Overview of Paid Digital Media for the US Beauty Market
Digital Media Channels Webinar Overview:
On June 24, 2019, we presented a webinar covering the basics of the paid digital media landscape in the US and how companies, even those with small- to medium-sized budgets, can take the first step in what can be an overwhelming prospect for a newcomer to digital advertising. The recorded webinar and a transcript follow below.
Digital Media Channels Webinar Video:
Digital Media Channels Webinar Transcript:
Jenna: Hello, everyone, and welcome to the Beauty Made in Italy webinar series. Today’s webinar topic is “Media Channels in U.S. Beauty Market,” and will be hosted by and Angela Cason of Tempo Strategic, a media agency with years of experience working on many different media channels. As always, there will be Q&A at the end of the session. Please feel free to use the chat function to ask any questions that you may have. We’ll be recording the session and sending out along with Angela’s contact information later today. Thank you all for joining, and now I’ll hand it off to Angela. Enjoy, everyone.
Angela: Thank you. Thank you to Meredith and Jenna for this opportunity. And good morning, everyone. Tempo was founded in 2010 to help our clients to accelerate their advertising results using the latest digital technology. The past year, we’ve had the pleasure of helping launch the Beauty Made in Italy campaign. And we were very proud to learn that the campaign was recognized with an award for best practices by the Italian Trade Commission.
I am Angela Cason, founder and co-owner of Tempo. I developed and launched dozens of products for prestige and masstige beauty brands in my career, and made the transition into digital advertising, learning what works by helping our clients grow. Today, we’ll share what we’ve learned through real world experience. My partner is Jay Lundeen, an Analytics Specialist. He is Blueprint Certified, which means he has the highest training in social media planning and buying.
Some of the brands we work with over the past 30 years include Estée Lauder, Erno Laszlo, Penhaligon’s, and Brut. We work with institutions including Yale University, the Clinton White House Office of National Drug Control Policy, and the Fulbright Alumni Association. And we’ve introduced specialty food brands including Monini Extra Virgin Olive Oil, and Arla Foods of Denmark to the American market.
Since we started Tempo in 2010, the landscape of advertising technology has grown in sophistication and complexity. In 2011, brands had about 150 choices for ad platforms, data and analytics, website development, and customer service. Now just 9 years later, there are over 7,000 companies ready to help marketers and there are techniques that didn’t exist before, from live chat, to compliance, to tag management.
The average marketer uses 91 of these, but don’t worry, we’re only going to talk about a few today. As you see we’ve grown and learned as the marketing options have expanded and have seen what works for our clients, so we’re going to show you our proven vendors. It’s our mission to help our clients transition into digital advertising with confidence. So, please feel free to ask questions or if you need help in getting started, we would be happy to talk with you about your business.
Let’s start with the big picture. Why do you need digital advertising to compete in the United States? One reason is share of voice. Here is the challenge. The United States has a population of 327 million people. In Italy you have a population of 60.5 million people, which is about one-fifth the size of the U.S. The U.S. advertising market spends $285 billion on media each year, while in Italy your ad market is 9.6 billion, only 3% of America’s. Simply put, you’re much less exposed to advertising than we are here in America. In fact, according to Forbes, the average American sees 4,000 to 10,000 ads per day. That’s a lot of share voice to compete against.
Another difficulty is that beauty, in particular, is a highly competitive sector. Advertising spending in the U.S. just for health and beauty in 2007 was 9.55 billion, and remember, we just said that the entirety of the Italian advertising market is 9.6 billion.
But as you see by this graph, overall spending on advertising in the health and beauty sector is coming down. Why is that? Because digital advertising is less expensive on a cost per thousand CPM, cost per mille, basis. Television is an average CPM of $17.25. And as you see Facebook is an average CPM of $1.81. Please note that these are quotes for comparison, they’re broad examples across many sectors, they’re not meant to be accurate for any particular advertiser.
The world’s biggest beauty advertiser, L’Oréal, has adopted a digital first strategy, as had many major beauty brands. Their total U.S. ad budget is $2.2 billion. Their digital ad budget is 38% of that, $836 million. They’ve launched the beauty tech lab with over 2,000 digital employees, and acquired companies such as Modiface, which allows them to lead in areas like augmented reality that allow customers to try before they buy.
