• Global growth in advertising spend in the Beauty and Personal Luxury sector in 2021 and 2022 will be lower than the market average
  • France and India will perform best in 2021 and 2022
  • Digital advertising spend in the Beauty and Personal Luxury category will be 19% higher in 2022 than in 2019

According to the Business Intelligence – Beauty and Personal Luxury report published by media agency Zenith, reduced demand for cosmetics and perfumes, in the face of continued social distancing, will limit the growth rate of advertising spend in the Beauty and Personal Luxury sector to 1.7% in 2021. That is lower than the growth in total advertising spend across the 11 key markets covered by the report, which stands at 4.4%.* In 2021, advertising spend in the Beauty industry in these countries will reach $7.5bn, and will then exceed $7.7bn in 2022, growing by 2.6%, compared with 4.5% growth for the entire market.

Advertising spend in the Beauty and Personal Luxury sector in 2020 declined by roughly the same amount as overall spend across the whole market. The sharp drop in spending on cosmetics and perfumes is directly linked to lockdowns and other pandemic-related restrictions. Fortunately, this decline was cushioned by continued demand for skincare and haircare products. As access to hair salons became more difficult, consumers decided to take care of their hair at home themselves. In addition, the skincare category benefited from increased demand for health-oriented products, which also gained popularity during the pandemic.

It should be emphasised that despite the expected period of economic recovery, overall demand for cosmetic products will not change significantly, because consumers will be reluctant to return to their pre-pandemic habits, which will cause a decline in sales, especially of cosmetics and perfumes. This situation will mean that most cosmetics and luxury goods brands will not significantly increase their budgets and will instead shift spending away from unprofitable channels.

Premium environments and e-commerce help digital offset the declining reach of magazines and television

Advertisers in the Beauty and Personal Luxury sector spend significantly more of their advertising budgets on magazines and television than other brands.

Beauty is an image-driven category, so its communication is based on building emotional bonds through advertising in a high-quality context, such as that offered by television or glossy magazines. Zenith estimates that in 2021 cosmetics brands will spend 18.3% of their budgets on magazine advertising, 4.3 times more than the average brand, and 42.2% on television, which is 1.6 times more spending compared with the rest of the market. However, it is worth noting that these media are becoming less and less effective, because their reach continues to decline, and the audience deficit is driving up prices.

Digital gains, traditional media lose

Beauty and Personal Luxury brands are relatively slow to be convinced by digital advertising, spending 34.1% of their budgets on this channel in 2020, compared with 53.1% of spending allocated to digital across the entire market. This result is due to the lack of premium environments in the digital channel that would support a high-quality brand image, something luxury products and cosmetics brands constantly try to emphasise. In addition, it also stems from the difficulties the cosmetics industry has had in adapting to e-commerce, because consumers still feel the need to try products in this category in person before deciding to buy one. According to Euromonitor International, in 2019, 11.8% of sales in the Beauty and Personal Luxury sector came from the e-commerce channel, compared with 13.2% for the entire market.

On the other hand, technologies such as VOD and Smart TV devices, as well as social platforms such as Instagram and TikTok, are creating new premium environments that make it possible to effectively present cosmetics brands or products from the luxury goods category. Since the start of the pandemic, when retail sales in physical stores fell, brands have significantly increased their investments in e-commerce. Digital channels are therefore becoming increasingly valuable for both image communication and performance advertising.

Zenith estimates that the Beauty category increased its digital advertising spend by 2.8% in 2020, despite the pandemic.

That is twice the 1.4% growth in digital advertising across all categories, because Beauty and Personal Luxury brands began to compensate for earlier underinvestment. According to the forecast by media agency Zenith, average growth in digital advertising will reach 5.9% per year in 2019-2022. Advertising spend in the Beauty and Personal Luxury sector across all other media will fall during this time by 1.2% per year for television and 12.4% for magazines.

“Cosmetics brands were forced to accelerate the implementation of their e-commerce strategies in 2020, and some of them opted for pioneering solutions using virtual and augmented reality to enable consumers to try and check products online” – said Christian Lee , Global Managing Director, Zenith. “Continued innovation in e-commerce technology in the area of improving consumer experiences will be key to unlocking brand growth in 2021 and beyond.”

France and India lead growth in advertising spend in the Beauty and Personal Luxury sector

France and India lead growth

Will marketers cut advertising spend in the beauty industry?

Zenith forecasts that over the next two years France will be the best-performing advertising market in the Beauty category, growing by an average of 13.3% per year. The reason for this is a rebound from a deep decline in 2020, when cosmetics brands cut their budgets by 32.9%. The market is expected to begin returning to normal in 2021, but in 2022 advertising spend will still be 13.8% lower than in 2019, compared with an average decline of 3.6% across all eleven markets in that period.

In India, by contrast, the forecast growth in advertising spend stems from strong consumer demand. In 2020, cosmetics advertising spend in India was stable, and Zenith assumes it will grow by an average of 7.6% per year, as more and more consumers develop the habit of regularly buying cosmetic products. As a result, advertising spend in the Beauty and Personal Luxury sector in India can be expected to be 15.2% higher in 2022 than in 2019.

In North America and the rest of Western Europe, by contrast, demand will return to normal much more slowly, which will hold back growth in Beauty advertising spend in Canada, Germany, Italy, Spain, the United Kingdom and the United States at 1%-2% per year.

"Growth in advertising spend in the Beauty and Personal Luxury sector will lag the overall market as long as consumers remain cautious about travelling and socialising" – said Jonathan Barnard, Head of Forecasting, Zenith. "But by investing in digital technologies that drive e-commerce, brands will be prepared to grow faster when demand rises."

* The eleven markets included in the report are Australia, Canada, France, Germany, India, Italy, Russia, Spain, Switzerland, the United Kingdom and the USA, which together account for 59% of total global advertising spend. Beauty and luxury goods are defined as a combination of four subcategories: cosmetics, perfumes, haircare and skincare.

About Zenith:

Zenith is an ROI agency, combining data, technology and top specialists to discover new opportunities, solve complex challenges and grow Clients' businesses. Zenith is part of Publicis Media, one of four competency centres within Publicis Groupe. The agency operates in 95 countries and employs more than 5,000 specialists in communications and media planning, content and performance marketing, optimisation, and data and analytics. Zenith's team in Poland consists of 170 specialists working for several dozen leading global and Polish brands.

 

Summary

According to the Zenith agency report, in 2021 advertising spend in the Beauty and Personal Luxury sector will rise by only 1.7%, less than the market average (4.4%). The pandemic and changing consumer habits are dampening demand for cosmetics and perfumes, prompting brands to shift budgets from magazines and television to digital, which in 2022 is expected to be 19% higher than in 2019.

The fastest growth in spending is forecast in France (an average of 13.3% per year) and India (7.6% per year). Experts emphasise that the key to brand growth will be innovation in e-commerce, including the use of virtual reality to test products online.