E.l.f. Cosmetics boosts marketing spend after seeing investment payoffs

Beauty brand e.l.f. is further boosting its marketing spend as it sees long-term payoffs from increasing its investment, according to the company’s CEO. 

The numbers

• The average US price point for e.l.f. is a little over $5, compared to around $9 for legacy mass cosmetics brands and over $22 for prestige brands. The brand’s pricing strategy focuses on everyday value instead of broad-based promotions.
• Over the last three years, e.l.f. has increased its marketing investment from 7% of net sales to 16%, driving ROI multiples above industry benchmarks.

“Our marketing initiatives are helping us reach new audiences, penetrate new platforms and test and learn in new frontiers,” said chairman and chief executive Tarang Amin during an earnings call for Q2 2023.

He mentioned three performance drivers helping the company gain more retail space: “our value proposition, innovation engine and ability to attract and engage consumers”.

Leaning into loyalty for first-party data

The company’s marketing efforts have paid off, with e.l.f.’s Beauty Squad loyalty programme now boasting 3.2 million members, up 20% year on year. 

“Those members purchase more frequently, have higher lifetime value and, most significantly, are a rich source of first-party data,” Amin said. “It actually makes our marketing more effective, being able to have lookalike targets, and you have that first-party data that fuels everything.”

Spending more to grow more

E.l.f. will further boost marketing investment to 19% of net sales in its 2023 fiscal year. “We love that combo of being able to invest more in our business and increase our profitability,” said Amin. 

“Additional marketing spend will be to continue our efforts to build greater awareness behind our brands. There's a lot further we can go there, as well as be able to prospect both new platforms and new collaborations. I feel really great about what [in-store teams] are doing, particularly when I look at the ROIs and the momentum it’s driving,” he added. 

[Image: e.l.f. Cosmetics]