The fragrance market represented 40 billion dollars in sales in 2017. The trend is appearing positive as 49 billion euros in sales are predicted in 2022 (Global – Fragrances, 2018. Fragrances Industry Profile: Global N.PAG-N.PAG). In order to answer this growing demand, fragrance brands need to be up to date with the latest marketing techniques. Making digital their best friend has been one common characteristic of fragrance brands in the last few years.
However, digital still represents a serious challenge in the always-wanted increase of sales. Indeed, it remains one of the last product type for which getting the people to smell your product is essential to their conversion.
If they don’t know the smell, they won’t buy it. Even though the younger target is willing to buy fragrance without smelling, it remains a small percentage of the overall consumers (30%).
The trend is changing…
In-store sales still represent 90% of sales in the beauty-care sector. However, the percentage of online sales has doubled since 2008 to achieve 9.7% in 2018. (Xerfi report – The Global Perfumes and Cosmetics Industry: the Market – May 2018 – 4,8% à 9,7%).
This statement makes us wonder the following.
What tools can brands use to increase their online conversion? How can digital become the first conversion channel in the fragrance industry?
“Brands are shifting a growing share of their advertising and promotion budgets towards digital channels to better reach their customers – particularly a younger generation of digital-savvy, more connected millenials – and also to enhance their relationships with customers via two-way web interaction and data collection, advanced behavioural segmentation and personalised promotional campaigns.” (Xerfi report – The Global Perfumes and Cosmetics Industry: the Market – May 2018).
A fragrance sample is a small quantity of a product aiming to make people discover the scent. There are multiple ways for brands to incite customers to buy online using samples:
The “Try and buy” strategy. Inserting a sample of the same fragrance the client is buying. This is a very efficient way to counter the barrier to the purchase of perfumes online. The customer will less be afraid of being disappointed. Indeed, they will be able to send the fragrance back if they do not like it.
Cross-selling sampling. Offering a sample of another fragrance than the one the customer has bought allows brands to promote their portfolio. This is a very efficient to make customers discover other scents that they already know. It will likely incite them to buy the newly discovered perfume next time.
Exchange consumer data for a sample. On a dedicated platform, the user will enter their contact details. In exchange, they will receive a sample of their choice. This allows brands to combine the collection of data and the fragrance discovery online. This is a win-win solution as customers receive this sample for free and brands increase their database.
2. A very thought-through online redirection strategy
Social media has become key for fragrance brands in their digital marketing strategy. It is essential at every step of the customer journey. When they create marketing assets, brands need to define clearly the objective behind each one. This will allow them to redirect the consumer to the best platform. The different redirections can be:
The brand’s social media platforms (if the asset is posted by an influencer for example)
The brand’s website
Online retailers’ website
Not all the redirection links will be relevant for a certain type of asset.
Having a thought-through online redirection strategy will make the consumer very inclined to click on the “Buy” call-to-action when he sees one. This is very important in order to bring the customer through the buying process smoothly.
Amazon, the well-known online global retailer that announced 178 billion dollars revenue in 2017 (according Statista) is progressively establishing itself among advertising platforms. Amazon advertising might reach $50 billion in the next decade according to Citibank projections. From retail leader to advertising platform, Amazon is maturing its Ad Business and positioning as a challenger in the context of Google and Facebook Duopoly.
The consolidation in September 2018 of Amazon media services (Amazon media group, Amazon marketing services, Amazon advertising) under the name of “Amazon Advertising” is a clear signal of Amazon’s strong ambitions in terms of advertising, starting with facilitating the buy and management of campaigns.
To understand the potential of Amazon Advertising, let’s have a look at the below market figures: according eMarketer, on January 2018, 6 persons out of 10 declared using Amazon website when researching a brand, product or service instead of using a search engine. Advertising on Amazon comes up when people are looking among products to buy on the retail shop.
Understanding the power of its first-party data, Amazon developed many formats such as sponsored products (ads that appear in search results and on product pages), sponsored brands (possibility to add a logo and customised headline in ads that appear in search results), display ads (brand visibility on websites and apps, on and off Amazon), video ads (on Amazon sites) and customed ads (innovative customised advertising experience). Amazon even owns its DSP (Demand-side platform).
For a long period of time, organic was the key lever to sales on Amazon. Sales and positioning of products were based on positive reviews, good conversion rates. Today to benefit from the best positioning, brands need to pay. The increasing number of people that directly search for products on Amazon confirmed Amazon in its strategy to monetize advertising on its ecosystem.
Amazon entering in the advertising industry will definitely compete with the duopoly of Google and Facebook.
AMAZON’S POSITION AMONGST GOOGLE AND FACEBOOK
Amazon’s ad business remains small compared to Facebook and Google. According to eMarketer, Amazon’s market share in terms of US digital-ad spending in 2018 is only 4,1%, compared to the 57,7 % of Facebook and Google duopoly.
