THE BEAUTY OF CREATIVITY - nielsen.com · Source: Nielsen TV Brand Effect: Ads indexed against...

James Russo SVP, Global Consumer Insights

THE BEAUTY OF CREATIVITY MARCH 2015

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@Nielsen

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MEET YOUR PRESENTER

James Russo SVP, Global Consumer Insights Nielsen

James Russo SVP, Global Consumer Insights

THE BEAUTY OF CREATIVITY MARCH 2015

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CHALLENGES

MEGA CATEGORY WITH MODERATE GROWTH

STANDING OUT IN A SEA OF SAMENESS

OPPORTUNITY TO SHINE ON SHELF

1

2

3

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MEGA CATEGORY WITH MODERATE GROWTH

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NEARLY $50 BILLION IN TOTAL U.S. BEAUTY SALES

Sources: Nielsen, NPD and select financial information

Department 17%

Food 8%

Drug 14%

Discount/Warehouse 3%

Other 6%

Internet 8%

Specialty 17%

Mid tier 1%

TV/Home Shopping 3%

Mass Merchandisers 25%

ESTIMATED AT $47.9 BILLION

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DRIVEN BY STRONG CONSUMER DEMAND

With an average spend of

$257 dollars annually

99% of HHs purchase beauty products

8 Source: Nielsen NPD Beauty Cross Channel Report, Homescan Total U.S. 2014 Beauty (Makeup, Hair Care, Skin Care, Fragrances)

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$22.1 Billion

+0.4%

UNIT SALES % CHG YAG

DOLLAR SALES % CHG YAG

-2.0%

$11.2 Billion

PRESTIGE/ DEPARTMENT

MASS MARKET FOOD DRUG

MASS MERCH DOLLAR

CLUB MILITARY

TOTAL CHANNEL

SCALE ACROSS MASS, GROWTH WITHIN PRESTIGE

Source: Nielsen NPD Beauty Cross Channel Report, 52 weeks ending 01/05/15, Total U.S. Beauty (Makeup, Hair Care, Skin Care, Fragrances)

+1.5% +3.4%

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$21.3 Billion

$22.0 Billion

$22.1 Billion

2012 2013 2014

+5.1%

SLOWING BEAUTY SALES WITHIN TOTAL MASS Mass Beauty Sales

Source: Nielsen/NPD BCCM, Total U.S., 52 weeks ending 01/05/15, Beauty (Makeup, Hair Care, Skin Care, Fragrances)

+0.4%

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SHOPPING BEAUTY LESS OFTEN…

Source: Nielsen Homescan, Total U.S. 2014 Beauty (Makeup, Hair Care, Skin Care, Fragrances)

(3.4) (3.6)

(6.7)

(0.1) (1.5)

1.7

(2.8)

0.9

(14.9)

(0.4)

0.5

(2.6)

Mass Market Mass Merch Drug Grocery Club Dollar2013 2014

Beauty Trips % Change versus previous year

MASS BEAUTY MARKET MASS MERCH DRUG WAREHOUSE

CLUB GROCERY DOLLAR

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45% 45% 47%

27% 26% 23%

18% 19% 20%

6% 6% 6% 3% 4% 4%

2012 2013 2014

Source: Nielsen Homescan Total U.S. 2014 Beauty (Makeup, Hair Care, Skin Care, Fragrances)

SPENDING INCREASES NOT OFFSETTING TREND

DOLLAR

WAREHOUSE / CLUB

GROCERY

DRUG

MASS MERCH

TOTAL U.S. MASS BEAUTY

$ % CHG vs. year ago

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STANDING OUT IN A SEA OF SAMENESS

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SPENDING MORE ON ADVERTISING

CPG Beauty

$28.0 B

$2.2 B 10% OF

SALES

4% OF SALES

Source: Nielsen AdViews, Total U.S. Beauty (Cosmetics, Skin Care, Hair Care, Fragrances) vs. All Other CPG Categories, All Media Types, 2013 – 2014

Advertising as a percentage of sales is higher within Beauty

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OPPORTUNITY TO INCREASE EFFECTIVENESS

Source: Nielsen AdViews, Total U.S. Beauty (Cosmetics, Skin Care, Hair Care, Fragrances) vs. All Other CPG Categories, All Media Types, 2013 – 2014

LOWER AD

QUALITY

20% less memorable on general recall for

women 18+ vs all other CPG

40% less memorable on brand linkage for women 18+ vs all other CPG

A LOT OF THE SAME

DRIVEN BY

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OPPORTUNITY TO SHINE ON SHELF

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INCREASED SKUS HAVE DRIVEN VELOCITIES DOWN Is more necessarily better?

