Fragrance foundation breakfast 2013 for circulation

Introduction

This presentation takes a look at fragrance in terms of the industry’s press marketing

2012 versus 2011, and there have been some significant turnarounds as you will see.

Now for next slide: Print Media

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Across 2012 fragrance gained the greatest percent increases in editorial pages of any of the beauty categories versus 2011. Fragrance is also the ONLY beauty category to have shown an increase every year since 2008. Now for next slide: 2012 Fragrance growth editorial

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This growth has to be because fragrance is the only beauty sector with a

cohesive approach, bringing together a common purpose through the

Fragrance Foundation and Jasmine.

Possibly in our small way we like to think that we may have helped as well,

anyway, enough of the false modesty and here are the numbers.

Now for next slide: 2012 v 2011 beauty editorial growth

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Editorial for fragrance grew by 13% which is significant when you consider that

fragrance ……….

Now for next slide: 4th Place

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……..actually falls in 4th place behind cosmetics, haircare and skincare, in

terms of its editorial share of all beauty editorial. It may be 4th, but most

importantly, fragrance is number one for its increase in terms of its editorial

across all the publications we monitor.

Let’s look at advertising.

Last year we showed you this slide.

Now for next slide: 2010 v 2011 UP

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And you will recall that across every single beauty category in total for 2011 ad

spend was up and that fragrance represented the single greatest increase at

18%.

This year we’re going to show you this slide.

Nowfor next slide: U Turn

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Sir Martin Sorrell's Group M predicted TV and press ad revenues to fall by

£350 million in 2012 compared with 2011.

For the beauty business we calculate that there was a £34.4 million reduction

at rate card which is a complete turnaround on 2011, so how did fragrance

perform within that?

Now for next slide: Fragrance Advertising

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There was zero growth in fragrance advertising but even at nought per cent at

rate card, fragrance for another year outperformed all the other beauty

categories.

Now for next slide: 2012 V 2011 BEAUTY ADVERTISING DECLINE (1)

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You will remember these PR increases from the earlier slide

Nowfor next slide: 2012 V 2011 BEAUTY ADVERTISING DECLINE (2)

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Even with a 0% increase the total value of the fragrance advertising pound now

puts fragrance ahead of…….

Now for next slide: Motorbikes

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…..cosmetics for the first time since 2009 with an estimated press spend of

£68 million. And whilst fragrance sits in 4th place for PR it has now moved

up……

Now for next slide: Rosettes

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….to third place in terms of overall ad spend at rate card.

So whilst fragrance ad spend is still £1.5 million less than in 2008, it is the only

beauty category that is maintaining spend and increasing its editorial presence.

Now for next slide: Handbag

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So where has the money gone?

One publisher told us that it has ‘just gone’ and whilst digital plays a significant

role it isn’t moving wholesale across to the new platform.

For instance, for one consumer mag in the States with a circulation over 2

million, digital represents just 2% of its total advertising revenue and we know

that digital advertising in the UK mostly comes for free in a package with the

hard copy version.

Now next slide: Handbag

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The media agency Carat have upgraded their predications for the per-cent

growth in global digital revenues from 13.5 to 16.4% in 2013.

We all know that digital offers hugely exciting opportunities, and now we are

seeing beauty brands and publishers working together in that space so we do

need each other more than ever, but I am here to talk about print and Sean will

talk digital later.

So let’s now look at what we all wait for every year, with bated breath,

Christmas.

Now for next slide: Christmas

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Well it was a bit of a mixed Christmas picture.

Fragrance editorial for December dated publications was up by 8%, down from

16% in 2011.

Display advertising was down but just under 2% as were promotions and

advertorials, so clearly PR was again the strong seasonal driver.

Christmas sales were up by by just under 3% which is considerably down

from the 14% increase in 2011.

That was December and this is how the rest of 2012 looked…..

Now for next slide: 2011 v 2010 the trend

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The red line is 2012 and 2011 is in blue and in fact if you overlay a trend-line,

year on year the trends are identical.

