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The Metaverse: Beauty’s Next Frontier

Beauty brands are finding their footing as the Internet becomes more immersive.

Squiggly silver lines snake over a person’s eyes, nose and mouth. Glistening purple-white and orange-pink sea anemone-like shapes sprout on another face, where opalescent globules magically appear and bluish mushroom-ish forms pop up. In a third look, a face and breasts are surrounded by translucent, purply-pink wafting gills.

Stuff of fantasy? For sure, but it’s also virtually real today. Welcome to beauty in the metaverse, an immersive online space in full expansion mode.

From bitcoin loyalty programs to NFTs, virtual 3D stores and online gaming involving makeup and hair looks, beauty is starting to have a real moment in this new virtual environment. 

“The next frontier is the metaverse, where we will see a lot of application in beauty,” said Michelle Phan, the pioneering social-media guru and founder of EM Cosmetics.

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“Think ‘Ready Player One,’” she continued, referring to the sci-fi film set in 2045, where a virtual-reality simulation is used to escape the real world. “In the metaverse, your avatar is a reflection of your personality. You can be anything [there]. Therefore, we will have a new definition of what beauty is.”

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Fashion has already galloped faster than beauty into the metaverse, with a plethora of NFTs, digital garments for avatars and runway displays.

You know it’s serious stuff when the virtual crosses over into — and disrupts — the real. Hermès is suing the maker of MetaBirkins NFTs. Nike recently acquired virtual shoe company RTFKT, a producer of NFTs and sneakers for the metaverse. And some executives have already quit their traditional day jobs to work on products for the metaverse full-time.

That’s true for Inès Alpha, a former advertising art director who shifted careers and now creates the aforementioned 3D makeup looks, among others, for people in their social feeds. 

At the vanguard of next-generation makeup, her projects have included teaming with Dior makeup’s creative and image director Peter Philips to develop the 3Dior augmented reality Instagram Filter.

Right now, the metaverse is “still a nascent area for beauty,” according to London-based foresight analyst Abi Buller at The Future Laboratory — but going forward, the opportunity is massive.

NFTS

In beauty, companies are looking to NFTs to connect the digital and physical worlds, as well as inspire loyalty. NFTs, non-fungible tokens, allow people to buy and sell ownership of unique digital items. They’re often used as a loyalty play because they provide digital scarcity. 

Last year saw some newfangled experiments with NFTs — Look Labs created Cyber Eau de Parfum as a digital asset, and Givenchy Parfums collaborated on an NFT, too. 

But until Clinique’s NFT late last year, there hadn’t been any really sustained efforts in that space by a major beauty brand.

“I really like the way Clinique has launched an NFT as part of its existing loyalty scheme,” said Buller. “It’s tagged on as a piece of loyalty and also as part of a competition.”

Clinique MetaOptimist NFT
Clinique MetaOptimist NFT. Courtesy image

Clinique’s approach with the NFTs was “modernizing loyalty,” according to Roxanne Iyer, global vice president, consumer engagement at the Estée Lauder Cos., eschewing a purchase to entry or auction model. Social storytelling became the currency, and on social platforms, Clinique consumers could tell their accounts of joy and optimism. Of those, three were chosen.

Winners announced by Clinique global ambassadors Emilia Clarke and Melissa Barrera were given an edition of the NFT artwork, called MetaOptimist. The digital assets symbolize the brand’s marquee products, Moisture Surge 100H and Almost Lipstick Black Honey (that’s gone viral on TikTok), and the company’s own identity and heritage. No value was assigned to the NFTs.

“It’s such an interesting way for us to start thinking about brand communities and empowering them, which is what the metaverse allows us to do,” Iyer said.

In the physical world, winners were given the physical Black Honey product and a decade-worth of product to be meted out yearly.

“With the NFT, we wanted to make sure there was a digital link and a physical link,” Iyer said. “That’s a really high-touch customer care program, where we’re going to be in touch with them for the next 10 years.”

Although the project was U.S.-focused, Clinique received entries from around the globe, and saw a 60 percent rise in search traffic as well as a 20 percent increase in social engagement. Participants were almost evenly split between loyal and new consumers.