Source: Nielsen Answers, Total U.S. 2013 vs. 2010 17

11%

-1%

BEAUTY CARE

Total Distribution Pts$ Velocity

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STANDING OUT AMONG 900 ITEMS How do you shine on shelf?

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CHALLENGES

OUTCOMES

INSIGHTS

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CONNECT TO THE LARGER CONSUMER TRENDS

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TREND 1: WELLNESS REQUIRED

WELLNESS REQUIRED

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+24%

NATURAL BEAUTY A GROWING FORCE Average USD value growth

Source: Nielsen Answers, Wellness Track, Total U.S., 4 Years through 52 weeks ending 11/22/14 CAGR = compound average growth rate

Total U.S. Beauty

(4-YR CAGR)

+2.7% +14%

Total U.S. Natural/Organic Products

All Categories (Latest 52 weeks)

Total U.S. Natural/Organic Beauty Products

(4-YR CAGR)

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TREND 2: HISPANIC SPENDING POWER

HISPANIC SPENDING POWER

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Across total Beauty Care, Hispanic Americans spend on average 34% more than expected based on their population. Demographic Comparisons:

Hispanic Americans 134 Asian Americans 127 African Americans 99

Caucasians 96

HISPANIC AMERICANS ARE LEADING BEAUTY CARE CONSUMERS

Source: Nielsen Homescan Total U.S., 2014 Beauty (Cosmetics, Skin Care, Hair Care, Fragrances)

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PREFERENCES AMONG MULTICULTURAL CONSUMERS Who’s shopping what types of Beauty Care?

Source: Nielsen Homescan Syndicated Panel Total U.S. 2014

White African-

American Asian Hispanic

(any race)

HAIR CARE

COSMETICS

SKIN CARE PREPARATIONS

FRAGRANCES – WOMEN

FRAGRANCES – MEN

SHAVING NEEDS

Index is: 120 or greater between 80–120 80 or less

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7.4

3.0 3.8

9.5 9.3 7.9

2.5

-1.2

-3.6 -2.9

1.9 4.0

0.5

-3.5

HispanicNon Hispanic

COSMETICS HAIR CARE ACCESORIES

PERSONAL CARE APPLIANCES

BAR AND LIQUID SOAP

HAND AND BODY LOTION

FACIAL CLEANSER & MOISTURIZER

SHAVING NEEDS

YOU CAN’T WIN WITHOUT HISPANICS

Source: Nielsen Target Track, Total U.S. Market, 52 weeks ending 10/04/14

$ % Change growth versus previous year

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TREND 3: MEN AND BEAUTY

MEN AND BEAUTY

Wellness required

Hispanic spending power

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10%

25%

32%

30%

28%

25%

9%

14% 22%

6%

WOMEN MEN

MAKEUP

FRAGRANCE

SKIN CARE

HAIR CARE

SHAVING NEEDS

Increase $ spend vs. previous year

TOTAL U.S.

MEN ARE BECOMING A FORCE IN BEAUTY

Source: Nielsen Homescan Total U.S., Q2 2013 - Q2 2014, Beauty (Makeup, Skin Care, Hair Care, Fragrance, plus Shaving Needs)

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WOMEN AND MEN, EXHIBITING SIMILAR RECALL ON BEAUTY

CATEGORIES

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WOMEN MEN General Recall

Brand Linkage

General Recall

Brand Linkage

MAKEUP 94 91 93 85

SKIN CARE 109 99 106 100

HAIR CARE 98 106 100 109

FRAGRANCE (Women) 105 132 106 124

FRAGRANCE (Men) 97 98 100 95

HIGHEST RECALL WITHIN FRAGRANCES

Source: Nielsen TV Brand Effect: Ads indexed against total top advertising beauty ads within collection of Hair Care, Cosmetics, Fragrances, Skin Care for Males & Females, F18+ & M18+ Q3 2013-Q2 2014