In fact ever since 2008 fragrance has increased its number of editorial pages

year on year, and no other beauty category has enjoyed that rate of success.

Apart from the overall increases one variance we wanted to look at is in this

period here from June to September which was driven by Summer fragrances,

up from last year and 40% of all fragrance coverage for that period was for

new products.

This year’s strong Summer performance came from Lancome La Vie Est Belle,

, Lady Gaga Fame The Fragrance, and Chanel Coco Noir Fragrance which all

helped drive through the stronger proportion of launches preventing the dip of

last year and in fact 12% of all the Summer fragrance coverage came from

those 3 products.

Nowfor next slide: Data Dive

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That’s what we do for a living, and what we realised a long time ago is that the

‘what’s the point?’ is vital otherwise it all becomes a bit rear view mirror.

That’s why we hope that these presentations help provide a level of insight on

what to look at in the year ahead. In fact we’re not interested in the numbers,

it’s what they can tell us that really is of interest.

Being able to predict the market, the shifts, the consumer’s journey, their

thoughts and actions around a brand is fast becoming a key element in every

marketing person’s thinking. The bringing together of a multitude of data sets

to bring science to that thinking is encapsulated in the term, which I am sure

you are all aware of, big data.

Now for next slide: Google

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And this is where we want to ask for your help.

Working with former senior Experian and IBM personnel we have just started

on the road to building a business intelligence platform and are asking

questions as to what the beauty business needs now to plan for the future.

We have prepared an online questionnaire and for anyone willing to work with

us by completing our survey, their name will go in the hat to win a 32GB iPad

mini with Wi-Fi + mobile connectivity, in dark grey with a cover and the

AppleCare Protection Plan worth over £500.

We are very grateful to the Fragrance Foundation for letting us ask you get

involved and this is the first time that we are making this offer to anyone so if

you can leave a business card on the way out we will email you the link to our

survey

Right enough of that, what’s next? Let’s look at the fragrance market shifts.

Now for next slide: Fragrance Market Shifts

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In terms of share of the editorial space across the four fragrance types, as you can

see there has been very little movement year on year and Fashion House

fragrances continue to dominate the printed pages.

Now for next slide: Fragrance market shifts EDITORIAL WEIGHT / PAGES (2)

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What is good news is that when we look at the actual numbers of pages, that is an

accumulation of everything from all the full page features to the smallest mention,

Fragrance PR across all the categories has shown good increases.

in particular Mass is up by 22% and there has also been a strong result from the

Celebrity brands .

Now for next slide: Fragrance market shifts 1500

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What this reveals is that the increased pages means that, overall, the number of

product placement opportunities for PR increased by just over 1,500 for fragrance

year on year when we analyse the average size that a fragrance product takes up on

a page.

Now for next slide: Fragrance market shifts

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Ad spend provides a slightly different picture. This increase here in Fashion House,

in fact the only real increase in share of spend, equates to £2 million additional

budget at rate card, and when we look at the actual values in spend…..

Now for next slide: Fragrance market shifts ADVERTISING SPEND (4)

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……the surprise is the 35% drop in spend from the luxury end of the market down

by £1.6 million, but more surprising is the £1 million drop from Mass which in

recessionary times should normally provide stability to the sector.

In summary, the zero growth results for fragrance was held up by the Fashion brands

and, albeit by a lesser extent the Celebrity brands up by just £250k even……

Now for next slide: Fragrance market shifts RIHANNA (5)

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……..though new Celebrity launches were down in number from 42 in 2011 to

27 in 2012.

New products are the lifeblood for the industry and we picked up on …….

Now for next slide: New Products (1)

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……..13,780 health and beauty products launches in 2012, and that takes into

account both advertising and PR and includes things like Elastoplast, and

amounts to 265 a week!

When you strip out advertising and just look at PR launches it’s a slightly

different picture.

Now for next slide: New Products (3)

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8,790 is still a very large number and just imagine that, potentially 170 new

products landing on a beauty Editor’s desk week in and week out.

