hair care & color: u.s

HAIR CARE & COLOR: U.S.RESEARCH BRIEFING | AUGUST 4, 2016

BENCHMARKING

EDUCATION

RESEARCH

BENCHMARKING DIGITAL PERFORMANCE

UPCOMING EVENTSBRIEFING

VIDEOLondon, Geneva, Paris

September 13, 14, 15

BRIEFING

DEPARTMENTSTORESNew York

August 11

BRIEFING

DATA & TARGETINGNew York

September 22

BRIEFING

DEATH OF THE AD COMPLEXLondon, Paris

October 4,5

A clinic for L2 members spotlighting

the biggest winners & losers in digital

for retail, media, and social platforms.

OCTOBER 20, 2016The New SchoolNew York

Q3 RESEARCHJuly August

Digital IQ Index®:

BEER UK

Digital IQ Index®:

SPECIALTYRETAIL

September

Digital IQ Index®:

BEER CHINA

Digital IQ Index®:

HAIR CARE& COLOR Digital IQ Index®:

SPECIALTY RETAIL UK

Intelligence Report:

DATA &TARGETING

Digital IQ Index®:

CPG CHINA


SOCIALPLATFORMS


VIDEODigital IQ Index®:

DEPARTMENT STORES

Membership

Digital IQ

Amazon IQ

Category IQ

Strategy Modules

Executive Education

For brands whose bottom line is impacted

by their performance on Amazon

L2 offers an immersive, longitudinal analysis of a brand’s performance

and delivers tactical recommendations to improve ROI.

Understand OpportunitiesAudit of Amazon specific investment opportunities.

Optimize ResultsInvestment impact analysis and best-in-class case studies

shape Amazon strategies and direct marketing spend.

Track & BenchmarkLongitudinal tracking of brand KPIs, benchmarked

against competitors.

INTRODUCTIONHAIR CARE & COLOR 2016

3.0%

0.3%

-0.9%

-0.5%

-0.1%

0.2% 0.1% 0.1%

-0.2% -0.1%

0.00%

2014–2015Beauty US: YoY Change in Share of Retail Value

TRADITIONAL CHANNELS CONTRACTING

HAIR CARECOLOR COSMETICS

DrugstoresDirectSelling

DepartmentStores

InternetRetail

BeautySpecialty

Super-markets

DirectSelling

Internetretail

BeautySpecialty

Drugstores HairSalons

US & UK, March 1–April 30, 2016Beauty Ecommerce Share, by Product Category

HAIR CARE STILL STRUGGLES ONLINE

Source: HookLogic, “Beauty Buyers Shift Online: Category Deep Dive,” June 29, 2016.

55%

11%

11%

9%

6%

55%

36%

4%

2%

4%

Makeup

Fragrance

Hair Care

Nail Care

Beauty Tools

Share of Traffic Share of Sales Value

- - - - - Baseline (Indexed to 100)US & UK, March 1–April 30, 2016Beauty Conversion Rate Index, by Product Category

TRAILING CONVERSION RATES

Source: HookLogic, “Beauty Buyers Shift Online: Category Deep Dive,” June 29, 2016.

112 108

89 85

51

Fragrances Cosmetics Hair Care Beauty Tools Nail Care

59%

48%44%

35%

23%

16%19%

28%

42%

26%

9%13%

Multiple Images Product Videos Tutorials Link to PDP

Diagnostic Tool Advanced Filters UGC

Beauty 2015 Hair Care & Color 2016

October 2015 (112 Beauty Brand Sites) & July 2016 (72 Hair Brand Sites)Adoption of Content / Conversion Assets Across Beauty vs. Hair Sites

WHY? CONVERSION ASSETS LACKING

Analysis by L2.

US & UK, March 1–April 30, 2016Beauty Digital Shopping Cart Metrics, by Category

WHY? AOV VS. SHIP-TO-WEIGHT

Source: HookLogic, “Beauty Buyers Shift Online: Category Deep Dive,” June 29, 2016

$142.17

$115.33

$97.28

$65.76 $62.45

Fragrances BeautyTools

Cosmetics Nail Care Hair Care

$34.74$20.74 $21.34

$12.33 $10.53

Fragrances BeautyTools

Cosmetics Nail Care Hair Care

AVG. CART VALUE AVG. CART ITEM PRICE

July 2016Sephora, Amazon and UltaTop 10 Brands Accounting for Top-50 Hair Care & Color Products, by Retailer

AMAZON IS A GROWTH CHANNEL

Analysis by L2.

