This article was originally published on Beauty Business Journal.
It goes without saying that 2020 and 2021 have truly changed the game and generated an ecommerce momentum for brands like never before. Consumers have modified not only the way they purchase but also how they think and behave. Although this has created new opportunities and emerging trends for the ever-evolving beauty industry, online ecommerce and growth don’t have a catch-all playbook.
In the case of indie beauty companies and digitally-native brands, most have navigated the pandemic storm relatively well, in part because these companies are actively managing their sales channels versus brands that rely more on retail. When everyone had to pivot and figure out online channels, these brands held a tremendous advantage over competitors.
However, these brands are constantly challenged by established beauty giants, growing indie brands, newcomers, and also bigger brands seeking to win a share of the digital sales space. In an increasingly crowded and competitive landscape, how can beauty brands step up their game?
The myriad of competitors flooding a space once dominated by a handful of brands that once benefited from relatively affordable digital ad prices has changed the advertising game. The low costs that allowed companies to grow fast have since adjusted up, and continue to do so, as brands bid them up.
“The ad dollar is a hugely important commodity in the beauty industry. Our investment and growth program Velocity is about providing that capital and expertise. It’s firepower to accelerate online sales for challenger brands in the beauty, luxury, and lifestyle sectors”, says Oliver Mauss, Founder and CEO of DRVE, an investment and growth firm scaling businesses that want direct sales to spearhead their brand.
The growth of beauty brands in the digital space also sheds light on another trend: many are undifferentiated, often offering similar products at similar prices with very similar customer experiences. This also leads to targeting the same consumers resulting in higher ad costs and difficulties in running promotions that stand out.
The increased interest in beauty brands, coupled with the massive growth of ecommerce, has raised the bar and pushed brands to constantly look for better selling strategies, and ensure they are maximizing revenue from their digital channels. This trend has reflected in more VCs turning their heads to the beauty and skincare sector for recurring revenue models.
As Mauss sees it this funding may not be sustainable for many brands since “3 out of 5 VC dollars go to paid advertising, namely Facebook, Google, and Amazon”. He adds that “the rate at which companies in this industry can scale is directly related to their access to not only capital but also expertise and systems. With brands selling online, it boils down to their ability to develop great products and back them with scalable processes.” Zoomed out, the growing interest from VCs in beauty has changed how entrepreneurs look for growth support. For small beauty startups, it translates into cleverly allocating capital to reach profitability, while keeping a healthy growth pace.
There Is No Magical Recipe For Growth
As online shopping continues to rise, digital advertising has become more complex and calls for a sophisticated approach with a diversified number of touchpoints.
With a wide range of channels at the buyer’s disposal, marketers are obligated to fill a larger role and support the full customer process. This implies providing the right information at the right time to nurture new and growing customers.
“Marketers sometimes choose over and over again the same ‘golden paths’ that they hope customers will follow, but in reality, brands need to optimize and switch things up constantly to see results that maintain sustainable growth”, says Agna Poznanska, CMO at DRVE.
This comes with the realization that ‘product’ doesn’t need to dominate an online store. For beauty entrepreneurs, the challenge is to think of what they can offer to prospective customers, other than products. This larger take on communication is usually associated with moments, emotions, accessories, and experiences. All these should also be featured in the brand’s store and should fit in with the voice the brand has.
“Brands need to personalize their message and voice, to provide consumers with what they’re looking for, instead of trying to sell something they probably already possess,” says Agna. She adds that it is especially true for premium beauty products, and customers can often be hesitant to invest in a new cream or innovative serum that might not be for them.
“Not every prospective customer is ready to buy and they can easily leak out of your funnel. When you look at the beauty industry, many brands are competing on pricing and I don’t think the focus should be there, but instead, on offering value and creating a great experience,” concludes Agna.
For Lisa Mattam, CEO & Founder of Sahajan, the path to growing her brand involved wearing many hats.
She founded Sahajan, an evidence-based natural skincare line based on the 5,000-year-old science of Ayurveda, in 2015. The goal was to develop a collection that would bring together science and the mindful living and ingredients of the Ayurveda traditions.
Lisa, who worked in the pharmaceutical industry before turning into an entrepreneur, claims her background trained her ‘in the rigor, thinking, process and requirements of running a brand’ which reflects on the transparent communication of Sahajan. As she puts it: “we don’t make any claims that aren’t backed up by science. We consult with Ayurveda experts and we always remember we are working with ancient science.”
Between May 2020 and May 2021, the brand’s revenue grew by 600%. The recipe for growth involved constant efforts and a combination of channels that reflected on different fronts:
- Earned Media
A brand with a strong message such as Sahajan was featured in different media outlets and developed a great network of collaborators. For beauty brands, any instance where creators or journalists are organically sharing their experience with the products counts.
