BEAUTY U.S.
Transcription
BEAUTY U.S.
BEAUTY U.S. RESEARCH BRIEFING | DECEMBER 8 , 2015 BENCHMARKING DIGITAL PERFORMANCE L2 Delivers Data-driven Insights to Brands Seeking Greater Return on their Digital Investments RESEARCH BENCHMARKING EDUCATION 2 UPCOMING RESEARCH Digital IQ Index®: BEAUTY: CHINA Digital IQ Index®: BEAUTY Intelligence Report DEATH OF PURE PLAY Intelligence Report SOCIAL PLATFORMS Intelligence Report IN THE COMPANY OF GENIUS 3 UPCOMING EVENTS BREAKFAST BREAKFAST LUNCH YEAR IN REVIEW DEATHINOF PUREPLAY YEAR REVIEW FOCUS 2016 New York New York York New Paris December 10th January 12th December 10th January 14th 4 COMMERCE IQ® Product Availability Regions Merchandising and Content Media and Promotion Select Retailers: User Reviews Search Optimization Bundling and Enterprise Scale Pantry *Pricing and Discounting *Subscribe & Save *Amazon specific categories 5 CATEGORY IQ® Search Visibility Longitudinal tracking of organic, paid, and PLA visibility on Google.com Search Rank Keyword overlap analysis and relative search rank versus competitive set Pricing & Assortment Comparison of product listing, pricing, and brand-level assortment analysis On-Site Visibility Retailer site search results for category keywords Category Merchandising Deep dive into investments, including content and co-op opportunities Product Merchandising SKU-level analysis including product listing structure, ratings and reviews, and content 6 STRATEGY MODULES Modules Blend Sector Insight, Performance Benchmarks, and Identification of Brand-Specific Opportunities Omnichannel Retail The Digital Organization Social Content & Strategy Video Localization Data & Targeting 7 BEAUTY 2015 INTRODUCTION E-COMMERCE IS GROWING… Beauty E-Commerce as a Percentage of Total Sales by Region 2009 2014 8.6% 6.5% 5.1% 4.8% 3.1% 4.5% 3.2% 4.1% 2.8% 1.5% 0.7% Asia-Pacific North America Source: Euromonitor Western Europe Australasia Eastern Europe 1.0% 0.3% 0.6% Latin America Middle East & Africa 9 SKINCARE MAINTAINS THE LEAD Share of U.S. Makeup, Skincare, and Fragrance Prestige Beauty Sales January–June 2015 Total Market Online 45% 43% 39% 36% 21% 17% Makeup Source: NPD Skincare Fragrance 10 ONLINE INFLUENCE EVEN GREATER Digital Research vs. Digital Purchases, by Country Percentage of Respondents Who Have Purchased Makeup Products in Past 12 Months October 2014, n=1,000 per Country Research Buying 83% 69% 64% 60% 41% -28% 54% 37% -23% 62% 49% 51% 48% 35% -19% 52% 29% -15% -32% -14% -23% Source: Google and TNS, "Consumer Barometer," Oct 2014 11 CONSUMERS SHOP WITH RETAILERS Favorite Online Destinations for Beauty & Personal Care Products Percentage of Respondents That Identified Site as Their Favorite Online Destination May 2014 ◼ 2014 Web Sales Growth Retailers +17.1% 73% +21.6% 42% +30.0% 35% 32% 28% 27% Source: Survey data from A.T. Kearney, May 2014. Web sales data from Internet Retailer. 25% 25% 24% 23% 12 THE NEW PATH TO PURCHASE Beauty: Rank of Amazon & Sephora in Outbound Traffic from Brand.com September 2015, n=95 Brand Sites Top 5 Top 3 45% 25% 15% 5% Source: L2, Inc. analysis, based on data from SimilarWeb.com. 13 WINNER TAKES ALL? U.S. E-commerce Sales, Billions 2013-2014, n=Top 50 E-commerce Retailers 2013 OVERALL 2014 15.4% from 2013 TOP 50 $264.28 15.6% from 2013 Top 50 73.59% $304.91 Top 50 73.75% Source: Internet Retailer, U.S. Commerce Department. 