L'Oreal Hikes Digital Ad Spend Sharply as Focus Shifts

Content Development Takes Center Stage as French Marketer Covets Bigger U.S. Role

By Published on .

TypeF.com, a site from Demand Media, which is creating 'thousands' of videos for L'Oreal.
TypeF.com, a site from Demand Media, which is creating 'thousands' of videos for L'Oreal.

L'Oreal is dramatically increasing its digital spending in the U.S., boosting its outlay for original content development as it shifts some of its focus from brand and product awareness toward consumer evaluation and advocacy online, said Marc Speichert, the company's U.S. CMO, in a media briefing in New York on Thursday.

After doubling U.S. digital spending in 2010, L'Oreal will spend as much on digital here this year as over the prior two years combined, Mr. Speichert said. That will bring digital to around 10% of L'Oreal's overall advertising outlay in the U.S., he said. Although he declined to detail spending levels in dollar terms, Mr. Speichert said L'Oreal's measured spending here was $1 billion last year, up about 25% from the prior year.

L'Oreal is increasing its overall outlay rather than raiding other budgets to fund digital growth, he added.

The U.S. is getting stepped up investment in part because it's a high-priority country for L'Oreal, which is breaking ranks with some global competitors by increasing its emphasis here despite slow market growth. L'Oreal's goal is to add 1 billion new consumers globally over 10 years, and the U.S. ranks behind only China and India in those plans, Mr. Speichert said. The beauty marketer hopes over the next 10 years to add 70 million additional consumers in the U.S., he said, a fairly lofty goal given that its market-penetration research shows 160 million people, or 52% of the U.S. population, already using the company's products.

L'Oreal's spending is moving to reaching consumers online when they're evaluating products, using a combination of sophisticated search marketing optimization and original online content aimed at very specific beauty issues.

To help win consumers during their product evaluation phase, L'Oreal is working with Demand Media to create highly focused websites that rise to the top of organic search results on complex "long tail" searches, Mr. Speichert said. Research by Demand shows that 80% of beauty-related search queries now have five or more words, as women seek increasingly detailed information, he said.

"The reality is that there was no content out there" addressing many of these needs, Mr. Speichert said.

TypeF.com, one of the Demand Media sites, serves up personalized content for subjects such as caring for blonde hair or creating a "smoky eye presentation."

"They're creating thousand of videos for us on specific needs," he said.

Beauty in the past year or so has moved into what Mr. Speichert termed "the digital battleground," as a growing number of consumers both research products online and buy them there. In just the past year, the percentage of consumers who research beauty products online moved to about 25% from around 20%, while the percentage who buy them online rose to 35% from 30%, according to Mr. Speichert. "That sets us up for dramatically transforming our business and how we market," he said.

And that 's not just true of L'Oreal, he added. "Walmart, for example, now sees Amazon as its greatest competition, not Target ," he said.

L'Oreal's efforts to capitalize on that shift include the purchase last year and relaunch this year of Makeup.com, using content supplied by Federated Media. L'Oreal buys 100% of the ads on the site, Mr. Speichert said, and plans to enable all those ads with "click to buy" buttons.

Another L'Oreal digital effort, the Beauty TV YouTube channel introduced last year, has generated 22 million video views and is the largest "partner" channel on YouTube, Mr. Speichert said, delivering reach that he called comparable to a cable TV network.

Lancome's partnership with beauty video blogger Michelle Phan, he said, has produced five of the 10 most-viewed beauty-related videos on YouTube, he said.

L'Oreal is also focusing more on advocacy, Mr. Speichert said, in part by increasing its investment in social media monitoring to identify the comments and individuals that most need to be addressed, drawing on the online war room for PepsiCo's Gatorade as inspiration.

There's a lot of digital hay to sort, of course, in order to find the needles. On one recent day, L'Oreal identified 242,000 social media mentions about its brands, only 18,000 of which it found "relevant" and 893 of which were deemed "actionable" in some way, either through contact from the company's consumer-affairs department or sending them to the various brands and divisions for further action.

In this article:
Most Popular