Estee Lauder Readies Agency Review for 2014

Growth in Beauty Giant's Ecommerce Group has Hit 'Success Plateaus,' According to Brief

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Estee Lauder is rethinking its agency roster as it preps for a review in 2014.

The New York-based beauty giant will run a "two-part digital media review," inviting shops to pitch for at least one of two separate assignments with budgets around $4 million, according to a review document that Ad Age obtained. One assignment will be to oversee digital media across various brands. The other will be to support digital media optimization and analytics to drive e-commerce revenue.

Santa Monica-based consultancy Select Resources International is guiding the search process and recently sent the review brief to a handful of agencies. Upon the client's request, SRI did not disclose the identity of the client, and it's holding off on formally launching the review process until the first quarter of 2014. Despite the absence of the company name in the brief, a number of executives close to the matter told Ad Age that Estee Lauder is behind the search.

So why is the company holding off on starting the pitch? Because it doesn't want to "disrupt" Estee Lauder's existing relationships "during the critical fourth quarter retail season this year," the company said in the brief.

The brief did not go into specifics on the incumbents but said that the company's "brands currently leverage multiple creative and media partners across brand and geography, with one traditional media partner for the U.S."

Estee Lauder declined to comment. SRI did not respond to a request for comment.

"They believe a more holistic and efficient use of digital media resources, first within the U.S. and subsequently at the global level, will help to leverage the sheer scale and depth of their investment, and raise the quality of thinking and efficiency and value of those activities," according to the brief. "The client organization is complex and matrixed, with multiple brand businesses as structural corporate siblings, but operating in silos with minimal shared infrastructure to support collaboration," according to the review document.

Estee Lauder owns a mix of high-end and lower-price-point beauty products. Top U.S. media spenders in 2012 included the namesake Estee Lauder brand ($133.6 million), Clinique ($135.4 million), Aveda ($23 million) and Origins ($17.2 million) -- all four of which boosted their media spending by at least double-digit percentages in 2012, according to the Ad Age DataCenter. The company, which is ranked 43 on the DataCenter's list of top ad spenders in the U.S., spent $906.8 million on total U.S. advertising and promotions in 2012. On domestic measured media it spent $388.3 million, according to Kantar Media.

Scope of Work

Outlining the scope for the digital media assignment, the brief lists communications planning and media planning and buying across channels such as search, display, mobile, paid social and emerging media platforms. It states that the agency will need to manage "dozens of brand specific campaigns."

The brief also states the client will measure the agency's success in terms of brand metrics and engagement, while "contribution to sales is a secondary objective."

Scope on the e-commerce assignment -- the company refers to it as the "performance digital media assignment" -- includes direct response and digital media activity, such as "optimizing performance media for daily sales and revenue targets."

The agency that wins this assignment "will not sleep," according to the brief. The company is looking for "performance media experts who can adroitly deploy and analyze a never-ending stream of media and real-time data, optimizing results on the fly, 24/7."

Selecting the Contenders

SRI and the client will select a short list of approximately five to seven agency contenders to meet in the first quarter of 2014 for a credentials & capabilities meeting, according to the brief. They'll then cut that list to three-to-four finalists.

Although the assignments are focused on the U.S. -- it's the company's largest market -- the brief indicates that there's a possibility for global expansion and requested that agencies participating in the review have a "physical presence" in target global markets in the Middle East, Latin America and Asia. "Special strength in China is highly desirable," it added.

Estee Lauder net sales were up 5% in fiscal 2013 to more than $10 billion. According to sister publication Crain's New York, the company is focusing on emerging markets such as Latin America and China, and targeting travelers in airports, where retail sales are growing. It's also introducing new products and expanding its popular MAC label.

Additional Estee Lauder brands include Aramis & Designer fragrance brands, Bobbi Brown, Bumble and Bumble products and salons, La Mer and Smashbox, among others. The company also is the global licensee for fragrances and cosmetics sold under brand names such as Tommy Hilfiger, Donna Karan, Michael Kors, Tom Ford and Coach.

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