14 WINNER TAKES ALL? U.S. E-commerce Sales, Billions 2013-2014, n=Top 10 E-commerce Retailers 2013 OVERALL 2014 15.4% from 2013 TOP 10 $264.28 16.7% from 2013 Top 10 49.29% $304.91 Top 10 49.83% Source: Internet Retailer, U.S. Commerce Department. 15 WINNER TAKES ALL? U.S. E-commerce Sales, Billions 2013-2014, n=Top 4 E-commerce Retailers 2013 TOP 4 2014 15.8% from 2013 Amazon 26.07% Amazon 25.68% $264.28 Apple 6.92% Staples 3.80% Walmart 3.94% $304.91 Apple 6.76% Walmart 3.98% Staples 3.68% Source: Internet Retailer, U.S. Commerce Department. 16 WINNER TAKES ALL Estée Lauder Total, E-commerce Sales vs. Department Stores Billions, 2014 Total E-commerce Sales All Sales $10.97 $5.4 $0.6 $2.5 $1.1 Source: Internet Retailer. 17 SCALE: VLOGGERS VS. BRANDS YouTube: Average Organic Vs. Total Brand Channel Views Beauty & Hair Care Brands April 2015, n=80 Beauty & Hair Care YouTube Channels Beauty & Hair Care Brands Top Vloggers Source: L2 Intelligence Report: Video, 2015. 18 THE RISE OF INSTAGRAM Beauty: Share of Total Interactions, By Platform n=216 URLs (72 Facebook, 72 Instagram, 72 Twitter) October 2014–October 2015 Twitter 0.7% Facebook 9.0% Platform Interactions Likes + Comments Likes + Comments + Shares Instagram 90.3% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Favorites + Retweets 19 …AND THE GROWTH OF WINNERS Beauty: Share of Total Instagram Interactions vs. Posts Beauty-Specific Instagram Pages October 2015 SHARE OF POSTS (n=3,320 Posts) Butter London 4% Tarte 5% Kat Von D 5% e.l.f. Benefit Cosmetic Cosmetic s s 3% 3% Anastasia Beverly Hills 8% Other 73% Source: L2, Inc. Digital IQ SHARE OF INTERACTIONS (n=52,722,360 Interactions) Other 31% Index®: Beauty, 2015. Too Faced Cosmetics 6% MAC Cosmetics 7% NYX 7% Anastasia Beverly Hills 34% Benefit Cosmetics 7% Tarte 8% 20 BEAUTY 2015 METHODOLOGY METHODOLOGY SITE & E-COMMERCE 40% DIGITAL MARKETING 25% SOCIAL MEDIA MOBILE & TABLET 15% 20% 22 METHODOLOGY DIMENSION: SITE & E-COMMERCE TECHNOLOGY, SEARCH, & NAVIGATION: Analytics, Load Time, Guided Selling Sophistication & Integration, Videos, Product Search, Category-Relevant Sorts & Filters CUSTOMER SERVICE & STORE LOCATOR: FAQs, Contact Information, Live Chat Availability, Store Locator Sophistication PRODUCT PAGE: Product Merchandising, User Reviews, Content Integration E-COMMERCE & ACCOUNT SOPHISTICATION: Ease of Checkout/Third-Party Handoff, Sample During Checkout, Loyalty Programs, Account Customization 40% OPTIMIZATION ON E-TAILERS (where applicable): Amazon, Walmart, Target, Sephora, Ulta, Nordstrom, Macy’s, Amazon Grey Market * Methodology for highlighted components has been added/changed since last year 23 METHODOLOGY DIMENSION: DIGITAL MARKETING SEARCH: Traffic, Web Authority, Brand SEO & SEM on Google, Category Search ADVERTISING: Display, Video Pre-Roll, Retargeting, and Cross-Platform Initiatives EMAIL MARKETING: Ease of Sign-up, Frequency, Segmentation/Customization, Trigger Emails, Smartphone Optimization 25% EARNED MEDIA: Mentions, Sentiment, and Brand Activity on Industry-specific Outlets (+Makeup Alley, Total Beauty, Basenotes.net) * Methodology for highlighted components has been added/changed since last year 24 METHODOLOGY DIMENSION: SOCIAL MEDIA FACEBOOK: Reach, Annual Growth, Programming, Relative & Absolute Engagement, Support