CPG Ad Spending 2014: L’Oréal Looking to Invest More in Direct Response

Roxanne Barretto – Assistant Vice President, US Digital / L’Oréal

While ecommerce remains a small part of sales in consumer packaged goods (CPG) overall, the health and beauty category is a bright spot digitally, having seen much success in its direct-response efforts. Roxanne Barretto, assistant vice president of US digital for L’Oréal, spoke with eMarketer’s Danielle Drolet about CPG digital ad spend trends for the year ahead, as well as predictions on direct response (DR) and mobile.

eMarketer: What is the beauty category’s secret to success in ecommerce?

Roxanne Barretto: What’s interesting is that many of our retail partners are changing the way that they think about ecommerce. We’ve seen a change in some of these eretailer sites, where they’re starting to recognize their own sites as media and marketing platforms. And then opening them up to brands and advertisers like us.

As that continues to change and big retailers start to think about this new form of media, it starts to open up the door for us. Then we can learn what consumers are doing on their sites, and how we can talk to them in a much more interesting, targeted way than we have in the past.

eMarketer: CPG still remains branding-focused vs. direct response, with spending share at 65% and 35%, respectively. How do these percentages compare with spending at L’Oréal?

Barretto: We are around that range. Our focus is to continue to push more toward direct response. As we develop relationships with some of our media partners, who are creating ecommerce hubs, or with our eretailer partners, our plan is to continue focusing on the DR piece. Traditionally, we have focused very heavily on branding only. The goal today is to try and balance out branding and DR a bit more.

eMarketer: Since digital has evolved, does the CPG sector feel more comfortable experimenting with DR?

Barretto: Yes, most certainly. Particularly when starting to think of mobile and the way you can influence people in the store, moving them down the purchase path.

“Traditionally, we have focused very heavily on branding only. The goal today is to try and balance out branding and DR a bit more.”

Digital has more of an opportunity to even out the mix between DR and branding simply because of how sophisticated the targeting is. Also, in how there’s some models coming into play that will help us assist people while they are in-store.

eMarketer: Large players in CPG are continuing to shift significant budget to digital, particularly when it comes to interactive formats that tell a brand story. Is this the case for L’Oréal, too?

Barretto: As we see growth year over year, we’re certainly seeing more investment coming into the digital channel. Many of these bigger interactive formats have always been important, especially with beauty. Whether it’s print, TV or digital, it has to tell an emotional story. We continue to prioritize formats that are able to help evolve that story.

The difference is probably going to be the way that we buy interactive units. Even with the programmatic landscape evolving, we’re still looking at big publisher and media partner relationships. But, we’re also equally looking as much at programmatic buys.

eMarketer: Mobile spend is going up in all industries. In CPG, eMarketer is predicting it as 33.5% of the total digital pie. Where is mobile for L’Oréal?

Barretto: It’s gone up very significantly. Today, we have 40% to 50% of traffic coming from mobile to all of our site platforms. Mobile spending has surpassed even our projections of where we thought we’d be. It’s nearly a strategy all on its own.

A big part of it, of course, is couponing and in-app advertising. But, there is also search. Our search strategy has evolved as well to account for mobile. It’s just an area that you can’t ignore. When we talk about mobile, we talk about both display and search, both of which are seeing significant growth.

Courtesy of eMarketer