Other brands are taking different tacks for forays into the metaverse. SK-II, for instance, created SKI-II City, a digitally immersive metropolis inspired by Tokyo’s massive pedestrian intersection Shibuya Crossing. There, people could virtually wander around and have branded experiences, such as entering a cinema and watching films about SK-II.

P&G's Beauty Sphere
The towering construct of P&G’s BeautySphere. Courtesy image

Also recently from Procter & Gamble came the BeautySphere virtual world, an interactive environment presented in early January at the Consumer Electronics Show.

Visually, the space looks like a tall building in an offset stack. There, virtual visitors can scroll through the various levels to explore content, including an interactive game-like experience, livestreaming sessions and other videos.

On the ground floor, a virtual garden maze offered by Herbal Essences and created in conjunction with Royal Botanic Gardens, Kew, invites guests to enter.

“It is a tower of learning,” said Alexis Schrimpf, vice president of design, global skin and personal care at P&G. With the Kew Gardens experience. “We’re taking a very complicated science-based activity system and gamifying it for her. So she can learn about ingredients, how they’re authenticated and verified, and what’s the process that our partners go through,” Schrimpf said.

“She can make a difference in the real world by having a tree planted if she completes the whole process,” Schrimpf continued, noting the importance of the tie-in between virtual and physical experiences. “We’re learning how to do brand-building at the edge of the digital space.”

Eighty percent of P&G consumers polled said they want a personalized experience, and 60 percent said online experiences are just as important as those in person.

GAMING

Online gaming has been a natural lure and fit for beauty brands in the metaverse.

Last October, London-based fashion game developer Drest introduced a beauty mode feature, starting with Gucci Beauty, which released an array of virtual makeup in the app for a limited time through an exclusive partnership. Users also gained the option to give a model avatar a makeover. 

Players could experiment with 29 assets, representing products such as Rouge de Beauté Brilliant lipstick and Palette Beauté des Yeux Floral eye shadow. The range of combinations made for more than 40 looks players could experiment with in the game. The app also allowed them to purchase the real-world products.

From Drest
From Drest Courtesy of Drest

Drest ventured further into beauty after seeing engagement with its own brand makeup, created with Mary Greenwell. “What became evident was how much people really loved engaging with beauty,” said Lucy Yeomans, creator, founder and co-CEO of Drest. She said Drest’s audience wanted to be able to zoom in to be close to the beauty elements and real branded beauty.

Nars Cosmetics, too, has plans to launch “a visually sophisticated and highly engaging gamified experience on the world’s leading metaverse platform in Q2,” teased Dina Fierro, vice president, global digital strategy and social engagement at the brand.

Nars has also been a beauty guest at Drest, but starting in spring, beauty brands will be able to be a permanent fixture.

On Drest, “you’re educating through entertainment,” Yeomans explained. “You’re really starting to foster brand awareness and allegiances through storytelling and aspiration. We almost allow our audience to be co-creators.”

Drest is considering entry into less visually apparent beauty categories, like fragrance and skin care, where it could consider face masks that give avatar skin an extra glow, for example. Hair color is the next frontier for Drest, which works closely with hairstylist Sam McKnight. 

Yeomans believes the metaverse is a place to listen and see how people perceive a brand. “You can learn so much from the audience,” said Yeomans. “You just have to make it as fun as possible.”

Gaming platform Roblox has been working with many brands entering the metaverse on how they want to connect and engage with people.

“Self-expression as a whole in the metaverse is so important,” said Christina Wootton, vice president, global brand partnerships at Roblox.

On the site, with nearly 50 million daily active users around the world, one in five are updating their avatar every day. “A big part of that is fashion and beauty,” she said.

Wootton noted that organically in the immersive, 3D space, people are creating beauty trends. “They’re coming up with different colors and different palettes,” she said, adding co-creation with brands will be seen a lot more moving forward.

Another idea? “Maybe an influencer can come into the space through an avatar and try makeup virtually on other people,” said Wootton. “Or you can watch beauty tutorials and then try that look on to your avatars.”

Roblox’s Royale High has a virtual makeup part of its experience. Singer Zara Larsson held a music launch party there and had a cat-eye, glittery face look that people could put on their avatars.

“What you see in the real world you can also create in this digital space, but you can go much further,” Wootton said, adding brands should watch the community and think about how they can benefit users.

Other options include creating a branded world — a persistent experience — where co-creation and real-time feedback are possible.