of Native Video Format YOUTUBE: Reach Search Visibility, Channel Experience, Video Views, Virality of Content TWITTER: Reach, Annual Growth, Frequency, Relative & Absolute Engagement 15% INSTAGRAM: Followers, Growth, Engagement, Instagram Video, Relative & Absolute Engagement, Brand Mentions EMERGING SOCIAL MEDIA: Pinterest, Snapchat, Meerkat * Methodology for highlighted components has been added/changed since last year 25 METHODOLOGY DIMENSION: MOBILE SMARTPHONE EXPERIENCE: Compatibility & Functionality, Cart Consistency Across Devices, Store Locator & Geolocation TABLET EXPERIENCE: Responsiveness, UI/UX Optimization for Touch Input, Cart & Maps Performance, Tablet Advertising MOBILE SEARCH: “Above-the-Fold” Visibility via Organic or Paid Results on Chrome App; Site Identified as Mobile-Friendly, Click-to-Call or Local Directions 20% MOBILE INNOVATION: iOS & Android Apps, Mobile Web Advertising * Methodology for highlighted components has been added/changed since last year 26 CATEGORIZING RESULTS Brands are Parsed into Five Categories Based on Digital IQ Index® Score GENIUS 140+ GIFTED 110–139 CHALLENGED 70-89 FEEBLE <70 AVERAGE 90–109 27 BEAUTY 2015 RANKING L2 DIGITAL IQ INDEX®: RANK BRAND 102 FEEBLE CHALLENGED Digital IQ 70 Pierre Fabre 102 70 Puig 104 51 Shiseido Co. 104 51 Shiseido Co. 106 50 Coty Inc. 29 L2 DIGITAL IQ INDEX®: RANK BRAND 90 CHALLENGED Digital IQ RANK 83 96 Trish McEvoy 91 98 LVMH 99 LVMH (Kendo Holdings Inc) 73 The Estée Lauder Companies 77 99 Unilever 73 Coty Inc. 76 L'Oréal Group 74 The Estée Lauder Companies 80 95 75 Procter & Gamble 80 94 75 96 Revlon 92 Digital IQ The Estée Lauder Companies 82 92 BRAND 101 71 Cosmetic Developments Ltd. 30 L2 DIGITAL IQ INDEX®: RANK BRAND 78 AVERAGE Digital IQ RANK 93 83 Anastasia Beverly Hills 79 86 Coty Inc. 87 Hourglass Cosmetics 84 LVMH (Kendo Holdings Inc) 90 87 Beiersdorf AG 84 Procter & Gamble 88 Amway Corporation 85 Sisley CFEB 91 83 86 Butter London 92 82 Digital IQ 88 85 LVMH (Kendo Holdings Inc) 81 BRAND Inter Parfums 92 79 CHALLENGED 87 84 Elizabeth Arden 31 L2 DIGITAL IQ INDEX®: RANK BRAND 66 AVERAGE Digital IQ RANK 99 72 Christian Louboutin 66 73 LVMH (Kendo Holdings Inc) 75 Elizabeth Arden 94 Puig 98 75 The Estée Lauder Companies 94 Unilever 97 N.V. Perricone M.D., LLC 95 Clarins 98 71 95 Beiersdorf AG 99 69 96 73 Unilever 69 Digital IQ Lippmann Enterprises, LLC 99 66 BRAND 75 94 Markwins International Corp. 32 L2 DIGITAL IQ INDEX®: RANK BRAND 54 AVERAGE Digital IQ RANK 104 57 Procter & Gamble 54 104 57 103 63 L'Oréal Group 103 102 64 Mary Kay Incorporated 101 Burberry Group 103 L'Oréal Group Strivectin Operating Company, Inc Johnson & Johnson 103 57 103 Stila Styles, LLC L'Oréal Group 57 103 57 The Estée Lauder Companies 57 Digital IQ Procter & Gamble 104 54 BRAND 64 101 Coty Inc. 33 L2 DIGITAL IQ INDEX®: RANK BRAND 40 AVERAGE Digital IQ RANK 112 48 Murad Inc. 43 50 Coty Inc. 50 Procter & Gamble 106 L'Oréal Group 109 52 L'Oréal Group 105 The Estée Lauder Companies 109 Limited Brands 106 Dermalogica 109 44 107 Unilever 109 44 Digital IQ 107 48 LVMH (Kendo Holdings Inc) 44 BRAND LVMH 110 44 GIFTED 52 105 L'Oréal Group 34 L2 DIGITAL IQ INDEX®: RANK BRAND 29 GIFTED Digital IQ RANK 118 36 Revlon 31 38 The Estée Lauder Companies 38 LVMH 113 L'Oréal Group 116 40 Shiseido Co. 112 Clarins 115 JA Cosmetics Corp 