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FEMALE EMPOWERMENT RESONATES WITH FRAGRANCES

*Source: Nielsen TV Brand Effect: Ads indexed against total top advertising beauty ads within collection of Hair Care, Cosmetics, Fragrances, Skin Care for Millennial Women (18-34) General Recall, Brand Linkage Q3 2014 – Q2 2014

“This is a man’s world, Keira Knightley” Chanel – Coco Mademoiselle

Ad Awareness

179 Brand Association

150

“Marilyn Monroe” Chanel – No. 5

Ad Awareness

148 Brand Association

218

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BREAKTHROUGH

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ROADMAP FOR SUCCESS Connected by their ability to breakthrough

TV ONLINE IN-STORE

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BREAKTHROUGH WITH TV

TV

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• Tell a STORY and leverage a SPOKESWOMAN

• Make it RELATABLE and occur in home or familiar location

• DEMONSTRATE product

• Emphasis on multi-benefits and/or EFFICIENCY OF PRODUCT

• Tell a STORY and leverage a SPOKESWOMAN

• Communicate SIMPLICITY of product application

• Highlight product benefit and resulting LIFESTYLE CHANGE

“Older Millennials” Women: 26-34

“Younger Millennials” Women: 18-25

Source: Nielsen TV Brand Effect

LOOKING AT MILLENNIALS DIFFERENTLY

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LIST THE LEARNING…… Clinique ad delivers on “demonstration” and “efficiency”

Source: Nielsen TV Brand Effect –Creative Evaluation, Skin care, A18+, October 2014

Clinique, Sonic Cleansing Brush, ‘Hello’, :30s

Demo: F18+ Connected emotively & felt it provided valuable information

EMOTIVE

INFORMATION

103

132

Clinique ad REALIZES strong information power with the female audience (F18+)

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37 Source: Nielsen TV Brand Effect: Ads indexed against total top advertising beauty ads within collection of Hair Care, Cosmetics, Fragrances, Skin Care for for Younger & Older Millennial Women General Recall, Brand Linkage Q3 2014 – Q2 2014; Homescan Panel AOD, 52 weeks ending 06/28/14

Jennifer Garner DOLLAR SALES CHANGE

+20% Buying Households During the year the Ad aired

Neutrogena Cleansing Wipes

170 152

105 168

Older

Younger

Millennial women:

Brand Association Ad Awareness

NEUTROGENA WINS WITH MILLENNIAL WOMEN

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HEAD & SHOULDERS SCORES WITH TROY POLAMALU

Source: Nielsen TV Brand Effect Analysis- Ads indexed against total top advertising beauty ads within collection of Hair Care, Cosmetics, Fragrances, Skin Care for Younger (ages 18-25) & Older Millennial (26-34) Males General Recall, Brand Linkage Q3 2014 – Q2 2014

Troy Polamalu DOLLAR SALES CHANGE

+14% dollar sales growth During the month of the ads launch

HEAD & SHOULDERS

2x 1.5x

2.5x 2x

Older

Younger

Millennial males:

Brand Association Ad Awareness

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ONLINE

BREAKTHROUGH ONLINE

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-3%

Total Beauty Trips Year/Year Change

Mass Market Prestige Online

+3%

Instead, they are going online for

Beauty

CONSUMERS INCREASINGLY PREFER ONLINE

Source: Nielsen Homescan, Total U.S. 2014 Beauty (Makeup, Hair Care, Skin Care, Fragrances), Pure Play Online

-12%

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PURCHASE CYCLE

Mass Market

Department

Online

DOLLARS PER BUYER

32 days

84 days

66 days

$128

$172

$86

TRANSACTIONS HIGHER IN BRICK AND MORTAR Higher purchase frequency in Mass; higher transaction within Department