“You can always take a very good piece of earned media and amplify it to drive more acquisition. Choose a good media feature, or a positive and honest review, and back it up with paid media”, adds Agna.
In the early days of the brand, collaborations with other brands sharing similar values and cross-promotion targeting the same customers also worked well. Even if they require a lot of legwork, “collaborations are suitable at different stages in the development of the brand. The main reason for it is that they don’t need huge financial capital, they just need brand capital”, says Agna.
- Paid Media
A combination of paid social, paid search and affiliate marketing had a major impact on Sahajan’s growth. There is no secret that these channels are a must for most brands selling online, and in the case of Sahajan, increasing the firepower in these channels led to its paid marketing growing by 250%.
“Think of paid growth as a flywheel in which you need the expertise, the time and capital to test, scale and then test again to continuously optimize campaigns. You need to have the expertise and systems to have an always-on approach that generates constant data-driven results”, adds Agna.
- Owned Media
As for many brands, email marketing was successfully tapped into. Content creation was key for Sahajan, as the brand has a strong educational goal.
A quick look at the brand’s social profiles walks users through a series of tutorials on how to apply products but also shares recommendations for a healthier lifestyle. As Lisa says, “the message we put out there with Sahajan is not just about bringing people into the brand but also into the world of Ayurveda, and helping them understand its 5000-year-old science”.
The content shared via email ranges from a breakdown of key ingredients such as moringa oil and triphala to how to do ayurvedic hair oiling, to food recipes. Creating content that focuses on educating consumers is a great way to bring awareness about products and engage with them, as it waterfalls into organic sharing via DMs, SMS, and personal channels.
Allies of Skin
Nicolas Travis, Founder & CEO of Allies of Skin, attributes the success of the company to the strength of the brand’s image, its loyal customers, and the superb products they bring to the table.
The Singapore-born brand didn’t have a dedicated investment and growth partner to operate its digital channels until 2019. Prior to the holiday season of 2019, Allies of Skin teamed up with DRVE to work on their paid growth channels and accelerate drive more online sales.
As their business continued to grow after the joint efforts, Allies of Skin has continued to work with DRVE to tap into new markets and grow their direct-to-consumer (DTC) sales even further.
Between December 2019 and December 2020 the brand grew its revenue 100x times, and further reinforced its DTC strategy.
The team behind Allies of Skin has been tackling growth from different angles:
- Earned Media
A founder with a background in pharma but also PR, Nicolas knows first-hand the importance of media for any brand. As Allies of Skin found market fit, sales accelerated and the number of loyal customers increased, Nicolas and his team worked tirelessly to position the brand and its messaging.
Their products are regularly featured in Allure, Marie Claire, Glamour, Instyle, Vogue, and other media outlets. The common thread in these placements is that they accurately articulate very well the products they feature, allowing readers to get a real feeling for what the product is about and how to use it.
Beyond traditional PR, Nicolas credits influencer marketing as the game-changer for the brand. For Allies of Skin, 2020 was the first year in which Allies of Skin the brand had the luxury to heavily invest in leading influencers. “It was the first time we could see how our product interacted with the creator’s audience, and that allowed us to estimate how much sales we can drive from this type of campaign”, he says.
Counting on a great network of creators seeding products and sharing their honest experiences with the brand is an easy win to drive earned media, but usually a very expensive one.
“Influencer marketing is great for brands that have clear objectives and realistic expectations. Some questions to ask yourself before moving forward with an influencer campaign are: Is this a long-term campaign or a one-time story? Do we need to amplify a story in a niche or do we need to have a broader reach?”, says Agna.
- Paid Media
For brand awareness, programmatic and display ads are a huge asset since they help fill up the top of the funnel and gain new users. This was supported by paid search and paid social, with the latter combining different platforms, such as Pinterest.
Since Allies of Skin is a global brand, the efforts targeted various markets from Singapore to Europe and North America.
All these channels helped to diversify traffic on each stage of the funnel. “For instance, we scaled up online traffic by 240% for the biggest promotion of the year. There were many successful campaigns but rich media and video played an important role in the success”, says Agna.
She adds that “as a founder or a marketer, it’s tempting to try to lead with social platforms like Facebook but you shouldn’t over-rely on one channel or platform. The best is to think about it as an amplification of all your other efforts in multiple channels”.
- Owned Media
The team behind Allies of Skin are no strangers to skincare education. From the early days, they have been working extensively on resources for their audience. In their `Transparency Thursday’ weekly segment on Instagram to the recently launched Allies University, the brand has nailed how to offer value, before product, to anyone who wants to become an expert on all things skincare.
“For brands of any size, it is key to focus on education as you will likely get organic shares and higher customer LTV. There is also a lot of hidden value in publishing this type of content since it also generates shares via DMs, SMS, and a lot of ‘silent’ awareness for the products”, points out Agna.