Growth in global beauty ad spend will rise from -1.2 per cent in 2018 to 2.7 per cent this year, and will reach 4.7 per cent in 2021, according to Zenith’s Beauty Advertising Expenditure Forecast.
This acceleration of growth will be spurred by the global expansion of e-commerce advertising and the improved supply of premium digital environments.
Beauty ad spend will total US$14.4bn this year, and reach US$15.8bn in 2021.
Beauty ad spend has struggled in recent years as magazines and television – traditionally favoured by brands for their ability to evoke emotional connections with consumers through bold imagery and high production quality – have lost audiences to the internet.
While these channels are still valuable, circulations have declined for many years and ratings are now falling in key markets.
Magazines commanded 21 per cent of beauty ad spend in 2014, but fell to 13 per cent in 2018, though that’s still high compared to their 4 per cent share across all categories.
By 2021, magazines will account for 8 per cent of beauty ad spend versus 3 per cent for the market as a whole. Television’s share of beauty ad spend dipped below 50 per cent for the first time in 2016, and fell to 40 per cent in 2018, while accounting for 31 per cent of ad spend across all categories.
It’s forecast to fall to 35 per cent by 2021, compared to 27 per cent for all categories.
The beauty market is becoming more fragmented, and brand loyalty is harder to maintain as the number of brands grows.
Incumbent brands are facing competition from new competitors: direct-to-consumer (D2C) brands, eco-brands and retailer-owned brands.
Many of these new brands, particularly D2C, have sought growth through targeted promotions, without investing in the mass-reach brand building that typically drives beauty ad spend growth.
This combination of shrinking audiences and new competition from new brands that don’t try to build mass reach has led to sustained weakness in the beauty ad market.
Overall, beauty ad spend only grew once between 2014 and 2018, and that was by just 0.9 per cent, in 2016. Beauty ad spend fell by 1.2 per cent in both 2017 and 2018.
This situation is beginning to change as digital platforms, like Instagram, increase the supply of high-quality environments, connect brands with image-conscious consumers in places where they search for inspiration, and attract more of these brands’ budgets.
Meanwhile, D2C brands are finding that there’s a limit to the market share they can win without creating mass awareness, and many are beginning to invest in traditional brand-building campaigns.
E-commerce sales are rising rapidly; beauty brands are increasingly forming partnerships with retail platforms as retailer media becomes more available or creating their own D2C platforms.
These are not complementary investments: spending on retailer media can cannibalise D2C sales, and vice versa. Brands need to choose which of these two routes to e-commerce they embrace.
This growth in online brand-building and e-commerce advertising is stimulating rapid growth in beauty brands’ internet advertising, and growth in beauty ad spend overall.
In 2018 internet advertising overtook television to become the largest advertising medium for the beauty category, and sustained double-digit growth is expected through 2021, when it will account for 50 per cent of all beauty ad spend.
Despite the rise of e-commerce, the majority of beauty purchases are still made in bricks-and-mortar stores. While consumers may browse online, most want to experience a product before buying it.
Zenith’s global brand president, Matt James said: “Brands need to work with retailers to create more in-store experience opportunities, and use new technology like Augmented Reality to create digital brand experiences that allow consumers to try before they buy online.
“By tying together their e-commerce and in-store experiences, beauty brands can lead consumers down the path to purchase more effectively.”
Zenith Australia CEO, Nickie Scriven commented: “As is the case across a number of markets, in Australia Gen Z’s propensity for mobile research will be mirrored by a marked acceleration in mobile search revenues as beauty advertisers attempt to intercept consumers during the process of selection.
“So while online advertising as a whole is likely to grow 11 per cent in 2021, search revenues will increase by 18 per cent.”
Consumers expect brands to have ethical supply chains and sustainable products, and will call out those that don’t on social media.
Demand for plant-based products and eco-friendly packaging is rising rapidly – sales of vegan beauty products rose 38 per cent in the UK last year – and is expected to continue.
Zenith global head of clients, Tamina Plum said: “People are much more conscious about understanding where the products they use come from and how they are tested.
“Brands that commit to meeting their customers’ expectations will be able to win their loyalty.”
Zenith head of forecasting, Jonathan Barnard said: “Brands in the beauty category are continuing to move their budgets to internet advertising to take advantage of its dual combination of effective brand building and a direct channel to sales.
“Nevertheless, television and magazines will remain important to beauty brands and attract a considerably higher share of beauty adspend than across the market as a whole.”
China leads by total spend, while India leads growth
China is the leading market for beauty ad spend, with an estimated US$6.2bn in 2019.
This is unusual; for the ad market as a whole, and within the automotive and healthcare categories Zenith examined earlier this year, China is second behind the US.
Beauty retail sales grew faster than any other large category last year due to heavy demand and rising interest in the male beauty sub-category.
Early adoption of e-commerce advertising is the main driver of China’s strong beauty performance.
It’s grown for more than a decade and continued investment is expected to boost beauty ad spend to US$6.9bn by 2021.
Chinese tourists also help shape beauty ad markets in other countries by attracting targeted advertising in airports, shopping centres and other high-traffic areas.
The US is the second-largest market, spending US$2.6bn on beauty advertising in 2019.
US beauty advertising is still focused on television and magazines, where 40 per cent and 37 per cent of budgets will be spent this year respectively, while 23 per cent will be spent on internet advertising. Beauty brands are only just beginning to unlock the value of e-commerce advertising, and there is huge potential for growth over the next few years, allowing the US to narrow the gap with China.
India is the fastest-growing market for beauty ad spend, and is the only market that hasn’t suffered at least one year of decline since 2014.
Zenith forecasts 19 per cent average annual growth to 2021.
India has the least mature market – accounting for 0.3 per cent of GDP, less than half the global average of 0.7 per cent – and is therefore developing quicker, lifting beauty ad spend rapidly along with other categories.
Among all the markets growing in the survey, India is also the fastest growing for advertising as a whole.