About 75% of Estée Lauder’s investment in advertising are in social media influencers and it is proving to be “highly productive”, according to president and CEO Fabrizio Freda in the company’s fourth quarter earnings call. The productivity is due to the company’s “excellence” in targeted advertising, focusing its investment on where there is growth.
According to a press release, the company’s Leading Beauty Forward initiative and ongoing cost-savings initiatives have contributed more than US$380 million in savings. The savings are channelled into “advertising and other brand building areas”, including influencer outreach.
Growth areas include its “pretail” business, where passengers can order products online and pick them up at the airport upon their departures or return. Pretail is centered in Asia for now, but is expected to grow worldwide, said Freda. In terms of channels,
Estée Lauder’s online sales grew at least double digit in every one of the approximately 50 markets it is in.
Brand sites, retailers’ sites and third-party sites all grew double digits, coming on the back of the company’s efforts to increase its brand presence on select third-party malls and sites. In the earnings call, Freda described brand sites as “valuable media properties”.
He explained: “They collectively attracted this year more than 400 million visits, allowing our brands to engage with consumers to rich storytelling, elevated assets and high-touch experiences. This builds equity and loyalty, which creates value that extends to sales in other channels.”
Data-driven marketing can help to make these sites even more compelling, as the company tailors its messages to different consumers, he added.
The brand sites, third-party platforms and freestanding stores in brick-and-mortar combined had approximately 1.3 billion visits last year.
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Additionally, Estée Lauder has been focusing its advertising spending on digital marketing and social media to “strengthen brand equity, drive repeat purchase, and generate trial”. While its investment in advertising has increased, Freda said the company has made a conscious decision to keep its our promotion flat, delivering 90 basis points of full-year operating margin improvements to 17.5%.
Overall, Estée Lauder’s net sales for the fourth quarter rose 12% with strong growth in its international regions and growth across all product categories. The Asia-Pacific region continued its strong net sales growth this quarter, up 23% with all product categories rising double digits. Nearly all markets grew and more than half of the markets grew double digit.
Skincare led product category growth this quarter. Net sales grew 19% with continued strong increases from the Estee Lauder and La Mer brands globally. “Our direct-to-consumer business accelerated. Sales from new product innovation, reached an all-time high, and our digital marketing and social media activations were highly effective,” said Freda.
Meanwhile, net sales in makeup grew 8%, led by strong demand in Asia and travel retail. Fragrance and hair care grew marginally by 3% and 1% respectively.