“PRO” LINES ARE BLURRING

Self-Described as “Professional” / “Salon

Brand”

Link for Salon

Owners in

Primary Nav?

Owned

salon(s)?

Salon locator

on site

Distributing

Officially on

Amazon?

Award-Winning Professional Hair Care

Products

Macadamia Professional offers salon-quality

hair care

Farouk Systems… is a Houston-based

company that manufactures high-quality

professional hair care products

The Award-winning line is sold through specialty

retailers, professional salons…

Sold exclusively through authorized salons,

spas, retail and department stores

Phyto [is] a leader in… salon-quality formulas

---Wholesale Price of Product ---Price of Product Sold by Third-Party MerchantBefore and After Oribe Began to Officially Distribute on Amazon Luxury Beauty (Dec. 2016)Amazon.com: Price of Oribe Gold Lust Conditioner

DISTRIBUTION = PRICE STABILIZATION

*See appendix for more granular data on Phyto and Oribe pricing

BEFORE OFFICIAL

DISTRIBUTION

DISTRIBUTING ON

LUXURY BEAUTY

Ulta Removes Pro vs. Consumer Distinctions in Navigation

RETAILERS FOLLOWING SUIT

July 2013: 12 Links

January 2015: 33 links

July 2016 (Today): 36 links

?

…While expanding navigation options for Treatment and Styling

Search term ◼ blowout ◼ dry bar

January 2008–July 2016Hair Care: US Google Monthly Search Volume

NEW BUSINESS MODELS

Drybar Launch

2009 2010 2011 2012 2013 2014 2015 2016

Drybar Path to Growth

BETTING ON OMNICHANNEL

Feb 2010First Opening in Brentwood, CA$250K Investment from brother

+ $50K personal savings

2016Predicted

$100M in Sales

2008Straight-At-Home

At-home $40 Blowouts

2013$10M Debt Financing

and new CEO, John HeffnerFormerly at OPI

Jan 2012$16M Private Equity

Jun 2014$20M Private Equity

Apr 2016Ulta Launch

Mar 2013Launches Products

& Styling Tools in Salons and Sephora

May 2013

July 2016

ULTA’S GROWTH DRIVER AS WELL

Source: ULTA Beauty Q3 2015 Earnings Report, as reported by Beauty Store Business.

Salon business growing 20% YoY (10.9% comps)

22k online appointment bookings per month, 67% from new guests

Increase in average ticket driven by growth in add-on services

(conditioning, treatments)

2014–2015Change in Viewership of Top 25 Cable Networks

TV VIEWERSHIP IS DOWN…

Source: Nielsen.

-25% -25%-23%

-20%-19%-19%-18%

-15%-15%-14%-14%-12% -12%

-9% -9% -8% -7% -7%

-4%

-1%

2% 3%

8% 9%

15%

HIS

T

A&

E

MT

V

Com

ed

y

US

A

TL

C

FX

SY

FY

NA

N

FA

M

TN

T

BR

AV

O

Sp

ike

TB

S

VH

1

ES

PN

LIF

E

Dis

ne

y

FO

OD

AD

SM

E!

DIS

C

HG

TV

AM

C

TO

ON

April 1, 2015–March 31, 2016, n=200 BrandsOrganic Views Divided by Quartile, Ad Spend for National AiringsAverage TV Ad Spend per Channel, by Total Organic YouTube Views

BUT 2ND SCREEN EFFECTS PERSIST

Source: L2 Intelligence Report: Video 2016, June 2016; L2 Analysis of Strike Social & iSpotTV Data.

$16,551,899

$35,707,499

$52,239,509

$73,793,175

<300KOrganic Views

300K–1MOrganic Views

1M–2.7MOrganic Views

>2.7MOrganic Views

n=49 brands n=53 brands n=47 brands n=48 brands

2.5

2.5

3.2

3.5

3.9

Living proof.

