Zenith Forecasts Recovery Of Cosmetics And Fragrance Advertising Through To 2022

Growth in beauty and personal luxury advertising will remain below market average in 2021 and 2022, according to a new report from Publicis Media’s Zenith.

Decreased consumer demand for cosmetics and fragrances will restrain the recovery in beauty and personal luxury advertising to 1.7 per cent in 2021, according to Zenith’s ‘Business Intelligence – Beauty and Personal Luxury’ report, published today.

This is below the 4.4 per cent growth rate for total ad-spend in the 11 key markets included in the report: Australia, Canada, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK, and the US, which account for 59 per cent of total global ad-spend.

Beauty and personal luxury is defined as the combination of four sub-categories: cosmetics, fragrances, hair care and skin care.

According to Zenith, beauty ad-spend will total US$7.5bn across these markets in 2021, and then rise to US$7.7bn in 2022, growing by 2.6 per cent, compared to 4.5 per cent for the market.

You can hear from Zenith Australia’s head of strategic insights, Kim Xavier, on some of the main insights from the report, below.

Beauty and personal luxury ad-spend fell roughly in line with the market in 2020. The sharp drop in spending on cosmetics and fragrances as people stopped meeting in person, due to social distancing restrictions, was mitigated by continued demand for both hair and skin care.

With hairdressers and salons harder to reach, consumers took hair care into their own hands at home. Skin care, meanwhile, benefited from the heightened desire for health-enhancing products during the pandemic.

During the recovery, though, overall demand for beauty will not change much as consumers remain reluctant to return to their pre-pandemic habits, reducing sales of cosmetics and fragrances.

Most beauty and personal luxury brands will not raise budgets substantially, Zenith noted, and will be more likely to redeploy spending from underperforming channels instead.

Ecommerce helps digital compensate for declining reach of magazines and TV

According to Zenith, beauty and personal luxury brands spend much more of their budgets on magazines and TV than the average brand.

The beauty category (defined as the combination of four sub-categories: cosmetics, fragrances, hair care and skin care) thrives on its ability to create emotional connections through imagery in a “high-quality environment”.

Zenith estimates that in 2020 beauty brands spent 18.3 per cent of their budgets on magazines advertising (4.3 times more than the average brand) and 42.2 per cent on television (1.6 times more than average). But while the effective reach of traditional media declines, consumers are turning to digital and social platforms in increasing numbers.

Globally, beauty and personal luxury brands have been slow to adopt digital advertising, spending 34.1 per cent of their budgets digitally in 2020, compared to 53.1 per cent for the market as a whole.

This, Zenith notes, is a result of the “historic lack of premium digital environments that support the high-quality brand imagery that beauty and personal luxury brands need to convey”.

It is also due to the difficulty the beauty industry has had adapting to ecommerce because consumers feel the need to sample and try on beauty products in person before committing to a specific product.

According to Euromonitor International, 11.8 per cent of beauty and personal luxury sales were through ecommerce in 2019, compared to 13.2 per cent for the market as a whole.

However, technologies like video-on-demand and connected TV, and social platforms like Instagram and TikTok, are creating new premium environments that showcase beauty and personal luxury brands effectively.

Brands have also greatly stepped-up investment in their ecommerce offerings since the start of the pandemic as a matter of necessity, Zenith reports, as bricks-and-mortar retail sales shrank. According to Zenith, digital channels are, therefore, becoming more valuable for both brand and performance advertising.

In Australia, as more and more interactions moved online in 2020, Zenith saw the use of cosmetics decline, with 52 per cent using cosmetics less than before the pandemic began, according to results from a ZenPoll conducted last week.

And while skin care remains of high importance, half of Australians have simplified their skin care routine and are investing more in their own self-care.

Zenith Australia’s head of strategic insights, Kim Xavier, said: “Although many people had to resort to purchasing cosmetics and skin care products online through lockdown periods, the in-store experience of purchasing these products is still very important.

“While 55 per cent are more likely to research beauty products online, only one in three are purchasing more of their beauty products online.

“This signals an opportunity for beauty brands to continue not just to accelerate their ecommerce strategies, but actually have a dual strategy focused on in-store engagement, while also driving greater innovation in online experiences through new technologies.”

Zenith estimates that the global beauty category increased its spending on digital advertising 2.8 per cent in 2020, despite the pandemic.

This was twice the 1.4 per cent growth rate of digital advertising across all categories, as beauty and personal luxury brands began to compensate for previous underinvestment.

Zenith forecasts average growth of 5.9 per cent a year in digital advertising between 2019 and 2022.

Beauty and personal luxury ad-spend on all other media will decline over this period, by between 1.2 per cent a year for TV and 12.4 per cent a year for magazines.

France and India to lead beauty and personal luxury ad-spend

Additionally, France is expected to be the best-performing beauty ad market over the next two years, growing by 13.3 per cent per year, on average. According to Zenith, this is a reaction to the depth of its decline in 2020, when beauty brands cut budgets by 32.9 per cent whole.

The market will start to recover quickly from this reduced base in 2021, but is still expected to be 13.8 per cent lower in 2022 than it was in 2019, Zenith noted, when compared to the 3.6 per cent average drop across all eleven markets over this period.

On the flipside, India is forecast to grow because of strong consumer demand, Zenith said. Beauty ad-spend was stable in India in 2020, and is forecast to grow at an average of 7.6 per cent a year as more consumers take up the habit of regularly buying beauty products.

Beauty and personal luxury ad-spend in India is forecast to be 15.2 per cent higher in 2022 than it was in 2019, Zenith said.

Across North America and the rest of Western Europe, demand will recover more slowly, leading to annual growth in beauty ad-spend of 1 to 2 per cent per year in Canada, Germany, Italy, Spain, the UK and the US.

“Growth in beauty and personal luxury advertising will lag behind the market while consumers remain cautious about travelling in public and meeting in person,” Zenith head of forecasting Jonathan Barnard said.

“But by investing in digital technology that embeds ecommerce into the heart of their operations, brands will prime themselves for more rapid growth when demand picks up.”