The U.S. has lost some luster in recent years for packaged-goods companies as they chased higher growth in developing markets. Not so for L'Oréal, which made the U.S. a top global priority two years ago and a lab for some of its key digital-marketing innovations. It is now reaping the results of that strategy.
In the 52 weeks ended Aug. 12, L'Oréal led all major beauty-focused household and personal-care players in the U.S. with sales growth of 5.4% to $4.1 billion, accelerating as the year progressed, according to a Deutsche Bank report citing SymphonyIRI data. In the third quarter, L'Oréal's North American sales grew 7.1%, well ahead of the company's 4.6% globally, and only a percentage point below developing markets.
"We still see big opportunities in the U.S., in part because our shares are lower here than in other parts of the world, particularly Western Europe," said L'Oréal USA Chief Marketing Officer Marc Speichert. "There are still big opportunities in per-capita consumption when you compare the U.S. with some other developed countries."
U.S. growth has come not by playing it safe, but in the face of a major ramp-up in often experimental digital and content investment. The L2 digital-innovation consultancy made L'Oréal the fastest-rising beauty player in its recent industry report, with the Lancome brand tying Estée Lauder for the top spot and L'Oréal USA rising to No. 3 of 56.
Among factors figuring into that ranking was L'Oréal recently launching the first Xbox app in the CPG industry, a multibrand effort tied in with Lucky magazine and L'Oréal's own Makeup.com. The app has gotten good download and time-spent results, Mr. Speichert said, because it doesn't get lost in the vast sea of apps for smartphones. It's one of many projects funded by L'Oréal's experimental Next Fund, entering its third year next year, with a link to its Women in Digital program to foster female-led tech startups.
But much of the success comes from mixing the traditional and digital, Mr. Speichert said. He cited Garnier Skin Renew Dark Spot Corrector as an example. A familiar if well-tested TV ad from Publicis, New York, used a Dalmatian to help drive home the point. But the print campaign also tied into an online diagnostic tool from Modiface backed by the Next Fund to good effect, Mr. Speichert said.
Search -- both paid and organic -- has been perhaps the biggest digital driver of L'Oréal results, he said, with more than a billion searches annually on beauty subjects. Another propeller of success has been a 2-year-old Next-Funded project from Demand Media to create content that is designed to attract complex beauty-search queries, Mr. Speichert said, along with optimizing those and other sites to eliminate bounce-back once people land there from search.