On the advertising front, they measure ad effectiveness across all digital media in real time. But don’t panic or be intimidated, L’Oreal’s budget is not typical. As you see here, only 6.2% of health and beauty brands spend more than $5 million on their advertising. This includes top advertisers like L’Oreal, Coty, and Chanel. But as you see, the overwhelming majority, 78.5% spend less than $500,000 in media in the U.S.
Before we go further, we need to be sure we’re clear on a very important distinction. Everyone gets confused, because social media such as Facebook and Instagram are two things. They have content and they have paid media. Think of social content as editorial. Like a magazine, Facebook and Instagram posts are created and owned by your brand, and you are the publisher. You’re reaching people who are already following you.
Paid digital media, on the other side, appears on the same platforms, but can reach an audience far beyond your social media followers. We will be discussing paid digital media.
There are three types of paid digital advertising: display, paid social, and search. Display ads appear on websites all over the internet. Social media ads appear on social feeds and their ad networks. Search ads appear on search engine results pages on Google, Bing, and other search engines.
In the U.S. 44% of digital advertising spending is on search ads, 36% is for display ads, and 17% of spending is on social media such as Facebook.
This is how advertising revenue breaks down for the major players in the digital advertising space. From left to right, they are Google, which owns YouTube, next to it, Facebook and Instagram, which it owns, Bing, which is Microsoft’s search engine, Amazon, Snapchat, Twitter, LinkedIn, Pinterest, and Yelp. Google and Bing are search engines while the others are social media platforms.
By the way, Amazon has just announced the acquisition of an advertising platform that will dramatically change their advertising revenue in the next few years.
Now, let’s look at four key advantages digital media have over traditional media. The first is targeting. You can target people by many different interests and affiliations. The second is measured results. You know exactly how many times your ad was shown, and to whom. Third is flexibility. You can shift creative or budget quickly and easily. And fourth is feedback from the audience in likes, comments, or click-throughs. Got it? Digital advertising offers targeting, measuring, flexibility, and feedback.
Now let’s dive a little deeper. Each of these three types of media, display, paid social, and search differs in how they are targeted, purchased, and measured. We will go through them in turn. Let’s start with display advertising, sometimes called banner ads. Display ads can be targeted by demographics, the site content, high-affinity categories such as fashion or nature sites. We can target geographics down to the level of the ZIP code of the stores where your product is in stock, or we can base the ad placement on the user, depending on what their browsing history looks like. That’s what the algorithms do.
How are display ads purchased? Through real-time bidding on programmatic platforms. Here’s a simplified version of how it works. On the left, you see a publisher, like our vogue.com example. Vogue.com has lots of digital advertising space to sell. So they use something called a supply-side platform, or SSP, and they put their ads up for auction.
Meanwhile, on the right, advertisers such as Olay want to place an ad on vogue.com. So they put their ads into a demand-side platform, or DSP. The SSP and the DSP communicate with one another and come to an agreement on the price for the ad in that space. If they agree, the DSP sends the ad that Olay prepared ahead of time, which is then put in the space on vogue.com. And all of this happens instantly in real time.
Now here’s a bit of digital magic:
Once the user interacts with a website, the advertiser can re-target them. Here’s how: I started at vogue.com, where an Olay banner popped up. The banner was originally targeted by affinity to the website, vogue.com, because fashion and beauty go together, they have an affinity. But once I interacted with the ad, it identified my computer. Next, I went to thenewyorktimes.com. And after that, I went to foodnetwork.com. Neither of these two sites had anything to do with beauty or each other, but both are on my computer, so the Olay ad was served to me, the user. Now the ad is following me, because I showed interest in it the first time I saw it. It will continue to follow me for as many times as the advertising manager has set it to repeat. This is how an advertiser uses banners to build awareness over time. Got it?
Now, let’s talk about paid social advertising. Social platforms know what their members are interested in. Facebook, Instagram, YouTube, LinkedIn, Quora, Snapchat, Pinterest, and others have a broad swath of information about their user bases.