113 Charlotte Tilbury Beauty Inc. 116 35 114 Guthy-Renker 116 32 114 36 L'Oréal Group 32 Digital IQ L'Oréal Group 117 32 BRAND 40 112 Gurwitch Products 35 L2 DIGITAL IQ INDEX®: RANK BRAND 18 GIFTED Digital IQ RANK 129 22 Johnson & Johnson 19 26 L'Oréal Group 27 Too Faced Cosmetics LLC 120 Coty Inc. 123 28 Chanel 119 Tarte, Inc. 123 LVMH 122 The Estée Lauder Companies 124 22 123 Shiseido Co. 124 22 123 22 L'Oréal Group 19 Digital IQ Unilever 124 19 BRAND 29 118 L'OCCITANE en Provence 36 L2 DIGITAL IQ INDEX®: RANK BRAND 6 GIFTED Digital IQ RANK 138 12 The Estée Lauder Companies 6 14 L'Oréal Group 15 The Estée Lauder Companies 131 The Estée Lauder Companies 134 16 Procter & Gamble 130 Avon Products 134 Procter & Gamble 132 Shiseido Co. 135 10 133 Coty Inc. 137 10 133 12 The Estée Lauder Companies 9 Digital IQ The Estée Lauder Companies 138 8 BRAND 16 130 Coty Inc. 37 L2 DIGITAL IQ INDEX®: 5 1 IN THE COMPANY OF GENIUS 142 LVMH 3 2 1 Strong omnichannel efforts with Brow Bar boutiques offering beauty services 2 Experimenting with cross platform initiatives and pushing its presence on Snapchat 3 Product pages are packed with functionality including UGC content and Q&As 38 L2 DIGITAL IQ INDEX®: 3 IN THE COMPANY OF GENIUS 144 L'Oréal Group 1 2 1 Strongest desktop site in the Index excels at content & commerce integration 2 Trigger emails based on video view on desktop site leverages vlogger collaboration across channels 39 L2 DIGITAL IQ INDEX®: 3 L'Oréal Group IN THE COMPANY OF GENIUS 144 1 2 1 Effective use of Guided Selling on site integrated across rich content including videos and 2 shoppable looks; Strong diagnostic tools and UGC lead to product purchase Personalization capabilities: offers tailored content and suggestions based on products previously owned 40 L2 DIGITAL IQ INDEX®: 2 1 L'Oréal Group 2 IN THE COMPANY OF GENIUS 145 3 3 1 Superior search visibility on relevant e-tailers and effective product merchandising on Amazon 2 Rich filters on site narrow down video content for user by zone, occasion, and skill level 3 Effective use of shoppable UGC content on site 41 L2 DIGITAL IQ INDEX®: 1 1 IN THE COMPANY OF GENIUS 149 L'Oréal Group 2 3 1 Top mobile experience in the Index with optimized dropdowns and checkout 2 Strong performance across Social Media platforms, repurposed as shoppable UGC on site 3 Video tutorials guide customers seamlessly to product purchase on site 42 BEAUTY 2015 KEY FINDINGS ENTERPRISE VALUE Beauty: Digital IQ Score by Parent Company Portfolios with Three or More Brands November 2015 Brands Slated to Merge with Coty GENIUS GIFTED 119 110 AVERAGE 106 103 103 101 95 CHALLENGED FEEBLE L'Oréal Group Estée Lauder n=17 n=13 YoY Digital IQ % Change -2% -6% Procter & Gamble n=7 LVMH n=10 Unilever n=7 Coty n=8 Shiseido n=5 +8% +3% +1% +10% +1% 44 ENTERPRISE VALUE Beauty: Digital IQ Score by Parent Company Portfolios with Three or More Brands November 2015 Brands Slated to Merge with Coty Average Digital IQ Excluding Licensed Brands GENIUS GIFTED 124 119 124 112 103 AVERAGE 103 106 CHALLENGED FEEBLE L'Oréal Group Estée Lauder n=17 n=13 Procter & Gamble n=7 LVMH n=10 Unilever n=7 Coty n=8 Shiseido n=5 45 BIGGEST MOVERS Biggest Winners & Losers 2014–2015, Digital IQ Percentile Rank 53% 25% 24% Challenged Gifted Challenged Average Gifted Gifted 24% Challenged Average 22% Challenged