“There’s a lot of opportunity and ways to experiment before something is even produced in the real world,” said Wootton.

In the future, through Roblox, it might be possible to try something on virtually, click on it and then have the products shipped in the real world to the user.

“A lot of brands are thinking about new revenue streams in this space, as far as the virtual sales,” said Wootton. ”This is a new business opportunity.”

Beauty brands are all eyeing Gen Zers, Roblox’s fastest-growing demographic is 17-to-24-year-olds.

“For brands in general, we recommend they’re educated in the space before they come to Roblox or enter the metaverse — really learn about the community, what’s already happening and listen to feedback,” Wootton said. “How does this audience want your brand to come into this space? How do they want to engage with you?”

Collaborating directly with the community is important, too. “They are really the experts in this space,” said Wootton.

As such, Roblox developed the UGC Avatar Creator Program, so more users can design virtual fashion for others. The Gucci Garden, where Roblox users could experience Gucci’s creative director Alessandro Michele’s vision, was done with Rook Vanguard, a UGC creator and developer on Roblox.

Bidstack, which enables game developers to monetize their titles and advertisers to engage gamers during the playing experience, has been behind the likes of Paco Rabanne’s intergalactic campaign for the Phantom men’s fragrance in Maximum Games and the VR tie-in with legendary soccer player Tim Howard for the Invictus men’s scent.

From Paco Rabanne's intergalactic campaign with Bidstack.
From Paco Rabanne’s intergalactic campaign with Bidstack. Courtesy of Bidstack

“I really do see luxury and beauty as endemic to gaming, and that’s really reflective of the global audience it attracts,” said Lisa Hau, chief operating officer of Bidstack Group, explaining the average age of gamers is 35, and they’re affluent.

“As we diversify our portfolio, we should be able to work with more female-focused brands, as well,” said Hau.

This year, instead of earmarking test budgets for metaverse-related projects, companies are expected to use on-plan spending, she said.

“Over time, advertising dollars follow where their audience is,” said Hau.

Naver Z, a Naver subsidiary that runs the 3D-avatar app Zepeto, has teamed with Christian Louboutin, Dior, Gucci, Adidas and Nike.

“Our users tend to be young — most of them are teenagers,” said Jay Lee, CEO of Naver Z USA, a subsidiary of the South Korea-based group.

For beauty brands thinking of entering the platform, he suggests they understand what kind of looks Zepeto users prefer. “Each metaverse platform has a different style,” he said.

In terms of the users, it’s about finding what they want and delivering it. “That kind of perspective shift may not be easy for the traditional brand,” said Lee. “It’s more top down.”

Two months ago, Zepeto opened up and started letting people submit their designs into the marketplace, so they can monetize their creativity and fandom. “That would not be limited to the fashion designers,” said Lee. “We’re opening our platform to anybody who can animate, build experiences virtually.”

RETAIL

Virtual and metaverse-based retail experiences are expected to give brands further opportunity to build customer loyalty.

Obsess, the experiential e-commerce platform that’s launched more than 100 3D boutiques, including for the likes of Dior, Charlotte Tilbury and Dermalogica, will introduce the ability to sell NFTs through virtual stores this year.

“We will definitely start to see brands add virtual goods [in 2022],” said Neha Singh, founder and CEO of Obsess.

Dermalogica's 3D virtual store
Dermalogica’s 3D virtual store. Courtesy of Obsess

She noted her generation of immersive e-sellers veer away from the traditional e-commerce sites comprised of a grid of thumbnails on a white background.

“It’s not very transactional,” she said. “What’s missing from the online shopping experience today is real discovery, [which is] happening typically in retail stores and on Instagram. But it’s not happening on brands’ own websites.”

Obsess’ 3D virtual stores are being conceived for better immersion, inspiration and discovery, Singh said. For Obsess-created boutiques there’s no need to download an app or wear a virtual reality headset. With a click of a link it can be opened on a phone.

“Brands don’t require any other assets that they don’t already have,” said Singh. “They’re seeing ultimately great results through it, which is why you’re seeing them proliferate.”

Obsess’ business has grown about 400 percent year-over-year in both 2020 and 2021. 