Some of this information we give them when we sign up, and some they glean from the content we respond to, and the interest groups we follow. Facebook knows who we know and who we like. LinkedIn knows about our work interests and so on. And advertisers use this data to create highly targeted audiences by their interests.
We also build audiences using Facebook’s Lookalike option. We start with the client’s email list, because those are often the best, most loyal customers, right? It’s not as common in Europe as in America, but if someone in America likes your company, they will often sign up with your email, often in exchange for a discount offer. We import the emails of the clients we know into Facebook to see if those people are also Facebook members. If they are, we can market to them. And we can also find new customers we don’t know and do not have the email of, but who share similar interests and characteristics with our email customers. Facebook calls this a Lookalike audience. I believe you would say, “Come due gocce d’acqua.”
Facebook has different advertising types. They are all purchased on Facebook’s proprietary platform. We can run single ads with many variations of headline and visual, we can run carousel ads, particularly useful if there are several related products or subjects, and that allows us to tell a multi-part story. Video ads are increasingly popular. And we can also insert lead forms, again, to gather those important emails that allow us to market to people. We usually mix several types to test the best response. For example, we would show a video, and then retarget anyone who watched at least 10 seconds of it with a single image ad to follow up.
The third type of digital advertising is search advertising, which is also called AdWords or Pay-Per-Click. It works differently from display and social. We can still target campaigns geographically and use algorithms, but instead of looking for customers, we are trying to be found by them. A user will type in a search word or phrase, this is called a query. And Google delivers what is called a search engine results page, or SERP.
At the top, you may see paid shopper ads. These are for products that are offered online, and if you click on any of those ads, you’ll go through to the website in order to purchase. Below those ads are the organic results. These appear based on the content on their websites. These placements are earned through search engine optimization, which is a very good topic but a deep topic for another time. And at the bottom, you see ads. How did these ads appear?
Google offers ad space for a query, and advertisers offer to pay Google if their ad appears on that page. And if a user clicks on the ad, this is called a cost per click. Google calculates the offered price from the advertiser as well as the quality of the website that will be clicked to, called the quality score. If they come to an agreement, the ad is placed. If the user clicks on the ad, the advertiser pays Google the agreed upon price. But if no one clicks on the ad, the advertiser doesn’t pay, got it?
To recap, we target display and social media in similar ways through information about the site or the user. For search, we are found when our ad matches the search query. Now, how can we know how well our campaigns perform? In the digital world, we can measure it. What you measure depends on your goals. If you want awareness, impressions may be the most important result. Social response is a measure of engagement. Clickthrough is a response that indicates a stronger commitment. They’re interested enough to click through for more information. Or goal completion such as making a sale or capturing email may be your most important measurement.
We determine the desired outcome at the beginning of a campaign and maximize for that outcome as we manage the various bidding processes we’ve just shown you. Here, for example, is the dashboard for the metrics for the Italian beauty Facebook campaign.
The goal for this was awareness. As you see, we generated almost 12 million impressions for the Beauty Made in Italy campaign at an average cost of $4.03 per 1,000 impressions.
Remember, when we said before that the $1.81 was not typical, this is an example of this. This is a beauty audience which is more expensive to reach. So we had 12 million impressions, 14,659 clicked on the link, which is a 12% click-through rate. The cost to us for that was $3.29 for each click that went through. The cost per 1,000 impressions was $4.03. Our total budget was $48,241.95. We reached 3,441,116 users with a frequency of 3.48 times per. And we had 2,166 reactions to our advertising posts, 15 of which were actual comments. As you can see, this $4.03 cost per 1,000 is much lower than the CPM of an average television commercial, and we know exactly how many people saw it.
Keep in mind that the metrics you measure should align with your business goals. If you want awareness, then your key performance metric is impressions. If you want engagement, you’re asking for social response. If you want engagement and response, your goal is click through. And if you want response or sale, your most important metric is goal completion. So, we’ve seen how the three types of digital media are targeted, purchased, and measured. But how do you integrate digital into other marketing efforts? How do you start? Here’s a case study of how we use digital to extend the budget of a campaign and increase our share of voice.
