August 28, 2019: Estée Lauder spends 75% of its marketing budget on influencers; PopSugar launches fitness influencer-to-consumer brand marketplace; Facebook execs want Instagram to have double the ads; Facebook attempts to launch “Clear History” tool; YouTube adjusts children’s privacy settings
Here’s what’s worth knowing this week:
Estée Lauder Spends 75% of Its Marketing Budget on Influencer Marketing
In Estée Lauder’s second-quarter earnings call last week, president and CEO Fabrizio Freda revealed the company is spending 75% of its marketing budget on influencer marketing.
Whoa, go on …
During the company’s earnings call, Freda said that the company’s investments in influencer marketing are part of a larger strategic initiative centered around putting marketing dollars into areas that prove effective when it comes to growth. According to Freda, influencer marketing has contributed to Estée Lauder’s growth strategy by improving the quality of its assets across brands while also sharpening its targeting practices, resulting in “significant savings and efficiencies” and a much better “rate of return.”
What else was revealed on the earnings call?
Estée Lauder has been crushing it and is showing no signs of slowing down. Second-quarter earnings revealed strong results, with net sales of $14.86 billion, a 9% increase from last year’s net sales, which were $13.68 billion. Net earnings rose from $1.11 billion at this time last year to $1.79 billion this year.
We’re continuing to see some of the world’s largest and most successful brands dedicate significant portions of their marketing budgets to influencer marketing, highlighting the power of influencers and influencer-generated content (IGC) to drive not only bottom-line value for these brands, but contribute to larger corporate strategies and milestones (see: Revolve IPO).
For the Estée Lauder portfolio of brands specifically, their influencer marketing strategies tend to incorporate a mix of influencer personas, on average activating slightly more micro-influencers (52%) than macro-influencers (43%), compared to mega-influencers (5%). By diversifying their influencer marketing mix to include both micro- and macro-influencers, Estée Lauder brands have been able to achieve scale by more than doubling their social media posts compared to last year and consequently, leading the cosmetics industry in influencer share-of-voice.
PopSugar Launches Influencer-to-Consumer Brand Marketplace
PopSugar announced the launch of Glow, a marketplace for fitness goods and classes developed and offered by influencers.
Interesting, tell me more.
So far, more than 50 fitness influencers are offering products on Glow, ranging from workout tutorial PDFs, yearly subscriptions to video classes, and workout gear. Currently, there are over 1,000 total items for sale on the platform and PopSugar takes a 25 percent cut of every sale made on Glow.
What’s PopSugar saying?
Over the long term, PopSugar expects this to grow into something that functions more like a marketplace than a publisher content-focused product. “We hope that the size and scale of the platform gets too large where we can’t support it. [Creating content in collaboration with influencers] helps us learn about creating viable content and helping produce it.” – Brian Sugar, PopSugar founder
While publishers have always launched influencers traditionally (in the form of editors, personalities, etc.), this is among the first examples we’ve seen of publishers incubating influencer-to-consumer (ITC) brands. As influencers continue to launch their own ITC brands, the biggest opportunity for existing brands (and publishers) is to play a supporting role by partnering with influencers and providing business guidance and operational support prowess (i.e., planning, production, distribution).
For PopSugar specifically, the launch of Glow allows for the formation of deeper relationships with influencers, who are increasingly being viewed as competitors to many lifestyle publishers like PopSugar, as well as access to their audiences and most importantly – their content. As an exclusive destination for influencer content and products, publishers again become a destination for readers and new monetization opportunities. It also serves as an essential test-and-learn platform for the publisher to rapidly experiment and take better advantage of first-mover opportunities. For influencers who are often first-time sellers of their own goods and services, these types of partnerships offer a win-win – the business know-how and logistics to launch their commercial brands, exposure to new audiences, and the diversification of their influence on different platforms.
When Facebook Thinks Double the Ads Will Be Double the Fun
According to a new report from The Information, last year Facebook executives instructed Instagram to “roughly double” the number of ads in the app. Not that we’ve noticed.
The report goes into the many ways Facebook has exercised its control over Instagram in the last two years, including the company’s plan to rename the app, re-platforming, replacing the majority of Instagram’s leadership, and dramatically increasing the number of ads in the app.