Redken

Matrix

DevaCurl

SheaMoisture

June 28–July 17, 2016By Brand, n=18 Brands, n=1.1K PostBeauty & Hair Care: Share of Snapchat Post Volume

VIDEO CONTENT MODELS IN FLUX…

DevaCurl34%

Shea Moisture

19%

Living proof.5%

Redken10%

Matrix8%

Schwarzkopf4%

Schwarzkopf Professional

3%

TIGI Bed Head5%

Toni & Guy Hair Meet Wardrobe

2%0%

Other10%

AVERAGE DAY ACTIVE PER WEEK

EVEN SO…

n=279 Brands, n=8.3M Facebook, 307M Instagram and 92.6M YouTube InteractionsUS or Global Accounts, Q2 2016Share of Posts & Interactions, by Category

HAIR UNDER INDEXES IN SOCIAL

Color Cosmetics

76%Skincare

14%

Fragrance5%

Consumer Hair Care

4%

Professional Hair Care

1%

Color Cosmetics

43%

Skincare24%

Fragrance5%

Consumer Hair Care

13%

Professional Hair Care

15%

SHARE OF INTERACTIONSSHARE OF POSTS

Search term ◼ ouai ◼ jen atkinGoogle Search Volume & Select Instagram Posts

INFLUENCERS STILL THE UNLOCK

706K

758K

950K

@JenAtkinhair Instagram mentions from

Kim Kardashian and Kylie Jenner drive on avg 830K

interactions – amplification of 8.8X @theOuai’s total

community size

JAN ’16 APR ’16 JUL ’16

Guy Tang: Blockbuster Brand Partnerships

SIMILAR IMPACT ON INSTAGRAM

Guy Tang + Pravana Product

Partnership (Balayage Kit)Incentivized to Tag Brand in

Personal Instagram Content

Colorist Content Posted on

Brand Channel

METHODOLOGYHAIR CARE & COLOR 2016

METHODOLOGY

DIMENSION:

SITE &ECOMMERCE

40%

TECHNOLOGY: Response Time, Load Time

SEARCH & NAVIGATION: Filtering/Sorting, Quick View, Keyword Search,

Guided Selling Tools

CUSTOMER SERVICE & STORE LOCATOR: FAQs,

Contact Us, Live Chat, Persistent Store/Salon Locator, Mapping Directions,

Location Type, Product Availability, Functioning Geolocation

PRODUCT PAGES: Content Integration, User Reviews/Ratings, Support for

Offline Path to Purchase

E-COMMERCE: DTC Checkout, 3P Cart, “Buy Now” Links

PRO or CONSUMER ACCOUNT & LOYALTY: Utility

RETAILER.COM (if present): Visibility & Merchandising Efforts on:

- Amazon or Amazon Gray Market

- Walmart

- Target

- JC Penney

- Specialists: Ulta, Sally Beauty, Sephora, Sleek Hair

Note: Colored text represents methodology elements that have been added / changed since 2015.

25%

DIMENSION:

DIGITALMARKETING

METHODOLOGY

SEARCH: Traffic, Web Authority, SEO/SEM, Brand Visibility Across

2,500+ Non-Branded Search Terms in 5 Sub-Categories (where

applicable)

ADVERTISING: Desktop & Video Display Ad Impressions, Creative

Units, Retargeting, Share of Voice within Category

EARNED MEDIA: Reddit and Blog Mentions, Selective Presence on

Industry-Specific Content Aggregating Sites

EMAIL MARKETING: Ease of Sign-up, Frequency, Estimated List

Size, Read Rate, Inbox Placement, Employ of Trigger Tactics


15%

METHODOLOGY

DIMENSION:

SOCIALMEDIA

FACEBOOK: Reach, Total Post Engagement (12-months), Average

Interactions Per Post

INSTAGRAM: Reach, Total Post Engagement (12-months), Average

Interactions Per Post, Post Frequency, Social Commerce

YOUTUBE: Search Visibility, Channel Experience, Video Views (12-

months), Content Sponsorship, Optimization of Most-Viewed Content

TWITTER: Reach, Engagement (12-months), Tweet Frequency,

Programming Tactics

PINTEREST (if applicable): Active Platform Presence, Reach, Support

for Buyable Pins from Mobile App

SNAPCHAT (if applicable): Active Platform Presence, Snap

Frequency, Product and/or Tutorial Snap Content, Paid Activity


METHODOLOGY

20%

DIMENSION:

MOBILE SMARTPHONE EXPERIENCE: Responsive Time, Compatibility &

Functionality, Geolocation, Click-to-Call, Mobile Checkout, Support for

Expedited Payment Methods

MOBILE SEARCH: “Above-the-Fold” Visibility via

Organic or Paid Results Site Identified as “Mobile-Friendly,” Paid Ad

Extension, Brand Visibility in PLAs (if applicable)

