Lessons in Social Media, Building Business for the Future

Editor’s note: This article is an excerpt from “Fragrance Experts Talk of Holiday Sales on Par with 2011; New Path for Fragrance Foundation” from the upcoming January 2013 issue of Perfumer & Flavorist magazine. To learn more about the upcoming trends affecting the fragrance and overall beauty industry, pick up Perfumer & Flavorist’s January 2013 issue, and follow PerfumerFlavorist.com and GCImagazine.com.

At a recent State of the Industry event hosted by The Fragrance Foundation in New York, fragrance and beauty industry experts discussed how the business climate is weathering for the remaining weeks of 2012, as well as the importance of having a strong social media presence in the marketplace during the years ahead.

Carrie Mellage, director of consumer products at Kline & Co., told attendees the most significant recent impact has been Hurricane Sandy, with the storm likely to take a toll on holiday sales, but that other factors are coming into play in fragrance purchasing as well. “I think value over name [will be] top of the line with the consumers,” she said. “They will be looking for deals.” She noted the industry will be impacted due to the new mindset of the consumer of going back to the basics, focusing on family and friends. So this may or may not have a negative impact, she said, although she expects value will drive fragrance purchases.

Mellage also expects that fragrance’s turnaround and its move ahead in other beauty categories will persist in 2012, and for the year, Kline & Co. expects 2012 fragrance industry sales to be up 4.5–5% versus a year ago. The event’s industry watchers also expect fragrance to continue to be a fast-growing area in the beauty industry as a result of brands’ successful launches of celebrity fragrances, packaging innovation and strong marketing campaigns.

In fact, strong online marketing campaigns, especially those focused on social media, will be essential for the years ahead. Wade Gerten, CEO of social media company 8thBridge Inc., told the event’s attendees beauty companies can further understand their consumers by leveraging the power of social media, especially Facebook. Although the Facebook “like” button is ubiquitous, brands can offer more defined “like” options on their websites that allow the consumer to post if they need a product, want a product or have the product. “The real value of social media is word of mouth,” he said. “People are discovering products from each other.”

Also speaking at the Fragrance Foundation’s event, Scott Galloway, a clinical professor of marketing at NYU Stern and founder of the digital innovation company L2 Think Tank, said the most significant piece of data they have found from the fragrance industry is that Estée Lauder found its customer is more likely to buy a product at a large retailer when he or she begins the interaction with an iPad, rather than a sales associate. “The influence that is taking place online is dramatic,” Galloway said. “The best brands in the world are now taking their online store and replicating it offline instead of the last 20 years [when] we’ve been trying to take our offline stores and [put] them online.”

Service is changing, Galloway added. E-commerce is booming for prestige brands and Generation Y is dominating the online sales space. Galloway identified the Gen Y group as introverts, who prefer to interact with a product online rather than with a sales associate. In addition, the iPad has a sales conversion rate of 20%, he said, which is 50% greater than a conversion rate of a PC. And mobile devices are also integral for brand building and sales, according to Galloway. One-fifth of all traffic to websites came from mobile devices and he expects that to grow to 50% within the next two to three years, he noted.

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