No wonder it’s so hard to get PR, but PR really does drive customer loyalty

and sales, so in fact the decline can be seen as good news because that

means that fewer launches makes for a less competitive landscape..

However a 24% overall decrease is a very significant drop especially when you

consider that the number of beauty editorial pages has increased, so does this

suggest that the time is right to re-visit the importance of those PR strategies?

As you can see it was Fragrance that showed the smallest decline with just

over 800 launches, or put in another way……..

Now for next slide: New products (4)

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………2 a day, and it really puts the your results into context when you

consider that skincare launches just under 8 a day and to add another line of

context……

Now for next slide: New products (5)

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….less is more. Let me explain.

There were less fragrance launches but the percentage of editorial pages for

fragrance launches increased.

In fact fragrance was the only category where this happened.

Hold onto you hats the next slide gets complicated.

Now for next slide: New products (6)

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There has been an 8% increase in the number of beauty pages dedicated to

existing-fragrance product PR but there has been an 18% increase in the

number of beauty pages dedicated to new fragrance product PR launches.

Fragrance is the only category to have increased launch editorial, but there

were less launches hence less is more.

And the question I am sure you are all asking yourselves is who won the big

launch war?

Now for next slide: New products (7)

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Head to head Lady Gaga won it which is a sign of the times.

Lady Gaga thrashed Madonna with the biggest single launch in 2012 in fact the

biggest fragrance totally in 2012 and…….

Now for next slide: Madonna

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…… Madonna came in 9th.

What about the men? Who won that fragrance battle?

Now for next slide: The One For Men Sport Dolce Gabanna

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The One For Men Sport from Dolce Gabbana, and what about our all time all

British hero…where did he come?

Nowfor next slide: James Bond

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Sorry, couldn’t resist that

Now for next slide: Market Dominance

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The same top 10 fragrance companies that make up 91% of the ad spend

also make up 75% of the editorial pages and that is something that has seen

little to no change year on year.

What is interesting is that when we analyse the ratios between how a company

has shifted the focus from new to existing products for both ad spend and PR

the changes 2012 v 2011, the changes in some cases, are a complete

reversal.

We do not think that this is the forum to look at individual companies or brands

however we can set the benchmark for the industry which I can show you now.

Now For Next Slide: Advertising v PR strategy ratios

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Whilst I mentioned that the ratios for the companies are not stable, the

noteworthy point here is that these fragrance industry ratios have remained

exactly the same for the last 2 years.

40% of ad spend goes on new products and 60% goes into existing and you

can see the ratios below for PR.

Lastly and whilst we’re talking about ratios I want to re-visit some of the

publisher ratios we looked at last year in terms of leverage and the ROI.

However before looking at it I do believe that in some ways, because of the

changes in media spend and revenues, the bangs for bucks discussion is

moving from the opposite side of the table....

Now For Next Slide: Bangs for Bucks

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…….to the same side of the table and Sean will be touching on that in his

presentation.

There is no inference made here but when I Googled ‘table’ this image came

up

Now for next slide: Frgrance ROI

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Here we can see the balance between revenue and editorial by title and my

instinct when I see this is to say where's the synergy?

As you can see Marie Claire is the only title to appear in both the ad revenue

and editorial lists

Now for next slide: Fragrance ROI (2)

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Here we have drilled down a bit deeper into the Top 20 publishers defined in

terms of fragrance ad revenues, that is both national newspapers and

consumer press, and this gives us a sense of where the ROI lies and what

changes there have been year on year.

For example for every pound spent on advertising the industry average return

is £4.82 pence worth of PR estimated at rate card, so HELLO! are delivering

32% better value than last year, and whilst Hearst do fall below the average

they are also delivering better than in 2011 .

now for next slide: …and finally…

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And finally, let’s not forget that Fragrance is the strongest category in terms of

editorial increases, and has at least held its own in the advertising stakes.

The time ahead continues to be uncertain, so now it is as important as ever for

brands and publishers to work together as the new multi-media platform future

unfolds.

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END

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