MOBILE ADVERTISING (if applicable): Mobile & Tablet Display Ad

Impressions, Creative Units

MOBILE APPS (if applicable): Support for iOS & Android, Rank

History, Featured Status, Notifications, Location Services, Touch ID

Support, In-App Commerce, In-Store Functionality, Loyalty Integration


Brands are Parsed into Five Categories Based on Digital IQ Index® Score

CATEGORIZING RESULTS

GENIUS140+

AVERAGE90–109

CHALLENGED70–89

FEEBLE<70

GIFTED110–139

RANKINGHAIR CARE & COLOR 2016

L2 DIGITAL IQ INDEX®:RANK BRAND Digital IQ

69Sanofi

79

72High Ridge Brands

77

74Henkel AG & Co KGaA

70

76L’Oréal Group

69

77Dr. Miracle's, LLC

68

78High Ridge Brands

65

RANK BRAND Digital IQ

79Helen of Troy

62

80Strength of Nature

56

FEEBLE CHALLENGED


55Pravana

90


88

58Unilever Group

88

58Guthy-Renker

88

58Shiseido Co Ltd

88

63Avlon Industries

87


64Pierre Fabre

85

65Kao Corporation

83

65Miss Jessie's

83

67Ales Group

82

68High Ridge Brands

80

69Helen of Troy

79

AVERAGE CHALLENGED


49Revlon

92

49Unilever Group

92

49It's A 10, Inc.

92

52Procter & Gamble

91

52L'Oréal Group

91

52Vogue International

91


43L'Oréal Group

98

44L'Oréal Group

97

44Unilever Group

97

46Procter & Gamble

96

46Shiseido Co Ltd

96

48Pierre Fabre

95

AVERAGE


29Procter & Gamble

110

29Johnson & Johnson Inc

110


109


108


107

34Combe

106


34L'Oréal Group

106

37Procter & Gamble

103

39Unilever Group

101

40The Estée Lauder Companies

100

41Namaste Laboratories

99

41L'Oréal Group

99

AVERAGE GIFTED


16John Paul Mitchell Systems

120

16Procter & Gamble

120

18Deva Concepts, LLC.

119

19Procter & Gamble

117

19Revlon

117

19Unilever Group

117


22Procter & Gamble

116

23L'Oréal Group

115

24Living Proof

114

25Procter & Gamble

113

27L'Oréal Group

112

27Sundial Brands, LLC

112

GIFTED


4L'Oréal Group

137

5Procter & Gamble

134


133

6Unilever Group

133


130

9Kao Corporation

128


9Moroccanoil

128

9Unilever Group

128

12L'Oréal Group

127

13L’Oréal Group

125

14Procter & Gamble

123

15Unilever Group

122

GIFTED

RANK BRAND PARENT DIGITAL IQ

3 L'Oréal Group 140

L2 DIGITAL IQ INDEX®:

1 Advertising features influencers and connects to shoppable how-to content on site.

2 Embracing rapidly growing Snapchat with native ads in Snapchat Discover stories.

3 Banner ads and full page displays for product lines drive strong visibility on Walmart.com.

IN THE COMPANY OF GENIUS

21 3


2 Procter & Gamble 149


1 The “Strong is Beautiful: Dad-Dos” campaign garnered 7.5 million views on YouTube.

2 Investments on Amazon, including participation in Amazon Prime and Amazon Fresh, help

drive visibility for category keywords.

3 Geo-targeted video ads offer coupons and direct viewers to the nearest Costco store.

12

3



1 L'Oréal Group 166


1 Strong product pages feature how-to content, UGC, and live chat

2 Incentivizes account sign up with personalized offers and samples

3 Top performance in mobile search with deep links for product pages and

store locators

3

1 2


4%

29%

24% 24%

19%

Genius Gifted Average Challenged Feeble


Percentage of Brands Per Digital IQ Class, n=70Hair Care & Color 2015: Digital IQ Distribution

DISTRIBUTION: 2015

4%

36%

32%

21%

7%



Percentage of Brands Per Digital IQ Class, n=72Hair Care & Color 2016: Digital IQ Distribution