According to a large-scale consumer study by the company, one in four consumers have already shopped in a 3D virtual store, and among those, 70 percent had purchased an item from there or was influenced by that virtual store to purchase something through an e-commerce site or in a brick-and-mortar location.

“Sixty percent of them said it is something that they would like to do again,” said Singh. “Adoption is accelerating.”

The Charlotte Tilbury 3D boutique, launched during the end-of-year 2020 holiday period, has been updated numerous times.

An easy-to-use “shop with friends” functionality via video chat was added in the latest iteration. “It’s new, but we saw really good results from the people using this feature,” said Singh. “There’s much higher engagement and add-to-bag conversion rate, as well, if you’re shopping with your friends versus shopping by yourself.”

Obsess plans to broaden its platform to include shopping with influencers or sales associates, and interacting with friends through avatars, too.

Since Obsess uses computer-generated imagery, the sky is the limit in terms of what can be created. “For retail designers, it’s a very exciting time, because now they can virtually design retail where they are not limited by either restrictions of space or physics,” said Singh, adding she generally advises customers to stick to some basic principles of physics to keep consumers feeling grounded, however.

Singh advises that beauty brands looking to launch immersive shops define their objectives and how they would measure success. They need to strategically think about organizational structure — i.e. who is responsible for the project — and establish budgets and planning for that for the next few years, have a solid marketing plan and a cross-channel approach to promoting the store, while keeping in mind ease of store navigation is also key.

BrandLab360 has also just entered the beauty category with a 3D store. The creator of virtual reality solutions, v-commerce and metaverse experiences, has launched Maison Too Faced. It’s a retail platform where consumers can connect, shop and play online with thousands of others at once.

Too Faced's 3D virtual boutique
Too Faced’s 3D virtual boutique. Courtesy of BrandLab360

BrandLab360, which was cofounded by Jennifer Drury and Dan O’Connell, is best known for its virtual fashion showrooms using CGI and 3D rendering streamed from virtual machines. The Too Faced tie-in also marks BrandLab360’s first foray into online shopping, as well.

Beauty brands are also signing on to work with Lolli, a rewards application that allows users to earn Bitcoin while they shop. So far, Lolli has partnered with Sephora, Ulta, EM Cosmetics, Glossier, Dermstore and Revolve, among other retailers. The company is a big proponent of cryptocurrency accessibility, especially for women — hence, the beauty partnerships. 

“We’ve seen incredible success there — three-times year-over-year growth from our beauty merchants, and then six- to seven-time increase in total female users coming into our space because of the alignment with beauty merchants,” said Alex Adelman, CEO and cofounder of Lolli.

In total, Lolli has brought in more than 450,000 users after its kickoff in the U.S. in 2018, and plans to expand internationally during the next year. NFTs should play a part in the future, as well.

“You can imagine somebody shopping at a beauty merchant, like EM Cosmetics, and getting back an NFT in addition to the physical product,” said Adelman.

THE FUTURE

As the industry settles into the metaverse, beauty companies will need to balance return on investment with creativity. So far, however, there’s no one way for them to gauge their ROI.

“What we are more interested in than revenue is how many of our users are actually picking up and using digital assets to customize their avatar — so we’re more interested in engagement, retention metrics,” said Lee.

Nars Cosmetics, an early adapter in the metaverse with the likes of NFTs and gaming, assesses programs individually.

“For our partnership with luxury styling game Drest, for example, we focused on unique challenge participants and time spent in Nars-branded beauty mode challenges,” Fierro said. “Another recent activation, on Korean metaverse app Zepeto, was assessed through the lens of engagement and sales of Nars virtual makeup looks and merchandise.”

Six hundred thousand Nars virtual goods, including makeup looks and branded digital apparel, were sold through both the brand’s National Orgasm Day NFT release and the Zepeto tie-in.

“The biggest challenge will be fomo,” said Phan. “I can foresee a lot of brands jumping and chasing every shiny light, and not focusing. It’s still very early — this is the time to observe and learn before making a move.”

She believes brands’ biggest opportunity will be to redefine their relationship with their community.

“If social media has taught us anything it’s that consumers are not loyal to brands that treat them as just consumers. You won’t survive if you’re only thinking transactionally,” said Phan. “Similar to how our phones and social media have integrated so seamlessly into our lives, we will see the same for this space.”

