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L'Oreal has worked hard in recent years to boost its digital and social-media presence, but its proposed acquisition of NYX Cosmetics gives it a foothold on YouTube bigger in some ways than what it's been able to build on its own.
L'Oreal announced last week that it plans to acquire NYX, which expects to surpass $100 million in global sales this year, for an undisclosed sum, from private-equity firm HCP & Co. The 15-year-old brand has seen explosive revenue growth in recent years -- quintupling since HCP bought its stake in late 2010 -- thanks largely to social media, particularly YouTube. The brand's sales hit $72 million in 2013, up 46% from 2012, and rose an even faster 56% to reach $93 million for the 52 weeks ended May 31 from the year-ago period, according to L'Oreal.
"NYX is a dynamic company that has done a tremendous job of harnessing the power of social media, digital marketing and multichannel distribution," said Frederic Roze, CEO of L'Oreal USA in announcing the deal.
L'Oreal is no laggard itself in digital and social media. The L'Oreal Paris brand recently topped L2 Think Tank's "Digital IQ Index" for hair and color brands. And a three-year sponsorship arrangement between the company's Lancome brand and video blogger Michelle Phan ultimately led to the brand launching Ms. Phan's own brand last year, Em Cosmetics, primarily through e-commerce.
A L'Oreal spokesman declined to comment on how the company might apply social-media savvy from NYX elsewhere at L'Oreal. But the cosmetics giant -- like most of its big competitors -- could learn a few things from how NYX gets free exposure on YouTube, based on an analysis by Pixabilty, a tech company that tracks online video data.
L'Oreal Paris, the company's flagship cosmetics brand, handily beat NYX in total views of brand-created videos on YouTube -- 11.3 million to 1.4 million -- according to Pixability, a tech company that tracks online video data. Yet NYX beat L'Oreal Paris in total share of voice on YouTube. NYX generated nearly 138 million views of videos mentioning its brand's makeup compared to 112 million for L'Oreal makeup.
The edge for NYX on YouTube comes largely from one initiative -- the Fine Artistry of Cosmetic Elites (FACE) Awards -- in which bloggers create videos for the brand to compete for a $25,000 award determined from votes by beauty consumers. Last year, the FACE Awards generated 120 million views of videos mentioning NYX, with the brand hoping for another strong showing for this year's contest, which ends in August.
NYX (pronounced Nix – as in the Greek goddess of the night) has been sold everywhere from Nordstrom to Walgreens and Target. NYX also has a substantial presence at Ulta, the fast-growing hybrid mass-prestige chain that was the first national retailer to pick up the brand in 2008. And the brand has a substantial e-commerce business through its own site nyxcosmetics.com and distribution in 70 countries. The product line is equally eclectic, covering all color cosmetics categories and more than 1,500 items, since the company rarely discontinues shades.