DISTRIBUTION: 2016

2015–2016 Digital IQ Percentile RankBiggest Winners & Losers

BIGGEST MOVERS

40%

-39%

ChallengedGifted

ChallengedFeeble

-29%

34%

ChallengedAverage

GiftedAverage

39%

-32%

ChallengedGifted

GiftedAverage

31%

-25%

FeebleAverage

GiftedGifted

27%

-22%

AverageGifted

AverageChallenged

121116 114

110 109

92 89

74

EstéeLauder

n=3

Proctor &Gamble

n=11

L'Oréaln=13

Unilevern=8

Johnson &Johnson

n=3

Shiseidon = 2

Henkeln=4

High Ridgen=3

Avg. DIQ

% Change+4% +5% +1% +1% -12% -1% +6% -4%

July 2016Hair Care & Color: Average Digital IQ Index® Score by Parent Company

ENTERPRISE VALUE

Source: L2 Inc., Digital IQ Index®: Hair Care & Color 2016.

GENIUS

GIFTED

AVERAGE

CHALLENGED

FEEBLE

KEY FINDINGSHAIR CARE & COLOR 2016

55%

23%

44%35%

23%

71%79%

42%

26%

9%

Tutorials Guided Selling inPrimary Navigation

Tutorials Link to PDP Diagnostic Tool Advanced Filter*

Beauty 2015 Hair Care & Color 2016

October 2015 (112 Beauty Brand Sites) & July 2016 (72 Hair Brand Sites)Percentage of Sites That Employ Guided Selling Feature

FAILING TO CLOSE THE LOOP

Analysis by L2. *Rescored Hair Care in Q1 2016.

BEAUTY OVER-INDEXINGHAIR OVER-INDEXING

29% of Hair Care Tutorials do not link

to PDPs – vs. 11% of Beauty Tutorials

WINNERS DIALING UP CONTENT

New expanded navigation bar includes portal for professionals

Video tutorials with featured products sit in a new inspiration section

BEFORE: JULY 2015 AFTER: AUGUST 2016

ONE-CLICK DIAGNOSTIC

1. Highly visual one-click “diagnostic”

2. Product integrated/shoppable

3. Integrated UGC

4. Video tutorials by curl type – linked from primary

navigation

5. Videos tagged with shoppable product call-outs

6. Promoting sampling set to drive trial

55%

35%

14%11%

4%

53%

35%

14%

7% 9%

Store Locator Any Directions Directions withoutLeaving Site

Live Chat Auto DetectsLocation

2015 20162015–2016, n=68 Brands Present Across StudiesPercentage of Brands with Given Customer Service ImplementationsHair Care & Color; Brand Site Investments

CUSTOMER SERVICE STAGNATES

Source: Hair Care & Color Digital IQ 2016, L2 Inc.

Brands pulling back investments in Live Chat

Features updated pro education portal and business tools

REDKEN REFRESH: PRO & CONSUMER

New best-in-class salon finder with directions on site

REDKEN.COM REDKENSALON.COM

June 2016, n=43 Consumer Brands, n=29 Professional BrandsHair Care: Distribution Channels, by Category

PRO HAIR CHANNELS PROLIFERATE

70%

42%37%

12% 9%7%

86%

62%

38%

14%

Amazon Sleek Hair Ulta J.C. Penney Sephora

Consumer Professional

ABBA

AG HAIR

PHYTOBATISTE

NOT YOUR MOTHER’SCHI

SHEA MOISTURE

SEXY HAIR

ALTERNAJOHN FRIEDA

REDKEN

PUREOLOGYOGX

LORÉAL PARIS

CAROL’S DAUGHTER

NIOXINCLAIROL

1

3

5

7

0% 1% 2% 3% 4% 5% 6% 7% 8%

Ave

rage

Pa

ge

Ra

nk

Percent of Total Results

Henkel Kao Corp. L'Oréal Group Procter & Gamble Unilever

June 2016, n=42 Brands, n=981 Results for 59 Category KeywordsHair Care: Visibility and Page Rank, on Ulta

HENKEL WINNING ON ULTA

Avg. Reviews for Top 5 Products

REDKEN SALONS

ALTERNA OWNING BEST SELLERS

…and owns 39% of top results for trending “natural hair products”

Consistently

featured in

category

best-sellers

carousels

June 2016 Avg. Reviews for Top 5 Productsn=51 Brands, n=1,075 Results for 59 Category KeywordsHair Care: Visibility and Page Rank, on Amazon