Average -40% -36% -22% -19% -16% Gifted Average Gifted Average Gifted Average Gifted Gifted Gifted Gifted Average Average 46 ORIGINS Mobile-First Redesign with Personalized Search 47 BOBBI BROWN Relaunch Emphasizes Live Chat Consultation 48 E-COMMERCE LAUNCHES Make Up For Ever, Kat von D, Wet ‘n’ Wild Launch DTC E-Com 49 SOPHISTICATION STILL INCREASING Beauty: Year Over Year Changes in Site Feature Adoption n=90 U.S. Sites Present in Both Indices 2014 2015 80% 81% 60% 64% 23% 28% 26% 28% 17% 19% 17% 8% Store Locator User Reviews Auto Replenishment Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Live Chat Loyalty Program UGC Board 8% 13% UGC on PDP 50 FOCUS ON UGC L’Oréal accounts for 47% of the brand sites that adopted UGC boards YoY 51 GUIDED SELLING FEATURES Beauty: Percentage of Sites That Employ Guided Selling Feature October 2015, n=111 Brand Sites STAND-ALONE TOOLS NON PDP CONTENT PRODUCT PAGE 46% 36% 35% 23% 16% 6% Diagnostic Quiz Advanced Filter Virtual Makeover 6% How-to Videos How-to Texts UGC on Products Product Page Displayed On Skintones Overall, 60% of Index sites still rely on standalone tools to guide consumer selection. Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 52 OPPORTUNITIES FOR INTEGRATION WHERE DO TOOLS SIT? (n=67 Sites with Standalone Tools) Relevant Product Dropdown GOOD 39% Product Page 25% BAD Gallery Page 15% 42% of sites with standalone tools do not integrate them in purchase path Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 53 THE NEW PRODUCT PAGE Merchandising BAREMINERALS PRODUCT PAGE Product Page Feature Index (n=112 Sites) Product Videos 49% Color Selection Modifies Primary Image 20% Award Badges 20% Guided Selling Displays Product On Different Skintones 6% How-to Content 30% UGC Integration 16% Blog Content Interaction 5% 54 LIVE CHAT AS GUIDED SELLING Beauty: Percentage of Sites with Live Chat Call-to-Action & Integration n=25 Sites with Live Chat October 2015 CALL TO ACTION INTEGRATION ON SITE 72% 56% 32% 20% 16% 4% "Live Chat"/"Chat "Chat With a with us" Beauty Advisor" "Guided Chat" Live Chat Popup After Lingering Integrated on Product Page Integrated in Persistent Nav Overall, 22% of Index sites provide live chat Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 55 AMAZON RAMPING UP BEAUTY Number of Amazon Luxury Beauty Brands October 2013–October 2015 153 57 24 October 2013 (Launch) October 2014 October 2015 56 THE THIRD PARTY PROBLEM Beauty: Average No. of SKUs per Brand Sold by Third Party vs. Amazon October 2015 Avg No. Third-Party SKUs Avg No. Amazon SKUs 103 33 94 30 93 32 3,469 2,679 2,588 68 2,170 2,104 67 1,681 1,164 934 5 354 Elizabeth Shiseido Coty (n=8) Arden (n=2 (n=5) Brands) Estée Lauder (n=13) L'Oréal (n=17) LVMH (n=5) Unilever (n=7) Procter & Gamble (n=7) Kendo (n=5) Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 57 PRICING: MISS DIOR Amazon and Third-Party Seller Pricing Compared to MSRP MSRP: $122.00 Source: Camelcamelcamel.com. 58 PRICING: BURBERRY BRIT RHYTHM Amazon and Third-Party Seller Pricing Compared to MSRP MSRP: $90.00 Source: Camelcamelcamel.com. 59 SEPHORA’S CONTENT ECOSYSTEM Beauty: Top 10 Brands in Brand Mentions on Sephora Based on Filtered Content Returned in Brand Search October 2015 Number of Mentions Urban Decay 2,295 Kat Von D 2 3 4 2,043 NARS Cosmetics 1,730 Smashbox