Source: Nielsen Homescan, Total U.S., 2014 Beauty (Makeup, Skin Care, Hair Care, Fragrance) Pure Play Online market

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↓ Low Usage ↑ High Brand Lift

OPPORTUNITY TO SHIFT ONLINE AD PLACEMENT

Source: Nielsen Online Brand Effect: 300+ campaigns since 2010, however the majority of them fall between 2012 and 2014

SEARCH ENGINES

ENTERTAINMENT

↓ Low Usage ↑ High Brand Lift

↑ High Usage ↓ Low Brand Lift

AD NETWORKS

NEWS AND INFORMATION

FAMILY AND LIFESTYLES

HOME AND FASHION

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BREAKTHROUGH IN-STORE

IN-STORE

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44 Source: Nielsen Answers xAOC

+32% vs.

YAGO

+57% vs.

YAGO

STRONG PACKAGING = STRONG SALES

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SIX STEPS TO SHINE ON SHELF A case study in Beauty

1. HAVE MANY NATURAL VIRTUES Packs that look more “natural” lost other desirable qualities such as looking innovative, effective, glamorous, etc. 2. CHOOSE YOUR WORDS WISELY Women of varying ages have different mindsets around aging; sensitive to word choices. 3. CLEARLY DESCRIBE IT Ingredient claims attract much attention relative to other pack elements.

Source: Nielsen Package Design Trend Watch: Anti-Aging Beauty 2014

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A case study in Beauty

4. LET ME COUNT THE WAYS Anti-aging products that promise multiple benefits fare well.

5. HARNESS THE BEAUTY OF BENEFITS Benefits garner more attention and elicit more reactions than any other area of a package, including ingredients and brand name.

6. SHOW THEM A GREAT TIME Top-performing anti-aging packs set specific expectations for how long a product will take to make a noticeable difference.

Source: Nielsen Package Design Trend Watch: Anti-Aging Beauty 2014

SIX STEPS TO SHINE ON SHELF

SUMMARY OF KEY INSIGHTS

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CALL TO ACTION

Focus distribution among leading and growing channels which collectively result in nearly $48 billion in beauty sales; the scale remains in mass, with growth in prestige and online outlets.

1

3 Reverse industry wide underperforming ad effectiveness, by developing ads which have a strong storyline and appeal to key sub-demographics.

4 Shift online campaigns to those generating higher brand lift, which are Search and Entertainment sites.

5 Breakthrough on shelf with package designs and terminology which not only resonate with consumers but generate strong sales.

2 Align to the larger consumer trends of: Health & Wellness, Multicultural, and Men, to drive sales growth.

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WHO TO CONTACT FOR MORE INFORMATION

1. OVERALL BEAUTY TL James.Russo@nielsen.com Rebecca.Sharpe@nielsen.com

2. NIELSEN/NPD CROSS CHANNEL Victoria.March@nielsen.com BEAUTY REPORT

3. CONSUMER PANEL John.Zatwarnicki@nielsen.com

4. MULTICULTURAL INSIGHTS Eva.Gonzalez@nielsen.com

5. TV BRAND EFFECT Rachel.Ginsburg@nielsen.com Dawn.Kiernan@nielsen.com

6. NIELSEN DIGITAL AD RATINGS Susan.Chaika@nielsen.com

7. PACKAGE OPTIMIZATION Mike.Black@nielsen.com Kim.Gaskins@nielsen.com

8. GLOBAL TRACK COMPLETE Gillian.Bielecki@nielsen.com

Use the “Download the Deck” widget at the bottom of your screen to save this list

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TWEETABLE TAKEAWAYS

• Beauty category sales are gaining ground in prestige and online retail channels, but mass is still the leader. –via @Nielsen

• Beautiful Opportunity: Beauty product ads are 20% less memorable on general recall for women 18+ vs all other CPG – via @Nielsen

• Across Beauty Care, Hispanic Americans spend on average 34% more than expected based on their population. -Via @JRussoNielsen

• Via @JRussoNielsen - Beauty product packs that look more “natural” lost perceived qualities like looking innovative, effective, glamorous

LinkedIn @JRussoNielsen James.Russo @nielsen.com