AMAZON FUELING INDIE BRANDS

ARTNATURALS

L’ORÉAL PARISGARNIER

TRESÈMME

JOHN FRIEDA

PURA D’OR

CLAIROL

MANIC PANIC

MAJESTIC PURE

MOROCCANOIL

ARCTIC FOX

BIG SEXY HAIR

NIOXIN

REDKEN

REVLON

FEKKAI

MATRIX

1

3

5

7

9

11

13

15

17

19

0% 1% 2% 3% 4% 5% 6%

AV

ER

AG

E P

AG

E R

AN

K

PERCENT OF TOTAL RESULTS

AMAZON

L’ORÉAL PARIS

GARNIER

SALLY BEAUTYYOUTUBE

AMAZON

SEPHORA

L’ORÉAL PARIS

YOUTUBEPINTEREST

AMAZON

YOUTUBEULTA

AMAZON

ULTA

SEPHORA

WALMART

L’ORÉAL PARIS

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0% 10% 20% 30% 40% 50% 60% 70% 80%

PA

ID V

ISIB

ILIT

Y

ORGANIC VISIBILITY

Color Conditions Multicultural Styling TreatmentJune 2016, n=2,824 KeywordsPercentage of Non-branded Search Queries for Which Site AppearsGoogle Organic and Paid Search Visibility: Hair

& DOUBLING DOWN ON THE CATEGORY

Source: L2

Change in Visibility, Q1 2016 vs. Q2 2016, n=263 KeywordsBeauty: Category Search

WINNERS & LOSERS: STYLE / CARE

WINNERS

HAIR CARE

ORGANIC PAID

BRAND Δ BRAND Δ

+10% +29%

+5% +20%

+4% +15%

+3% +8%

+3% +8%

LOSERS

HAIR CARE

ORGANIC PAID

BRAND Δ BRAND Δ

-6% -21%

-5% -16%

-4% -13%

-3% -6%

-2% -6%

Search term ◼ cowash ◼ co wash

January 2004–July 2016Hair Care: US Google Monthly Search Volume

AMAZON’S BLIND SPOT?

JULY 2016

2005 2007 2009 2011 2013 2015

VS. FAST FOLLOWERS

CLAIROL

CLAIROL PRO

GARNIER

L’ORÉAL PARIS

MADISON-REED

MATRIX

REDKEN

SCHWARZKOPF

WELLA

AVEDAHEAD & SHOULDERS

L’ORÉAL PARIS

MATRIX

SOFTSHEEN-CARSON

GARNIERL’ORÉAL PARIS

GARNIERL’ORÉAL PARIS

MATRIX

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

PA

ID V

ISIB

ILIT

Y

ORGANIC VISIBILITY

Color Conditions Multicultural Styling TreatmentJune 2016, n=2,824 KeywordsPercentage of Non-branded Search Queries for Which Brand AppearsGoogle Organic and Paid Search Visibility: Hair

DISRUPTORS EMERGING

Source: L2

DIVERSE & AUTHENTIC INSTAGRAM

Innovation and Customization Drive Organic Visibility

THERE’S AN APP FOR THAT

DIAGNOSTIC TOOLS ON SITE TOP-RATED MOBILE APP

L’ORÉAL PROFESSIONNEL

PUREOLOGY PRAVANA

OUAI

BUMBLE &BUMBLE

KÉRASTASE

LIVING PROOF

FEKKAI

SHU UEMURA

PAUL MITCHELL

REDKEN

MATRIX

DR. MIRACLE’S

MISS JESSIE’S

DEVACURL

MIZANI

CAROL’S DAUGHTER

GARNIER

NEUTROGENA

DOVE

TRESEMME

PRO

MULTICULTURAL

CONSUMER

0%

5%

10%

15%

20%

25%

30%

35%

0%10%20%30%40%50%60%70%80%90%100%

RE

AD

RA

TE

AVERAGE EMAIL SEGMENT (PERCENTAGE OF TOTAL LIST SIZE)

Q2 2016, n=25 Brands Max List SizeProfessional: Segmentation of Email vs. Read Rate

EMAIL SEGMENTATION EFFORTS VARY

Implementing a Segmentation Strategy

WINNERS FOCUS ON DATA CAPTURE

HOW WOULD YOU DESCRIBE

YOUR HAIR COLOR?Haircuts

Styling

Hair color

Men’s Services

Perms and relaxers

KeraTriplex© Treatment

Blow-out

Wash House™

What services are you interested in? (Please check all that apply)