However, according to the same source, Amazon is experiencing a strong growth. Brands have spent $4.61 billion on Amazon ads in 2018, a 144,5% growth compared to 2017. By 2020, Amazon should weight for 7% of US digital ads investments overall.
Some key strategic advantages can explain this growth. Indeed, Amazon audience is huge and primed to buy. The main advantage of Amazon ad model compared to the duopoly of Google & Facebook is that it offers the opportunity to target customers based on their purchases and buying data, not just demographic and interests.
Shareen Pathak stated in Digiday“Google has search data and Facebook knows interest levels, but Amazon has real power because it knows what people are buying and how they’re doing it.”
However, this advantage might be reduced with the development and spread of Google Shopping. Also, we should keep in mind that, Amazon cannot compete in certain search segments. Amazon’s advantage is real for consumer goods sector, but very limited for insurance, banking or travel sector where the volume of requests on Amazon is too anecdotal to invest on.
WILL AMAZON CATCH UP WITH FACEBOOK AND GOOGLE?
Even if Amazon is experiencing a strong growth and have a serious advantage, it does not yet account for more than 5 to 7% of the online advertising market in the United States.
Amazon’s reporting tools are still limited contrary to Google and Facebook features. The platform only offers basic reporting interface. Amazon recently released a beta tool allowing advertisers to measure their impact on their online sales. With this tool being implemented, advertisers will have the opportunity to compare their results to other platforms, and this could have an effect on Amazon advertising market share.
Moreover, let’s keep in mind that for an advertiser, investing on Amazon Advertising to promote their products is not always an evidence. Some brands would rather invest their media spending to drive traffic on their own e-shop instead of driving traffic on Amazon. However, with the increasing number of people directly searching for the products they need on Amazon and not using Google anymore, it certainly cannot be ignored when thinking the digital advertising budget.
Did you know that WhatsApp, first worldwide instant messaging service, with 1,5 billion of active monthly users, was ad-free? Well, this will not be true anymore in a few months. In 2019, 5 years after its acquisition by Facebook, WhatsApp will start incorporating ads on its service.
What is WhatsApp?
Like other social media platforms, users can text messages, send voice messages, group chat, have voice and video calls, share photos videos and documents. WhatsApp ensure its users an end-to-end encryption solution to secure their messages and calls, plus a synchronization option on web and Desktop allowing to have chats via computers.
In 2014, WhatsApp was bought by Facebook for $22 billion according Forbes’ report, and was supposed to remain free from monetization pressure for five years, accordingly to the wish of the two co-founders. Both have now left WhatsApp due to misalignment with the monetization strategy developed on the platform through advertising, according to the Wall Street Journal’s report. A position in contradiction with Facebook policy and other products of the group such as Facebook Messenger and Instagram.
Some key figures to understand the monetization potential of WhatsApp:
With 1,5 billion monthly active users, WhatsApp is the first worldwide instant messaging service according to Statista, beating Messenger and WeChat.
Launched in February 2017, WhatsApp Status counts 450 million daily active users worldwide, according to Business Insider. WhatsApp Status are similar to stories on Instagram and Facebook. WhatsApp is thus the first social media regarding stories daily users.
The way to monetization:
Since the departure of the two co-founders, WhatsApp keeps moving forward towards an increased monetization of its platform.
The first sign of this trend was the launch of WhatsApp Business in January 2018. This free application allows owners of small businesses to interact easily with their customers thanks to various features. Users can create a business profile containing helpful information for customers (description, location, opening hours). The application offers users the opportunity to set-up quick replies and to re-use them. It also gives the opportunity to respond instantly with automated message (away messages for example). Businesses can also get analytical insights.
WhatsApp then launched its Business API (application programming interface) in August 2018. This API is dedicated to medium and large businesses with two main features. The first one allows companies to send messages to their customers with practical information (related to a purchase such as shipping for instance). Companies are charged for sending notifications and it must remain non-promotional. On the other hand, the goal is to enhance customer services with the option for businesses to answer customer’s messages for free during 24 hours. After that, they have to pay to answer. Based on these features, Facebook advertisers will be able to add a CTA (call-to-action) to WhatsApp on their Facebook ads, it will automatically open a WhatsApp conversation between the customer and the company. WhatsApp Business API is in a beta version and is still being tested with companies.
Last but not least, in August 2018, it was reported in the Wall Street Journal that WhatsApp had plans to start selling advertising in 2019 within its Status feature, between user stories.
With these various initiatives, Facebook target $10 billion revenues within five years of monetization, according to Forbes’ report.
WhatsApp number of users prove a strong potential Audience and help to better understand Facebook advertising strategy on this platform. As of today, the only ad inventory mentioned by Facebook for 2019 is the Status but we will very likely see the emergence of other formats.
