L’Oreal reaps the benefit of higher digital spend
We’ve written about L’Oreal’s particularly forward-looking management recently, and the benefits it’s bringing the company regarding a host of Millennial-centric concerns like environmentalism, diversity, and digital presence. Now, we’d like to focus on the last of those – because when it comes to getting younger consumers interested in luxury products, L’Oreal is currently a great example of how to do it right!
An example of L’Oreal’s innovative approach to digital:
L’Oreal is using social media to engage with customers on a scale never before seen in a luxury company. Arguably, this has been waiting to happen – where better for a cosmetics company to capture attention than social media platforms, the creation of which gave us the first ‘selfies’? But regardless how inevitable it is, L’Oreal got there first – and that matters!
The company is creating tons of original content for Facebook and Instagram; exploring Snapchat (for its Maybelline brand) and WeChat (for its Chinese customers); partnering with beauty and fashion bloggers and vloggers; investing in interesting digital startups; and developing its own apps and other digital properties. It is, in other words, a digital standout in the market.
L’Oreal’s consolidated sales between 2009 and 2015
This is the result of a concerted effort to prioritise its online presence – in 2013, the company set aside 15% of its marketing budget for digital channels. In 2016, this had doubled to 30%. It will probably be higher in 2017, because the importance of digital channels will only increase as younger customers continue to attain purchasing power.
The question investors should be asking is: when will the competition catch up?
Dominion holds L’Oreal in its Global Trends Luxury Fund.
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