Beauty being a tactile industry, full of products people want physically to touch and smell, makes the metaverse tricky, especially for products invisible to the eye, such as fragrance, skin care and hair care.

“It’s about brands responding to these challenges,” said Buller, explaining perhaps it’s a case of creating highly curated surveys, questionnaires or content experiences within the space to allow people to begin bringing beauty’s sensory aspect more to life. “It could be through giving a character, for example an avatar, to that fragrance.”

Lucie Greene, founder of Light Years, a New York-based consultancy, said she thinks most cosmetics brands have been approaching the metaverse in a rather conventional way, almost treating it like PR or buying traditional media.

“It is moving now into a stage of being a little bit more creative, like thinking about the potential of new mediums, new behaviors, new constructs,” she said.

“The aesthetic of the metaverse generally has continued to be influenced by gaming, and I wonder if that needs to evolve, as well, into at least a wider breadth of options and creative genres that span a little bit more of the grownup or maybe reference different aesthetics,” said Greene.

She also wonders if rather than hyper-real avatars, there might be more subtly augmented avatars of oneself in the future. “Basically, airbrush yourself,” she said.

“Further down the line, there will be more development of things like wearables that give us haptic feedback, for example, when we’re in metaverse spaces,” said Buller. “That could be something the beauty sector really benefits from, if there’s a way that you can feel through your clothing the way that a particular product is supposed to feel in real life.”

Greene believes that as in fashion, there will be a new wave of beauty creative directors that don’t have traditional work backgrounds but can push the boundaries of new mediums. Marriott has recently been looking for a metaverse specialist to join its team, and Reckitt Benckiser was recruiting a head of gaming internally.

Executives believe beauty will play catch-up with fashion in the metaverse.

“The transformation of traditional industry into its metaverse counterpart, which we call ‘metafashion,’ is happening very naturally, supporting the overall change in how we live and explore the world around us,” said Natalia Modenova, a cofounder of DressX, which aims to offer an infinite digital closet. “Digital assets were in place in gaming for a while, but the game is actually changing, and we already became ‘the avatars of ourselves’ in the multiple social channels, messaging and streaming services.

“Having digital clothes to support our lives in the metaverse, digital makeup is just as important to make the transition seamless,” she continued. “Just think of the way you choose your face look while creating your avatar in a game or virtual space such as Decentraland. Makeup is an important part of our self-expression in the physical world, and it has the potential to act the same role in the metaverse.”

It’s difficult to estimate how big the digital fashion or beauty industries can grow, but according to Morgan Stanley research, metaverse gaming and NFTs could constitute 10 percent of the luxury goods addressable market by 2030 — a 50 billion euro revenue opportunity.

“Today, revenue streams from digital mediums for luxury brands are negligible, even though most people in the developed world already spend more time interacting with their friends online rather than in the physical world. We think this is about to change,” wrote the bank in a “Luxury in the Metaverse” research report.

“Metaverse has no boundaries, and as it can be seen from the recent success of NFTs in the fashion industry, the sky’s the limit for the brands and creatives in the digital space,” said Daria Shapovalova, a cofounder of DressX.

She suggested beauty players explore new ways to showcase their products, embracing the creative freedom of the new era.

“While we have already seen face filters altering the look of human faces on social media and leading to a lot of controversy in the field, we think that beauty companies would rather achieve success by exploring creative possibilities of the metaverse that would never be available for the IRL world,” said Modenova.

Already, some beauty products that can be transformative in the metaverse have launched.

British materials and innovation studio The Unseen in October released its first direct-to-consumer product, an eyeshadow called Spectra that’s available in two colors. Under light like a phone camera’s flash, both turn into shades of molten silver.

The Spectra eyeshadow
The Spectra eyeshadow. Courtesy of The Unseen

“I think you’ll see more of that,” said Greene.

Alpha — whose 3D work is often inspired by sea creatures, riffing on their saturated iridescent colors, glossy textures and liquid movement — will continue shape-shifting makeup.

“There are so many possibilities,” she said. “In the metaverse, you can just be a 3D liquid.

“I always try to push the boundaries of what’s doable in physical makeup, in the physical world,” continued Alpha. “I have no interest in going to a metaverse that looks like the physical world — except if the physical world is burning, and that’s the only place where I can see trees and birds.”