Cosmetics 1,577 Too Faced 1,564 Benefit Cosmetics 1,459 BECCA Cosmetics 1,228 Tarte Cosmetics 1,179 YSL Beauty 1 1,019 1. Brand-supplied videos 2. UGC curated from Sephora’s Beauty Board 3. Sephora-supplied editorial Laura Mercier 692 Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 4. UGC, including reviews and BeautyTalk mentions 60 RETAILERS WIN IN BRAND SEARCH Beauty: Ownership of First Page Search Real Estate Brand Search Term, (e.g., “Mary Kay”) October 2015 ORGANIC N=878 search results Across 106 brand searches Brand Social/Micro site 19% Other 14% PAID N=404 search results Across 106 brand searches Brand Site 21% Retailer 76% Retailer 45% Parent Company 1% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Brand Site 22% Other 2% 61 AND IN CATEGORY SEARCH Beauty: Average Site Position vs. Frequency of Appearance Top 30 Organic Search Results for Non-Branded Search Terms October 2015 Average Search Rank 0 Amazon Brand.com Target Walmart Macy's Nordstrom Sephora Ulta Number of Appearances Across Category Terms 100 150 200 250 50 1.0 Macy’s (Fragrance) 6.0 High Relevance, High Frequency Sephora (CC) Ulta (CC) e.l.f. Cosmetics (CC) Essie (Nail) 11.0 Amazon (Nail) NYX (CC) MAC Cosmetics (CC) Amazon (Skincare) Amazon (CC) 16.0 21.0 26.0 Low Relevance, High Frequency Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 62 ORGANIC SEARCH: MAKEUP Beauty: Top 10 Sites on First Page of Organic Search Results N=2,390 First-Page Results for Non-Branded Color Cosmetics Terms October 2015 ◼︎ Retailer ◼︎ Brand Site ◼︎ Editorial ◼︎Social Media TOP 10 DOMAINS OVERALL sephora.com 6.1% ulta.com 4.9% amazon.com pinterest.com 4.4% 3.7% TOP 10 BRAND DOMAINS eyeslipsface.com* 3.0% nyxcosmetics.com 1.9% maccosmetics.com 1.5% maybelline.com 0.7% eyeslipsface.com 3.0% makeupforever.com 0.7% totalbeauty.com 2.9% covergirl.com 0.6% elle.com 2.8% urbandecay.com 0.6% toofaced.com 0.6% lancome-usa.com 0.4% allure.com 2.4% nyxcosmetics.com 1.9% realsimple.com 1.7% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. bobbibrowncosmet… 0.4% *Pre-site relaunch to elfcosmetics.com. 63 BRANDS COLLECT DATA… Percent of Beauty Brands Adopting Account Customization Fields With Average Number of Available Options per Data Field April 2015, n=25 brands Percent of Brands Adopting Average Number of Options 100% 12 90% 10 80% 10 9 70% 8 8 8 60% 6 50% 40% 5 32% 30% 6 5 4 28% 20% 20% 20% 16% 10% 2 4% 4% 0% 0 Skin Concerns Skin Type Source: L2, Personalization 2015, June 2015. Skin Tone Eye Color Hair Color Hair Concerns Hair Type 64 THE TARGETING OPPORTUNITY Data Fields # of Options Possible Personas Skin Type, Skin Concerns, Target Areas, Skin Condition, Age, Skin Care Goals, Time and Effort 29 12,096 Skin Tone, Skin Undertone, Skin Shade, Skin Type, Skin Concerns, Foundation Benefits, Foundation Formula 32 1,580,554 Eye Color, Beauty Style, Lash Look, Eyeliner 24 825 Hair Texture, Hair Thickness, Hair Condition, Hair Concerns, Chemical Treatments, Salon Visits 21 8,748 Hair Goals, Natural Color, Natural Shade, Grey Level, Color Treatment, Current Color, Current Shade, Current Tone, Chemical Treatment, Desired Permanency, Desired Tone 42 151,795,445,760 Total Possible Personas: 20,944,492,105,217,700,000,000,000,000 (“2.1 octillion”) 65 L’OREAL KNOWS HOW TO USE DATA Product Recommendations Personalized Email Targeted