Tuesday evening kicked off FIT’s first event of 2013 from the Cosmetic and Fragrance Marketing and Management Master’s in Professional Studies Alumni Association titled: Brands As Media Companies. Presented by L2 Digital Think Tank’s Scott Galloway and Maureen Mullen, the event was held at the House of Bumble, and sponsored by The Estée Lauder Cos., and shared with dozens of brand employees (from Estée Lauder, Procter & Gamble and Unilever, to name a few) insights on today’s digital realm. Here, some of the most exciting data. (Photo Caption, from left: Frank Fronzo, The Estée Lauder Companies; Teril Turner, Bergdorf Goodman; Scott Galloway, Founder, L2 Digital Think Tank; Maureen Mullen, Research and Advisory Lead, L2 Digital Think Tank; Peter Lichtenthal, Global President Bumble and bumble and Smashbox; Carly Guerra, The Estée Lauder Companies; Alex Fritsch Gil, The Estée Lauder Companies; Mark Polson, Vice President Creativity and Innovation, The Estée Lauder Companies.)
How Non-Ecommerce Behavior Affects You
The number of people who skip test-driving a car at the dealership has doubled since 2007 because purchases no longer happen at the dealership. Consumers effectively purchase them online, not literally, but go to sites, check brands, see user-generated comments, research blogs and ultimately find out what the dealership paid for the car. Then consumers go into the dealership and tell them what they want. Dealerships are warehouses for cars.
Rethink Retail Partnerships
Macy’s, Nordstrom and Sephora, in L2’s view, are potentially playing a less important role moving forward as it relates to brands and their manufacturers who do the best job of garnering influence and getting people to decide what they want before they walk into the store. Estée Lauder said they registered a greater conversion to purchase when people began interacting with an iPad at the Macy’s counter than with a sales associate. One of the biggest issues facing beauty brands over the next few years: Have they unwittingly entered into a suicide pact with retailers in structural decline. Have you attached your cart to an increasingly lame horse?
– Talking about digital is the equivalent of skinny jeans: it makes you look younger.
– The way CEO’s talk about digital you’d think they were spending 2/3 of their budget on digital, but they’re not, it’s more like 6-, 8-, 12 percent.
– The majority of young wealthy people (under 30 earning $50,000) consume more than 50 percent of content through digital, either the phone, iPad or PC.
People are obsessed with China right now, but L2 believes in terms of short-term investment that the best ROI in e-commerce is in Europe. The best thing about recessions? They always end. And when consumers come out of a recession they spend differently. They reshape the way they spend. When 2/3 of your competition isn’t even selling online in an economy that is bigger than the U.S. L2 thinks that is a big opportunity. Go to the asset class that is underinvested and that’s where you’ll get you highest return on investment.
Brands are Bifurcating into one of two stories:
A company that made early speculative investments in online put smart and talented people in charge of digital. It’s always scary when you walk into a room and the youngest person is in charge of digital. Take Coach. They took the head of North American Retail, who was running a multi-billion dollar business, and put that person in charge of digital. That sends a signal to the organization that that guy can get things done. He doesn’t need an approval process, he doesn’t need to check with legal or live in fear that someone will say to him that he’s doing something online that’s “off brand.” The great prestige brands are hiring people out of the best companies. They finally gave up on the archaic notion that you have to be from luxury to get it.
The other type of brand, L2 said, is the one who knew they needed to so something in digital. The people they hired are O.K., they spend a lot of money, but didn’t get much return. They start feeling burned. They say they want to see the return and then they’ll spend. It’s a downward spiral.
Social Platforms Gaining, Declining in Importance
Facebook is still a place you need to be but the percentage of traffic it is sourcing to your site has decreased, from 89 percent to now 71 percent. Facebook will not revolutionize business. It’s probably going to be a very important part of your marketing budget, but it will not change or reshape business. YouTube has doubled in terms of traffic to your sites. Video is an important word. If you can get someone to watch a 2-minute video on your product, 40 percent of those people end up in a store looking for your products. That’s what you call rich traffic. Twitter has fallen off the map in terms of relevance in beauty as an upstream source of traffic. Pinterest is the “It” girl, and Vine and Instagram are growing. These applications bring the aspirational value of user generated content in line with where a lot of brands feel they need to be in terms of the content they associate their brands with.