Zenith: Beauty's ad spend resurgence driven by e-commerce, premium digital options

Dive Brief:

Worldwide ad spending on beauty products will rise to 2.7% this year and reach 4.7% in 2021, according to a new forecast from Publicis Media's Zenith agency. The gains follow a decline of 1.2% in 2017 and then again a year later — a slide Zenith attributed to shrinking audiences for traditional channels like magazines and TV.
New positive momentum in the category is driven by an expansion of e-commerce advertising and premium digital inventory, Zenith said. Total spending on beauty advertising will hit $14.4 billion this year and rise to $15.8 billion by 2021. By that year, online channels are expected account for half of all beauty ad spend; however, most purchases still happen in physical stores since many consumers want to first test the product.
China is now the biggest market for ad spending on beauty products, at $6.2 billion this year, per Zenith. The country's prominence is propelled by a heavy demand for male beauty products and an early adoption of e-commerce ads. The U.S. is the second largest market for beauty, and will command $2.6 billion this year. In the U.S., 40% of spending will be directed to TV, 37% to magazines and 23% to online channels. India is the fastest-growing market, and the only one that hasn't experienced a decline in the past five years.

Dive Insight:

Zenith's latest forecast on beauty ad spending spells both good news and potential headwinds to consider for stalwarts of the category. On one hand, strong growth with advertising formats like e-commerce and premium digital placements is helping to revitalize consumer interest and marketers' investments. A number of platforms, including Instagram, Pinterest and Google, are building out more shoppable options that let users easily purchase products directly from ads without having to leave an app or website.

This could be a boon for beauty brands, especially as services like Instagram have helped to spur a larger volume of high-quality ad inventory thanks to large audiences that specifically look to their apps for style inspiration, Zenith predicts. The proliferation of advertising channels and the challenger brands attracted to them also presents challenges, however.

The increasing fragmentation of the market is a significant disruption to consider, Zenith said, especially as the number and kinds of beauty brands grow, including direct-to-consumer (DTC) brands, eco-brands and retailer-owned brands. DTC brands have grown without big spending on mass market ads in recent years, though many are now turning to more traditional channels like TV as they look to diversify beyond purely performance-led strategies.

Given that online ads are booming but sales are still mostly in brick-and-mortar stores, Zenith recommends that brands work with retailers to merge the online and in-store experiences, such as through virtual sampling via augmented reality (AR). As with mobile and e-commerce, more platforms are attempting to build out AR ad formats that exist without pushing users off their services. Facebook introduced AR ads for its news feed last year.

The Zenith survey of beauty advertising covers 14 markets that represent more than three-quarters of the global ad spend across all categories: Australia, Brazil, Canada, China, France, Germany, India, Italy, Russia, South Korea, Spain, Switzerland, the U.K. and the U.S.