always with us, able to provide information relevant to our locations and situations,” says Speichert. “By not entering this area now, you risk falling behind and not being able to catch up when this is the game in town.”

Already, HSN features streaming video as part of its mobile offering, which is called HSN on the Go. “Being an innovator is critical so that you can learn, test, shape and drive how these emerging technologies are going to support your business,” Grossman says. “We know a multichannel customer is worth much more in lifetime value than just a single channel customer. Once they’re buying across all screens, they know they can find you and interact with you anywhere. And especially mobile, which opens up a new world of personalization and geotargeting.

L’Oréal, like others, is keen on location-based networking and shopping Web sites like Foursquare, Gowalla and Shopkick. “They offer a significant opportunity to link real-world activity with the social space,” says Speichert. “For brands, the challenge is to strike the right balance between focus and fragmentation. Sites like Foursquare weren’t built with shopping in mind, and are predominantly used to connect friends with one another. However, brands have found ways to get involved and deliver value to consumers, and interestingly, users are accepting brands in those spaces, but in limited capacities.”

Shopkick, Speichert continues, is about shopping, while Facebook Places will likely make such applications mainstream. “All of this activity constructs a critical new space for consumer-facing brands.”

Mark is looking to make its entire commerce system applicable on mobile. “The time spent with mobile devices is growing at four times the rate of other media,” says Poccia. “I go back to my audience who never leaves home without their smart phone. Ever. For us not to stay at the forefront of innovation would be a disservice to our rep. Our dream is if you see a great bracelet, for example, the rep can say, ‘That’s one of our fall trends,’ and flip through a trend book on her phone and sell it to the customer right there. That is the next frontier,” she continues. “How do we give our reps the power to run their business from their smart phones? The next evolution is to empower the reps to be mobile with their business, because we know 30 percent of all mobile users have purchased clothing or jewelry through their device in the last year.”

Though still in its infancy, tablet technology and the much-ballyhooed iPad is also generating excitement among beauty marketers. “It’s a social device,” points out Drosos. “It’s about sharing pictures and content. It generates a dialogue. It emphasizes what’s so great about digital media already.”

Says the Media Kitchen’s Herman: “The iPad has created a whole new usage occasion, stealing share from the laptop. It’s created an intermediate part of our computing experience that we never knew we had, delivering a casual surfing experience with the interactivity of a touch screen.” Moreover, because of its relatively high price, “It’s a luxurious device and is attracting clients who are seeking audiences who can afford it. But we need to see it and other devices like it gain adoption before it’s a serious media platform.”

For advertising, maybe. But for the world of beauty, an inherently visual medium in which a picture is indeed worth a thousand words, many marketers are already harnessing its potential. “It’s an upscale way of looking at something that you used to have to look at on thumbnails,” says Demsey. “The beauty business is an image business and a storytelling business, and that nice big pad, with its high resolution, is a beautiful way to show your imagery, play a commercial, go behind the scenes.”

Celebrity hairstylist Ted Gibson has proven himself a master marketer of translating behind-thescenes access into product sales and service bookings in his salons. Business-wise, Gibson operates bustling salons in New York City and Washington. He markets an eponymous product line sold at Target and online. He is on-air hairstylist of TLC’s What Not To Wear TV show and a contributing blogger at Daily Makeover. And he’s the go-to stylist of choice for some of Hollywood’s boldest-face names, like Angelina Jolie, Anne Hathaway, Debra Messing, Christina Ricci and Joy Bryant. “I have a personal Facebook page, a Ted Gibson beauty brand page, Twitter that links to the Ted Gibson Beauty Web site,” he ticks off. “I use Twitpics for photos. I blog on Daily Makeover. I have video content on YouTube. Our salons send out weekly newsletters to between 15,000 and 17,000 clients with special promotions and deals.” And, of course, e-commerce. “I reach people who three or four years ago I wouldn’t be able to talk to,” says Gibson. “The only downside is that Facebook only allows you to have 5,000 friends. I have 1,500 people who want to be friends with me who can’t do it. They haven’t caught up with the magnitude.”

During a recent appearance on HSN, Gibson hosted a Tweet Up event for bloggers at his New York City salon, where he served up Champagne and free laptops so attendees could tweet and post on Facebook about the live feed they were watching. “We sold out 3,000 pieces in 12 minutes,” says Gibson.

Numbers like that demonstrate the game-changing power of technology to achieve parity between small brands and big. “Social media has leveled the playing field,” says Demsey. “The companies that can afford the big advertising spend now have to slug it out in cyberspace, where everybody goes in equal. You have to break through the clutter and connect with the people who want to connect with you.

“This space is changing every single day, with inundations of new technologies, new platforms, new ideas, new equipment, new companies,” he continues. “This is not like make your plan for the year and close the books. This is an interactive, ever-changing environment that requires rapid thought, flexibility, a point of view and, most of all, a strong will.”

 

 

 

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