CUSTOMIZATION REQUEST SEGMENTATION STRATEGY

MOVE TOWARDS TARGETINGFOCUS ON REPLENISHMENT

/ TRAVEL SIZES

TRIGGERED EMAIL

/ DISCOUNT

TRIAL-ORIENTED

SAMPLING

Q2 Advertising Push: Sampling and Curls

DRIVING TRIAL ACROSS CHANNELS

SAMPLING PUSH

SAMPLING LANDING PAGE

CURL-ORIENTED CONTENT / SAMPLING

Bumble & bumble owned 99% of competitive

impressions in Q2 through ads purchased 100%

via indirect (programmatic/ad network) channels

Q3 20151.2M

Q4 20151.6M

Q1 20161.8M

Q2 20162.0M

0.0

5.0

10.0

15.0

20.0

Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

Likes Comments Shares Posts per Week

July 2015–2016, n=41 Facebook Pages with Complete DataHair Care & Color: Facebook Engagement by Quarter

BRANDS ADAPTING TO PAY-TO-PLAY

Source: L2 Inc., Digital IQ Index®: Hair Care & Color 2016.

IndexAverage:6.6 Posts per Week

66

392K 382K439K 446K

633K

530K

619K579K 585K

484K

616K

895K

490K

Q3 2016To Date

Q1–Q2 2016Professional Hair BrandsShare of Total Facebook Interactions by Brand

INDIE PRO BRANDS ACCELERATE

Q1: SHARE OF INTERACTIONS Q2: SHARE OF INTERACTIONS

Moroccanoil13%

Olaplex11%

Pravana9%

Paul Mitchell

7%

Kerastase6%Redken

6%Matrix

3%

Other L'Oreal Group

3%

American Crew15%

Nioxin5%

Sebastian Profession

al4%

Other P&G 3%

JOICO2%

Zotos1%

Bumble and

Bumble2%

0% 0%

Other12%

Vogue Int’l Coty ELC Henkel Indie J&J L’Oréal Group Revlon P&G Shiseido Co. Unilever

Moroccanoil5%

Olaplex0%

Pravana12%

Paul Mitchell

6%

Kerastase4%

Redken5%

Matrix3%

Other L'Oreal Group

2%American

Crew3%

Nioxin3%

Sebastian Professional

1%

Other P&G 10%

JOICO3%

Zotos0.06%

Bumble and Bumble

2% 0%0%

Other41%

January 1–July 25, 2016Moroccanoil Facebook Interactions per Post

PRODUCT-CENTRIC HERO STRATEGY

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

4/1/16 5/1/16 6/1/16 7/1/16

Interactions 5,873

Interactions4,283

Interactions 4,276

Q2 2016Hair Care & Color Brands n = 66Share of Total Instagram Posts and Interactions by Brand

PROS & COLORISTS DRIVING EMV

Q2: SHARE OF POSTS Q2: SHARE OF INTERACTIONS

Olaplex22% Drybar

5%

SheaMoisture4%

Ouai3%

Pravana3%

DevaCurl2%

Living Proof

1%

Moroccanoil

1%Oribe

1%

Miss Jessie's

1%0%

L'Oréal Paris16%

Carol's Daughter

8%

Redken2%

Matrix1%

Garnier1%

Revlon7%

Bumble & Bumble

3%

Aveda2%

Other16%

Olaplex3%

Drybar3%

SheaMoisture2%Ouai4%

Pravana0%

DevaCurl2%Living

Proof2%

Moroccanoil2%

Oribe2%

Miss Jessie's

7%

0%L'Oréal Paris9%

Carol's Daughter

4%Redken2%

Matrix3%Garnier

2%Revlon

2%

Bumble & Bumble

4%

Aveda2%

Other46%

0%0%0%0%0%

Vogue Int’l Coty ELC Henkel Indie J&J L’Oréal Group Revlon P&G Shiseido Co. Unilever

Olaplex: Top Engaged Instagram Posts Q2 2016

PRO-ORIENTED CONTENT

Top-engaged Olaplex content feature UGC by stylists, featuring no-frills treatments

/ transformations, with Pro-oriented descriptions specifying detailed coloring processes

2.2% 2.1% 2.1%

AUSSIEAVEENO DOVE

GARNIERHEAD & …

KMS CALIFORNIA

L’ORÉAL PARIS

PANTENE

PRAVANA, JOICO,TONI & GUY,BIG SEXY HAIR,ORGANIC ROOT STIMULATOR

REVLON

0%

20%

40%

60%

80%

100%

(5,000,000) - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000

% V

IEW

S V

IA O

RG

AN

IC

TOTAL VIEWS

June 2015–June 2016, n=64 Brands with Complete DataHair Care & Color: Reach, Post Frequency & Engagement

VIRAL VIDEO MYTH

Source: L2 Analysis of Strike Social Data.