How is Facebook planning to do this?
From Facebook’s perspective, the major roadblock in doubling the number of ads on Instagram is the lack of greenspace for ads on the platform. Currently, Instagram only allows ads to be placed in Stories, in the feed and in Explore. However, the company has recently begun doubling down on its e-commerce efforts to open up more space, specifically through its in-app shopping features, shopping feed and rumored standalone shopping app. As well, the company has begun experimenting with new ad formats (see: back-to-back Stories ads) to increase the number of ads it serves while also attempting to avoid oversaturation.
While the majority of Facebook’s ad revenue currently comes from the main Facebook app (and not from Instagram), it’s reported that Facebook wants to bring Instagram’s revenue number much closer to Facebook’s, an indicator of just how much growth Instagram is responsible for driving. While the strategy might feel very Facebook, how this all comes to life in-feed may look very different.
As Facebook continues to lean more into Instagram and fine tune the appropriate balance between ads and regular content, it’s possible that we could see the throttling of influencer-generated content, much like the algorithmic changes Facebook made years ago to limit brands’ visibility in the news feed. Knowing that creator content drives audience attention on Instagram and represents its biggest ad opportunity, it’s also likely that Facebook will continue to develop features that make it even easier for influencers to partner with brands and amplify that content via paid (i.e., Instagram’s Branded Content Tool).
With users now seeing more ads than ever before on Instagram (especially in new e-commerce sections of the app), a benefit is how easy it is becoming to amplify sponsored and organic influencer-generated content. In order for brands to make their ads feel native and provide a seamless experience to the consumer, marketers can now put paid behind any influencer post or story (provided the right permissions are given on the backend) using Instagram’s Branded Content Ads to amplify IGC to both an influencers’ and brands’ audiences for maximum exposure.
Not Unrelated: Facebook’s Clear Privacy Tool
A year-and-a-half after Mark Zuckerberg promised that the company would let users wipe the connection between their web browsing history and Facebook accounts, Facebook released its “Clear History” tool in Ireland, South Korea and Spain, with other countries to come in the “coming months.” That is, excluding the U.S.
Back up, what’s the “Clear History” tool?
The Clear History tool is part of a new section of Facebook called “Off-Facebook activity.” Once opened, users will see a list of the apps and websites that are tracking their activity and sending reports back to Facebook for ad targeting purposes. In the upper corner, users will see a “Clear History” button, which, once tapped, will dissociate that information from their Facebook account. Users will also be able to block companies from reporting their tracking data about them back to Facebook in the future.
Why won’t the U.S. have access to this?
According to Gizmodo, a Texas District Court Judge has ordered Facebook to put the planned rollout on hold in fear that it may result in the loss of evidence in a criminal case.
As Facebook and other social platforms continue to try and make user data more publicly visible and give users more agency around their own data and privacy, it’s likely that we’ll continue to see similar tools being built. However, as seen with Facebook’s delayed launch of this tool 1.5 years after it was promised and the legal issues preventing the full roll out, it also goes to show just how unprepared all these platforms are to manage users’ privacy appropriately (see below for more).
YouTube Finally Takes A Stand Against Disturbing Content
YouTube quietly announced that it will no longer allow videos targeted at children that have specific types of disturbing content.
Within the blog post, the company says it will remove all content that contains “violent” or “mature” themes if it is targeted towards children, either through the video’s title, description, or accompanying tags. Previously, YouTube was age-restricting these videos, but now is taking a step further by actually removing them.
YouTube continues to go back and forth on its stance regarding brand safety issues on its platform, infamously taking a passive approach that involved dealing with inappropriate videos as they became aware of them – usually because a publication or legal entity was alerting the company.
For years, YouTube has struggled policing its content and, like many other platforms, continues to be criticized for continuing to prioritize monetization over public and brand safety, failing to put into place appropriate measures for the inadvertent limitations of algorithmic feeds. More and more, we’re seeing that even the ‘most sophisticated’ of algorithms can’t discern between real, credible information, and fake hoaxes, leading to the proliferation of fake news, which also speaks to consumers’ inability to tell the difference as well (hence Facebook’s need for experts and journalists to curate IRL News feeds).