I do anticipate that WhatsApp advertising will soon encounter some limits. Contrary to Instagram or Facebook, WhatsApp is mainly used for personal communication, and users might get upset with the addition of ads. WhatsApp won’t offer to the brands the opportunity to build a strong image as Instagram. I think the future of WhatsApp for Business will be focus around customer service and conversational marketing. Brands will have to adapt their communication to the way people communicate on WhatsApp and Facebook will need to be really cautious not to copy its other products business models.
Sources: WhatsApp website eMarketer report: Messaging Apps and Marketing 2018
You will now forget everything you know about previous generations. Gen Z is not defined by events but by behaviors. They have grown up more exposed to the world than any previous generation: 47% of Gen Z has already consider themselves to be an expert in something. Big companies are no longer an ideal: if they are not happy, they will change. Brand loyalty is very hard to acquire and to keep.
Advertising agencies have to be flexible and aware of millennials’ behavior by adapting and broadcasting the campaign through different touchpoint; so dealing with digital platform and traditional medias such as TV and billboards.
Rather than taking an all or nothing approach, it appears that a multi-channel approach that leverages the unique benefits of paper with the convenience and accessibility of digital will perform best.
As the audience is daily confronted to advertising, the most important for brands is to know what message they want to share and which media is more relevant to spread the message.
To know about the subject, please do take a look at the video below.
Businesses can easily be tempted to use a single ad format that seems efficient for them and keep it for each one of their ad campaign. However, leveraging different ad formats could also be a good solution. Indeed, each ad format has special features helping to focus on the right audience for your business based on defined objectives. That’s the reason why it is important to build a strong media strategy and plan beforehand.
First, adopt a full funnel strategy using different objectives to reach differentiated profiles…
Facebook is a useful tool to drive personalized marketing. It enables to target the ad on the right audience in other words people who are most likely to buy your products or services. Targeting can be done using demographics, location, interest but also behaviors, lookalikes, etc. By reaching several sub-audiences, the impact on global audience will be stronger.
Before defining a target audience, you should identify you campaign goals depending on the sales funnel stages (e.g. brand awareness, consideration or conversion) and based on the best metrics for the ad to maximize ROI. (see the chart below)
For example, is your objective to raise awareness on your next event and increase video views? Or do you need to drive traffic to your website?
Video ads allow to convey a large amount of information in a quick and engaging way. Besides, as Facebook pushes video content to the detriment of images, video ads can be helpful to build brand awareness, reach the right audience and make video views. For example, choosing a video designed to appeal to customers as part of the discovery stage could be a good way to grab attention and increase brand awareness. Video ads must greatly be considerate as they get very high engagement for low cost.
Carousel ads allow to broadcast up to 10 images and videos with different links in a single ad. They can be useful at all stages of the sales funnel, just as in the discovery stage as the conversion one. Indeed, they are ideal to showcase different products or features for brand awareness or retargeting. Moreover, they have significantly high CTRs.
Canvas ads offer a full-screen format composed of engaging photos, videos and text. They allow to tell a story for an immersive and rich experience. As this format is optimized for mobile, it loads instantly to better catch the audience’s attention. Canvas ads enable interaction between users and the images and videos leading to more link clicks, view rate and time spent on the ad.
Collection ads combine an image or a video with four recommended products below it. This mobile format allows to showcase multiple products making it easier for discovery. This ad format aims at driving traffic to e-shop and sales.
Lead ads are ideal to drive visitors into the consideration stage. When they click on the ad, a form will pop up allowing businesses to gain lead’s contact information. This type of ad format is most effective when it is part of a retargeting campaign for an audience such as past visitors or people who already watched a video. They are a good way to get high CTR.
In 2016, for the launch of its new brow collection, Benefit Cosmetics built a Facebook ad campaign to raise brand awareness on the new products.
As part of the campaign’s kick off, Benefit launched video ads expressing the brand’s fun and bold personality. Later, to encourage purchase consideration, the brand used ‘Custom Audiences’, one of Facebook’s targeting options, to retarget people who viewed the video ad. Once this target audience was segmented by age, each group could have carousel ads displayed in their news feed with personalized images and product recommendations.
Below, an illustration I made for you to visualize the Benefit Cosmetics’ Facebook ad campaign strategy for the launch of new product collection:
Finally, one thing to remember is that there is no best ad format on Facebook. Each ad format owns specific features and offers different benefits. Businesses should then leverage Facebook Ads and build a full funnel strategy using different objectives and formats to reach differentiated profiles.
Please note that each business aims at different objectives and audiences; ads formats do not have the same results for everyone. It is then highly recommended to test the formats to review the target audience’s reaction and their results.
Overall, you should consider advertising on Facebook as a strong digital marketing lever. And among all ad formats, video and mobile are the fastest growing ones.