ORGANIC HITLACKING SUPPORT

PAYING TO PLAYLIMITED ROI

January 2016Pantene: “Strong Is Beautiful: Dad-Do” Campaign

LONGTAIL OF ORGANIC ASSETS

30-SECOND TV SPOT ADDITIONAL ORGANIC ASSETS

97 National Airings (Including Super Bowl 50)

7.5M Views

92% Paid Views

Pantene invested heavily in its “Strong is Beautiful: Dad-Do” video series featuring NFL players,

but achieved organic traction with supplementary “Dad-Do” videos

876K Views (51% Organic) 531K Views (51% Organic)

597K Views (52% Organic) 381K Views (57% Organic)

n=48,236 First Page Video Search Results, n=50 Hair Care & Color KeywordsMay 25, 2016–June 7, 2016Top Channels by Average Daily First Page Search Ownership

VLOGGERS OWN YOUTUBE SEARCH

Source: L2 Intelligence Report: Video 2016, June 2016.

n Influencer Channel

0.7%

0.8%

0.8%

0.9%

0.9%

0.9%

1.0%

1.6%

1.6%

4.8%

Blonde

Sayria Jade

Luxy Hair

AlexandrasGirlyTalk

BuzzFeedVideo

Bebexo

MakeupWearables Hairstyles

Nicole Skyes

Guy Tang

Cute Girls Hairstyles

Guy Tang: Blockbuster Brand Partnerships

PARTNERSHIPS IN PLAY

1.3M Subscribers75.0M Channel Views

◼ Mobile ◼ Desktop ◼ Tablet

2014–2016, n=1,000 Category KeywordsHair Care & Color: Mobile vs. Desktop Search Volume

SHIFT TOWARD MOBILE

Smartphone59%

Desktop32%

Tablet9%

Smartphone66%

Desktop26%

Tablet8%

Smartphone71%

Desktop22%

Tablet7%

2014 2015 2016

Customizing the Consumer’s Path-to-Purchase

OPTIMIZING FOR MOBILE

2-CLICK COMPARISON CONSUMER EDUCATION 3RD PARTY ECOMMERCE

CONCLUSIONSHAIR CARE & COLOR 2016

CONCLUSIONS

Playing With a Handicap: The Hair Care category faces inherent e-commerce challenges. AOVs are lower than any other Beauty category, flying in the face of already undesirable ship-to-weight ratios, while an average item price of $10.53 suggests the category e-commerce is still overwhelmingly driven by lower-margin consumer brands.

But Still Incremental Gains to be Made: Brands can still unlock whitespace with conversion optimization. Investments in tablestakes Beauty assets (multiple images, video, diagnostic tools, UGC) have not penetrated Hair Care & Color yet.

Amazon Threat is Very Real: Best-sellers in Hair on the Amazon platform are a 50/50 split of brands that do / do not officially distribute. Discounting can be up to 70% off MSRP, with associated counterfeit / expired product risks as well. Category search visibility is clear priority for Amazon, and the giant continues to bid indiscriminately on brand terms.

Move to the Middle, with Channel Implications: Blurring lines between consumer and professional haircare has incentivized newer “pro” brands to drive growth (both sales / awareness) on the Amazon platform, with less risk of damage to brand equity. Retail channels are also ground zero for new brands in the category, and these organizations have also begun to downplay the bifurcation of professional vs. consumer.

Television Not Going Anywhere, But… Traditional media budgets are still the unlock for second screen effects and longtail organic asset awareness. However, brands are increasingly experimenting with digital-first / digital-only blockbuster campaigns; newer entrants to TV have prioritized deeply integrated campaigns with cascading social amplification.

Prestige Earned-Media-Leaders Follow Makeup Category Trends: Visual content, coupled with tapping into key stylists / colorists and consumer communities, has allowed brands such as Pravana and Olaplex to drive outsized reach. 1-to-1 relationship of EMV vs. growth in the category also mirrors trends seen in makeup with indie brands.

hair care & color: u.s

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