L'Oréal raises digital budget

10 October 2011

NEW YORK: L'Oréal, the beauty group, plans to significantly raise its digital marketing expenditure in a bid to engage US consumers.

Speaking to AdAge, Marc Speichert, the company's CMO for the US, reported that the organisation will allocate 10% of its adspend in the country to new media this year.

This figure matches the combined outlay recorded in the previous 24 months, and marks part of a strategy to boost budgets across all channels.

L'Oréal spent $1bn on measured media in 2010, a 25% improvement, and is seeking to attract 70m additional buyers in America during the next decade, within a global push by the firm to expand its customer base by 1bn people.

At present, 52% of US shoppers, equivalent to 162m people, currently buy goods from L'Oréal's stable of products, which includes leading brands such as Garnier and L'Oréal Paris.

To win over new consumers, the company has started working with Demand Media to develop a range of websites offering detailed, specialist guidance on what Speichert termed "long tail", or somewhat niche, beauty-related search terms.

Demand Media found 80% of enquiries entered via sites like Google contain at least five words, an indicator that interests are becoming increasingly specific. It is thus producing digital content with L'Oréal to serve unmet requirements.

"The reality is that there was no content out there," said Speichert. "They're creating thousand of videos for us on specific needs."

He also suggested that the emerging "digital battleground" has seen the proportion of customers researching beauty goods online grow from 20% to 25% in the last year, totals standing at 30% and 35% in turn for actually buying these lines.

Speichert added: "That sets us up for dramatically transforming our business and how we market."

This trend is not only an issue for L'Oréal, but is representative of broader shifts taking place in popular consumption habits.

"Wal-Mart, for example, now sees Amazon as its greatest competition, not Target," said Speichert.

Data sourced from AdAge; additional content by Warc staff