Coty (NYSE: COTY) is ditching cover girls for micro-influencers
Coty (NYSE: COTY), a multinational beauty company, was once among the largest advertisers in the world, with one of its flagship brands—CoverGirl—known for the supermodels who graced the pages of countless magazines to push its products. Now, amid sluggish demand for mid-market cosmetics sold in drugstores and falling shares that have reduced its market capitalization by nearly 40% so far this year, the company is increasingly ditching the glitzy, celebrity-based marketing of its past and focusing on a new powerhouse driving consumer behavior with younger generations: micro-influencers.
The US Chamber of Commerce defines the subset of social media content producers as anyone with 10,000 to 100,000 followers and says the group can be more cost-effective than traditional advertising campaigns and produce higher levels of engagement. Coty has taken note, and it’s recently been building out so-called influencer studios in cities like New York and Miami where creators can stop by and produce all kinds of CoverGirl-themed content.
Coty CEO Sue Nabi identified social media advocacy as a strategic initiative that the company is employing in an attempt to revive demand that’s stagnated in recent years, and the campaign has so far been a success. CoverGirl’s earned media, a metric that tracks unpaid content produced by a third party, was up 80% year-over-year in the company’s most recent quarter, she said in an investor presentation in November.
“This continued strength in social media advocacy coupled with our most on-trend innovations resulted in CoverGirl’s omnichannel market share remaining stable in the past quarter,” she said. “And while our work is not completely done in terms of reigniting CoverGirl, making the brand resonate as strongly with Gen Z consumers as with Millennial and Gen X consumers, it is important to highlight that this playbook has indeed been resonating, as CoverGirl continues to perform the best amongst legacy mass cosmetics brands in the US.”
The impact is easy to spot online. A recent search on Instagram for #covergirlstudio, for example, returned hundreds of results. In one video, Chloe Morgan—a self-described “events queen” with 28,200 followers—paid a visit to the studio in Miami and filmed herself testing out products ranging from lip gloss to foundation. “How cute is this setup?” she said before proudly showing off a goody bag full of CoverGirl products. “This is such a vibe.”
Nabi, in a question and answer session with investors, said the social media campaigns were helping to drive online sales on platforms like Amazon (NASDAQ: AMZN), and the momentum is giving Coty an edge when it comes to like-for-like growth over competitors including L’Oreal (CBOE: OR), Estee Lauder (NYSE: EL) and Shiseido. “We are continuing to outperform all our comparative peers,” Nabi continued. “You’ve seen this in the last 9 out of the last 13 quarters and this is really what we intend to continue to do.” That hasn’t yet translated into gains on Wall Street, however, with Coty shares declining 35% over the past year. Estee Lauder shares lost 43% over the same period, while L’Oreal is down 27%.
Using influencers in marketing campaigns is certainly nothing new, but the increasing focus on micro- and even nano-influencers (those with 1,000 to 10,000 followers) shows how strategies are fragmenting. Instead of relying on high-cost celebrities with large followings, brands are realizing they can get better results with grassroots campaigns. Star-power and massive reach may no longer be the most cost-efficient way to engage with a new generation of shoppers craving authenticity, and it’s publishing houses like Advance Publications and IAC (NASDAQ: IAC) that may have the most to lose.