We want to show you a real-world result based on a budget under $500,000. We’re sharing an example for a cheese client of ours, Arla Dofino, not a beauty product. We apologize that we don’t have a beauty example that integrates this way, but we wanted to match a typical budget for you, and the consumer passions are similar. We wanted to show you how we maximize the budget using digital advertising. So, traditional media for television, social engagement, included blogs and posts, and sweepstakes online, as well as tastings, actual live events. And our digital media tools were search, display, and audio. We’ll show you how we made it work.
Arla Foods is a Danish dairy giant that asked us to launch their Havarti cheese, Dofino, in the United States. The budget was less than $400,000, so how could we make that work? First, we recommended and chose one market to focus on, San Francisco. This is a top 10 city in California with a population around 800,000 people. We targeted women, 35 to 65, which is about 20% of the population. This condensed our budget into something where we could get a real result for the money that we spent. San Francisco is a big food market with great restaurants, star chefs, great summer events where we could do product sampling, and, of course, a technologically savvy population, this is where Silicon Valley is.
To boost awareness, we engaged the top chef and San Francisco influencer, Elizabeth Falkner, to create a simple recipe on a lifestyle television show. It was then edited into a 30-second spot, which ran on television. We sampled at events, reaching 300,000 people and also supported the brand with in-store promotions, online video for YouTube, and used our recipes for Facebook and Pinterest.
Remember, when we talked about the flexibility of digital media, here are some ways we use that to our advantage. We boosted local search with local content and overall search based on high ranking keywords such as recipes for macaroni and cheese. We geotargeted a banner campaign within a five-mile radius of Safeway stores where we knew the product was distributed, and then we adapted the creative to fit our promotions such as this one, “Find Dofino Havarti slices at your local Safeway.”
We also ran a series of banners and radio campaigns using the flexibility of digital radio. They were timed to our in-store, our television, and even our online promotions. The campaign won three international awards for marketing effectiveness. Our Facebook engagement increased 214%. We created an email list of over 12,000 names, with a 26% open rate, meaning the average number of times each email was opened, and branded search for the word Dofino increased 247%. This is an indication of awareness, because people needed to have heard the name Dofino to search for it, so they actually typed the name “Dofino” into their search bar, and that’s what that 247% increase means.
In total, we generated over 28 million impressions. With our target of women 35 to 64, we delivered a brand message an average of 28.2 times, and Google Analytics showed that 90% of our traffic from California was directly related to our campaign. I’m gonna hold this up here, so you can see the relative impact of different media in terms of audience size. So digital banner, the least expensive here, was 21 million, TV reached 4 million, digital radio reached 2.5 million, events reached about 300,000, and we also ran Taxi TV, reaching at about 164,000.
Most important was that regional sales rose 54%, and nationally, we saw a 10% increase in sales. So this gave us a separate case study, because we were running the digital media and the website was national, we also got a little bit of a boost nationally just doing that, but the other activity in San Francisco boosted it 54%.
We work with our clients to accelerate their results and give them real-world results that they can take back to their CEOs.
And we’re happy to be able to answer any questions at this time that you may have. Jenna, would you like to let us know what people need?
Jenna: Yes, that was great. Thank you so much. So we have some questions here. The first one is, what is your suggested media channels to advertise on for new and up and coming brands?
Angela: Well. It’s a little obvious, but one of our favorites is Facebook. It’s still one of the most trusted media for people, it’s very personable. And it’s got a lot of data that allows us to create affinities and find people. So we think Facebook is really a good place to start if you need engagement and you do wanna build an audience, if you can only do one.
Jenna: Yeah. That touches on our next question, which was, what social platform have you found to be the most successful for advertising? Would you still say Facebook or one of the other ones that you mentioned?
Angela: Instagram is great for that as well. And depending on the age that you’re going after, especially with young people, Facebook and Instagram are… Facebook owns Instagram, and they’re on the same platform. So very often when we do a Facebook campaign, we also take part of that budget and just automatically put it into Instagram. And Jay, do we have data and Facebook versus Instagram? I think we’ve run them kind of together. So depending on that… Instagram, however, is a content monster, so you really need to refresh and think about your creative as you go into it.
Jenna: Yeah, of course. Okay, so the next question is, what are some ways to keep your cost per click or your CPM a little bit lower?
Angela: Oh, Jay, you’re gonna have to come answer that one.
