Here’s How L’Oreal Is Benefitting From A Higher Digital Spend
L’Oreal (OTC:LRLCY) has been steadily working towards restructuring its media spending in favour of digital channels, in addition to other digital investments. In 2013 the company had allocated 15% of its media budget for digital channels and this number increased significantly to 30% in 2016. It is likely to be much higher in 2017. L’Oreal is looking to engage its consumers through a wide range of digital initiatives such as video advertising, online influencers and personalized communications and recommendations. As the tech savvy millennial generation enters its high spending years, L’Oreal is ensuring that it uses the right channels to communicate with this segment of consumers to drive revenue growth.
Social Media For Mass Communication
L’Oreal is actively using social media to engage with customers on a mass scale. It is working with local and global influencers to create content for Facebook and Instagram. The company is adopting a strategy to match the social media platform with its brands to create an effective social strategy to target the right audiences. For instance, it is experimenting with Snapchat for its Maybelline brand and exploring WeChat to target Chinese customers. An effective social media strategy ensures that L’Oreal is able to reach a wider audience. But at the same time, the company is able to customize its message by using the right channel for every audience segment. This ensures better engagement with consumers and can lead to higher conversions.
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Using Influencers To Connect With Consumers
In September last year, L’Oreal signed up five British beauty bloggers as influencers to create online content for its products. This was aimed at providing information to its customers and engaging them better. Earlier this year the company invested in Tallify, a start-up which connects big brands with social media influencers to create campaigns. This investment comes through its collaboration with Founder’s Factory, a London based global accelerator and incubator, under which the company will support the growth of five high potential start-ups each year. The investment in Tallify indicates that L’Oreal is considering influencers as a significant pillar in its digital marketing strategy to engage with consumers. By promoting content created by influencers, L’Oreal is able to bring credibility to its content and better adoption of the recommendations made by these personalities.
Personalization Through Digitization
L’Oreal has been technologically ahead of its competitors and company has experimented with several tools for consumers to find the right product for their requirements. Through Founder’s Factory, it has now invested in Veleza, an app based community of beauty lovers which helps members discover beauty products that match their personal needs. Another start-up which is being funded through this initiative is InsitU which offers personalized natural skin care. Its scientific team creates signature products, labels them with the customer’s name and delivers them directly to the customer’s home. This indicates that L’Oreal is continuing to use technology to provide more personalized recommendations to its consumers, thus creating a loyal customer base.
We believe L’Oreal’s investments in digital initiatives are paying off and giving it a competitive edge. These initiatives are leading to better engagement with the customers. THis in turn creates a stronger two-way communication channel that can lead to product improvements and personalized products to meet individual consumer needs, driving revenues over the long term.
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