Content 66 INSTAGRAM ENGAGEMENT TRIPLES Beauty: Instagram Post Frequency & Engagement, by Quarter Q3 2014–Q3 2015, n=56 Beauty-Specific Accounts with Complete Data Total Likes Total Comments Avg Posts Per Week 6.2M 4.9M 4.1M 2.3M Total Interactions 2.5M 5.5 5.3 Q3 2014 Q4 2014 Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 6.3 6.5 6.9 Q1 2015 Q2 2015 Q3 2015 67 INSTAGRAM FAVORS COLOR Beauty: Community Size, Post Frequency & Engagement September 1st, 2015 – October 28th 2015, n=77 Beauty-Specific Accounts Color Cosmetics Fragrance Multi-Category Nails Community Size Skincare Total Interactions 40,000,000 ANASTASIA BEVERLY HILLS 30,000,000 20,000,000 NYX COSMETICS 10,000,000 BENEFIT TARTE MAC URBAN DECAY KAT VON D BEAUTY 0 -5 5 -10,000,000 15 25 35 45 55 65 75 Posts per Week Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 68 ANASTASIA UGC ON TOP Beauty: Top 10 Instagram Posts by Cumulative Interactions September 1, 2015 – October 28, 2015 @anastasiabebeverlyhills 186,139 Interactions @anastasiabebeverlyhills 152,085 Interactions @anastasiabebeverlyhills @anastasiabebeverlyhills @anastasiabebeverlyhills 126,015 Interactions 124,644 Interactions 123,720 Interactions @anastasiabebeverlyhills @anastasiabebeverlyhills @anastasiabebeverlyhills @maccosmetics @maccosmetics 122,005 Interactions 117,603 Interactions 116,223 Interactions 114,920 Interactions 114,363 Interactions 69 FACEBOOK TRENDING DOWN Beauty: Engagement by Quarter Q3 2014–Q3 2015, n=66 Facebook Pages with Complete Data Likes Comments 7.5M Total Interactions Shares 7.7M Posts per Week 8.1M 7.5M 6.1M 5.1 5.0 4.8 4.7 4.1 Q3 2014 Q4 2014 Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Q1 2015 Q2 2015 Q3 2015 70 VIDEO YOUTUBE VS. FACEBOOK Beauty: Brand Share of Views, by Platform 46 Brands, Excluding Fashion and Inactive Accounts October 2015 SHARE OF PAID VIEWS SHARE OF VIEWS (n=22,705,651 Views) (n=26,698,685 Views) Other 19% Revlon 31% Other 48% Olay 41% Benefit Cosmeti cs 18% YSL Beauty 8% Olay 13% Revlon 22% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 71 BRAND REAL ESTATE IS UP… Beauty: Average First-Page Results for Branded Search on YouTube October 2014 vs. October 2015 OCTOBER 2014 OCTOBER 2015 (n=94 Brand Terms) (n=106 Brand Terms) Brand Real Estate 8% Other 25% Brand Real Estate 13% Vlogger Real Estate 67% Other 22% Vlogger Real Estate 65% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 72 EARNED MEDIA Beauty: Top 10 Brands by Number of Mentions on Vlogger Videos Percentage of Total Brand Mentions in Top 10 Beauty Uploads Among Most Popular Vloggers* n=1,975 Brand Mentions For Videos Uploaded January – September 2015 MAC 9.6% NYX 3.7% NARS 3.2% Maybelline 3.1% Too Faced 3.0% Benefit 2.7% Urban Decay 2.7% L'Oréal Paris 2.5% Real Techniques 2.2% Revlon 2.1% Source: L2, Inc. Digital IQ Index®: Beauty, 2015, based on top 25 vloggers reported by Pixability. 73 CAN’T BUY ME LOVE Beauty: View Count Growth Over Time, Vlogger vs. Brand Video Most-Viewed Beauty Video Among Those Uploaded in October 2014 - 2015 Video View Count Chanel Dove dope2111 60,000,000 dope2111 0% Paid Views 50,000,000 40,000,000 30,000,000 Dove 90% Paid Views 20,000,000 10,000,000 Chanel 43% Paid Views 0 Days After Upload Source: Strike/Social. 