Jay: Can you hear me?
Angela: Yeah, go ahead.
Jay: So the biggest way to keep your cost low, I mean, first of all, depends on what your targeting is on Facebook, Instagram, anywhere. So different audiences that you target are gonna have really different cost per clicks, depending…going forward, depending what the category is. So that’s the main thing. And then second to that, it’s about what you’re bidding. So you can be somewhat aggressive with your bids on these platforms and just try and go low, and that might limit your reach a bit. Because other advertisers are gonna get priority if they’re bidding higher than you. But if you keep the bid low, that’s another way.
Jenna: Perfect, thank you. Okay, so the next question is, how important is the creative on digital marketing? Because I know that some of the ad platforms allow for only similar ads, so how important is that creative?
Angela: Hang on one second. Jay, do you wanna say something about that?
Jay: Yeah. So I think creative is always important, but on digital media, Facebook, anything, what we like to do is test a bunch of different options for creative and see what works best. So, really, the most important thing is trying a lot of different things. And that’s the flexibility that you get with digital media, is that you can put a lot out there at first and kind of test that way to figure out what works best for you. But obviously you wanna have beautiful creative, but you just need to try a bunch of different things at first to see what works well.
Angela: The other thing about creative on these platforms is that it’s a little more subtle a message than traditional advertising platforms, which are very commercial and very buy-oriented. So here, you may have a brand message that is about how to apply your product rather than “buy my product.” You wanna think about the user experience and what will make that user stop and look and spend a little time with you and trust and like you as a brand. So it’s much less about pushing out a message saying, “I’m great, buy me, I’m wonderful. This is the best.” And much more about, “Let me share my expertise with you. Let me tell you why this is so wonderful.”
So this is especially a category where users want information, they wanna trust the company, they wanna know a lot about the products. And you want to engage their curiosity and their creativity, and then engage them with your product along that way. So, it’s a slightly different creative message and way of thinking. It’s very user-oriented.
Jenna: Perfect, thank you. The next question is, how can brands make their ads stand out in a crowded space since there’s so much advertising with beauty going on as well?
Angela: There are sort of two battles, one, of course, is the creative and the other is the bidding. So if you wanna outbid competitors, that’s one where you could just show up more often, you can outspend them, but that’s what L’Oréal and a lot of those people do. Again, I mean, one of the things that Italy does best is sophisticated, beautiful photography. So stunning photography is a basic need now. The other thing is again, as we were saying, look to inform and engage the consumer, and find a way to make them wanna learn more about you rather than just saying, “Come, buy my product.”
Angela: Do you want an example on that or…?
Jenna: If you have an example off the top of your head, that would be great.
Angela: Well, this is from what we did with Dofino. But one of the things that we did rather than just talk about the cheese was we problem solved for mothers. And our goal in this was to replace the kind of everyday cheese that they would normally buy for their family with Havarti. So we talked about recipes that made dinner fast and easy. We talked about how much children liked it, because it had a mild flavor. We talked about its superior melting qualities, but we also gave people what they wanted, which were quick, easy recipes, fast solutions. And we became a partner with a mom in what she had to create over time.
So if there were certain things like, “back to school” is a very big busy time for parents, and we did a special back to school focus when that was coming on in September, from how do you do a quick dinner for the family, so we looked at problem solution for them. And that’s, again, a way that you look at, what is the user going through in their daily life, and what solutions do they not have?
Jenna: Yeah that’s perfect. So we have just a couple more questions. Next one is, what is the best strategy for digital marketing if a brand doesn’t have an ecommerce platform or they do not sell online?
Angela: So some of our clients don’t. And one of the things that we would say to people is, again, I don’t know how familiar it is in Italy, I know in England, they really hate email, so I don’t know if it’s also kind of not loved in Italy. But in America, one of the things is consumer engagement and trying to capture your email from your clients. You can inform people, you can put things on your website that are intriguing and attractive to people, and also put that out in the digital ad space on YouTube, etc., if you have beautiful videos.
It is harder to measure whether or not you’re driving them to a retail location. So that’s the only real gap there, is that digital measurement is hard to do. Yeah, you could offer coupons or you can do a promotion with the stores that have you. Very often the stores will host that for you, and they’re pretty aggressive about those budgets in doing that. Does that help? Anything else I need to add to that, Jenna?
