Brief:

• L'Oréal announced it's buying beauty tech startup Modiface to expand its digital tools that let customers virtually try on makeup through augmented reality (AR), the technology that overlays digital images on a real background seen through a smartphone camera. The move aims to give L'Oréal brands such as Maybelline, Lancôme and Yves Saint Laurent the software tools to provide digital experiences to customers, according to a company press release.
• The Modiface purchase marks the first time that L'Oréal has bought a tech company after years of scooping up other beauty brands like Redken, Kiehl's and Matrix. Modiface will be part of L'Oréal's Digital Services Factory, which develops digital services for the group's brands, and will work with L'Oréal's Advanced Research on product development.
• Canadian-based Modiface has software that lets consumers transform a 3-D image of their face in real time as they virtually try on different kinds of lipstick, blush and eyeshadow. Terms of the acquisition weren't disclosed.

Insight:

L'Oréal, like many brands, has turned to digital campaigns to reach beauty customers who have shifted their media consumption to mobile platforms, where they can see product demonstrations from social influencers. The acquisition of Modiface solidifies a relationship between a storied cosmetics brand and a tech startup consisting of scientists and engineers who have developed AR and artificial intelligence (AI) features for commercial applications in the beauty industry.

L'Oréal and its brands also have created promotions with Modiface competitor Perfect Corp.'s YouCam app. As much as L'Oréal has worked with Perfect on similar technology, Modiface has worked with some of L'Oréal's biggest competitors. The acquisition of Modiface gives L'Oréal control of a proven technology and potentially keeps it out of the hands of competitors. Modiface helped retail chain Sephora to develop Sephora Virtual Artist, an AR tool that allows customers to try on thousands of shades of lipstick. 

As consumers of beauty products have grown increasingly familiar with how AR can help them shop for and virtually try on eyeshadow, lipstick and new hairstyles via a smartphone camera, brands like L'Oréal have quickly followed their lead through new app offerings that beef up their mobile presence.

L'Oréal has worked to keep up with the rapid shift to mobile and e-commerce in key growth markets like China. CEO Jean-Paul Agon last year said the company had added more than 1,700 staff to work on digital development. The company also partnered with French entrepreneur Xavier Niel to create a tech incubator for startups specializing in the beauty industry.