74 BENEFIT’S VIDEO STRATEGY Beauty: Share of Benefit Cosmetics’ YouTube Uploads vs. Paid Views For Videos Uploaded October 2014 – October 2015 SHARE OF UPLOADS (n=42 Videos) Tips & Tricks 31% Product Feature 31% Other 5% NonVlogger Tutorial 14% Vlogger Tutorial 19% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. SHARE OF PAID VIEWS (n=1,363,684 Views) Product Feature 11% Other 12% Non-Vlogger Tutorial 36% Tips & Tricks 26% Vlogger Tutorial 15% Source: Strike/Social. 75 BENEFIT’S VIDEO STRATEGY Beauty: Share of Benefit’s Facebook Uploads vs. Views, by Type For Videos Uploaded October 2014 – October 2015 SHARE OF UPLOADS SHARE OF VIEWS (n=41 Videos) (n=30,662,353 Views) Vlogger Tutorial 59% Other 44% Product Feature 37% Non-Vlogger Tutorial 2% Tips & Tricks 7% Vlogger Tutorial 10% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Product Feature 30% Non-Vlogger Tutorial 0.14% Other 9% Tips & Tricks 2% Source: Strike/Social. 76 COVERGIRL’S VIDEO STRATEGY Beauty: Share of CoverGirl’s YouTube Uploads vs. Paid Views October 2014 – October 2015, Video Upload Date Range SHARE OF UPLOADS SHARE OF PAID VIEWS (n=86 Videos) Vlogger Tutorial 38% (n=37,725,976 Views) Celebrity/Influe ncer 64% Celebrity/Infl uencer 34% Product Feature 10% Other 1% Behind the Non-Vlogger Scenes Tutorial 4% 6% Tips/Tricks 7% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. Tips & Tricks 1% Vlogger Tutorial 2% Product Feature 28% Other 5% Source: Strike/Social. 77 COVERGIRL’S VIDEO STRATEGY Beauty: Share of CoverGirl’s Facebook Uploads vs. Views October 2014 – October 2015, Video Upload Date Range SHARE OF UPLOADS (n=16 Videos) SHARE OF VIEWS (n=9,479,186 Views) Vlogger Tutorial 8% Vlogger Tutorial 25% Celebrity/Infl uencer 38% Product Feature 31% Product Feature 21% Other 3% Celebrity/I nfluencer 68% Other 6% Source: L2, Inc. Digital IQ Index®: Beauty, 2015. 78 NEW FRONTIERS Estée Lauder, Tarte, Kat Von D Experiment with Emerging Platforms 79 CONSUMERS SEARCH ON PHONES Beauty: Share of Category Search Volume, by Device November 2014 – October 2015 MAKEUP Tablet 9% PC 31% SKINCARE Tablet 7% Mobile 60% PC 50% FRAGRANCE Tablet 8% Mobile 43% PC 37% Mobile 55% In makeup and fragrance categories, >50% of category searches are conducted on mobile devices Source: Google AdWords Keyword Planner Tool. 80 TARGETING MOBILE CONSUMER Estée Lauder’s mobile site features a simple, intuitive tool designed with mobile in mind 81 OVERVIEW CONCLUSIONS 2016 AREAS OF FOCUS Have you increasingly facilitated a best in class guided selling experience on your website? – – – Product detail pages Customer service Content & Commerce integration Does your brand’s presence on third party online distribution enhance equity and maximize incremental growth? – – Best in class content, visibility on preferred partners Active management of diversion in third party marketplaces (i.e. Amazon) Are you getting the digital marketing basics right? – – – Optimize for SEO Use every touch point as a data capture opportunity Shift ad spend from direct to programmatic and network buys 83 2016 AREAS OF FOCUS Are you exploiting the evolving growth on social media? – – – Facebook = paid targeted reach at scale Instagram = authenticity + engagement Video Assets = critical Are you approaching asset development mobile first? – – Mobile optimized site, search & email Smaller screen as omnichannel connective tissue DIGITAL IQ = SHAREHOLDER VALUE 84