Jenna: No. I think that was super helpful.
Angela: Okay, all right.
Jenna: And then, do you recommend advertising on Snapchat or YouTube, or would you recommend just like sticking to Facebook and Instagram, kind of as like a starting strategy?
Jay: Sure. So that again, I think, getting towards what we were talking about in the first question about, you know, where to start, right? It all depends on what sort of budget you have in general. Because, you know, if you have the budget to be everywhere, that’s great. You probably do want to be everywhere, but it’s all about what you’re going to prioritize. So, you know, if you’re trying to reach women, you know, 35-plus, I don’t know, Snapchat isn’t where I would start. And Snapchat and YouTube are probably used for slightly different purposes. That’s just a little more personal because it’s on your phone. Because a lot of YouTube is done on desktop, and it’s not quite as social, that people are watching videos of, you know, influencers they might not necessarily know. So it really depends on your targeting strategy and what sort of budget you have. I would go on those platforms, but generally not before a Facebook or an Instagram.
Jenna: Sure. And then you kind of started to talk on our last question there. It’s just, what are some ways to maximize your advertising on different platforms with a smaller budget?
Angela: We manage across all the different channels, and that’s a lot of what we’re doing for our clients, is managing those budgets. So on a daily basis we’re looking at where the response is. And one of the things that actually, Jenna, you and I were talking about before this is that the thing you have to embrace about digital advertising is that it’s always a test.
You wanna get out there and find out and you will learn as you go where your audience is most responsive. And so we test across different media. As Jay said, we often start with one, such as Facebook, and then we might test some with Quora, we might test it…we’ve tested Amazon, we’ve tested LinkedIn for clients. We’ll make little forays into different platforms to see whether or not they really light up the board for our clients.
And as you manage this on an ongoing basis, it’s different from traditional media where you decided the beginning of the year what your budget allocation is going to be, and you plan it and you spend it and then you you sit back. This is not what digital is. Digital is every day, looking at it, or every week or month, you know, on an ongoing basis, and saying, “What is the data doing and where are our users responding?”
So you might start with, let’s say, a Facebook, Instagram budget, and then say, “Okay, let’s test a little YouTube and see if that works.” And maybe YouTube really takes off for you, and you say, “Let’s pull some of our budget from Facebook and put more on YouTube, because people are loving what we’re putting out there.” Or maybe YouTube is kind of not so great. So you say, “Okay, that didn’t work, let’s try Snapchat.” Again, all of these mechanisms have to be tested, because we’re getting real world examples or responses from people on an ongoing basis. And that’s what’s kind of exciting about this, is you don’t have to know ahead of time. You can get out there and start trying something, take a little step, see what happens. And then hopefully, it’ll go for you. But if it doesn’t, you can try a different format.
And we guarantee that, you know, this time next year, there will be a completely new one that no one knows the name of right now. So it’s very real- time to manage these budgets and to allocate them. Again, we like starting with proven winners, we think Facebook and Instagram are really strong right now. Pinterest has been really strong. It kind of had a surge and then a dip, and then it’s kind of bubbling up again.
So all of the different platforms are also experimenting on their side, on the business side, with their advertising models, so they’re shifting all the time. Twitter just announced yesterday, it was discontinuing an advertising service that it had tested. And it didn’t work and nobody advertised on it, so they stopped doing that. So we keep our clients abreast of those changes and then help them find different ways to test and maximize their budget as they go forward. The best thing to do for our clients is to just say, “Here’s what I’m willing to spend and see how much you can get me for that, and then let us maximize within those budget parameters.” Does that help?
Jenna: Yeah, it’s perfect. Okay, well, that was our last question. That was perfect and so helpful. Thank you all for joining, and thank you for presenting, both Angela and Jay. We’ve been recording this session, and we’ll send it out later today to all of our companies with your contact information as well. And I just hope everyone has a great week, and thank you for joining.
Angela: Thank you for having us, Jenna and Meredith, really appreciate it. Thank you all for listening. And if you need any help, we’re here. Thank you.
Jenna: Our pleasure. Thank you.
Angela: Buon giorno.