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The Next Phase

By: Jeff Falk
Posted: February 2, 2010, from the February 2010 issue of GCI Magazine.

Do you remember your first car? Sure you do, though I’ll bet the car itself is not the crux of the remembrance. Granted, the car often makes for a funny story—I’m thinking of those of you who drove the Pinto with no heat or the tri-tone Chevette, you know who you are—but it’s not the hunk of scrap metal on four wheels that makes the memory worthwhile; it’s the freedom it represented. However, it didn’t take too long to figure out that there was a price for this freedom. The car also created responsibilities and costs that we didn’t necessarily foresee or want. This is my long-winded way to say that every opportunity has a cost, and vice versa. Take marketing and selling online ...

In her December 2006 GCI magazine feature “Selling Online,” Imogen Matthews wrote: “Many young people choose to spend their free time online rather than watching television, and companies are just starting to wake up to the opportunities this has created. However, the beauty industry has a long way to go before it catches up to these consumer habits, with most companies spending a miniscule amount of their marketing budget on Internet advertising.”

More than three years later, it’s clear that the beauty industry recognized this marketing opportunity and has busied itself making online efforts key elements of strategies, but there have been costs along the way—a level of control, for one. The other aspect, online retailing, has liberated the consumer and leveled the playing field for many smaller brands. Consider the home-based Australian skin care company SkinB5, featured in Lisa Doyle’s “Putting the O in SEO” on Page 32, which undertook a new online marketing strategy integrating search engine optimization to see its annual sales go from $30,000 to $1.2 million within a year. But as the fortunes of brick-and-mortar retailers have declined, so too has the growth of many of the industry’s keystone players, which has an industry-ranging impact. Where are the opportunities in these costs? Finding those may be critical to the next collective phase of growth.