The economy may be up and down, but people are still buying beauty products. 

“They’re [beauty products] almost viewed as essential items, more and more like groceries,” said Jennifer Thompson, Head of Marketing for beauty tools brand Japonesque.

It’s called the lipstick effect (or lipstick indicator), a term coined by Leonard Lauder, the chair of Estée Lauder, in the early 2000s to describe the idea that people will still spend on small indulgences, including beauty products, during periods of economic uncertainty. 

It’s far from a science, but there’s something to the concept. Estee Lauder saw double-digit profits during the recession in 2007, while Ulta Beauty recently highlighted significant growth in its Q4 earnings.

Despite consumers’ willingness to spend, and the profitable outlook for much of the beauty industry, some advertisers are pulling back, including those promoting hair care (down by 16% to $208mm), oral hygiene (down by 20% to $129mm) and bath & shower products (down by 39% YoY to $71mm). 

Overall, beauty advertisers decreased spending through April by 9% YoY to $1.7b. In Q1, spending fell by 6% YoY to $1.2b, with the most significant decline in March.

These reductions would have been more significant had it not been for increases from advertisers promoting skincare (up by 10% to $554mm), cosmetics (up by 1% to $242mm), and deodorant (up by 20% to $107mm), who collectively boosted their budgets by 8% YoY to $908mm.

So, what gives? Why are only some beauty advertisers spending? Are others getting cold feet, or is something larger in play?  

Time will tell, but this could be the start of a new era for beauty advertisers—an era that embraces younger generations with open arms.  

TikTok, Influencers, and All Things Generation Z

Find your audiences and meet them where they are. 

It’s essential to understand where your target customers spend time to create a seamless shopping journey across channels.

Those are two pieces of advice given by Diana Haussling, Vice President and General Manager of Consumer Experience and Growth at Colgate-Palmolive, in a recent article about how Colgate-Palmolive is navigating the blend of physical and digital retail.

Haussling’s advice underlines the greater trend we’re seeing as beauty advertisers trek down new avenues as the industry—and consumers—evolve. 

One of those avenues leads to TikTok, which has completely won over Generation Z. 

Olay, which decreased spending overall by 16% through April, teamed up with TikTok star, Kat Stickler, to launch the Galentine Hotline on February 13, allowing consumers to send a text to receive relationship and skincare advice. While overall spend was down thanks to a 39% reduction in TV overall, digital spending was up nearly 115% YoY.

At the same time, Dr. Squatch shined on TikTok with a unique combination of “trending sounds, cheeky memes, and comedic skits created by the brand and its consumers.” TikTok and influencers are so ingrained in Dr. Squatch’s ad strategy that a handful of employees recently branched out to start their own agency, Gassed. 

“We launched Gassed to combat the creative fatigue that brands often suffer. Gassed counters this problem by understanding how to convert for sales on TikTok, tailoring creative so it’s performance-based to reach clients’ KPIs whilst also managing the paid side of the media campaigns,” said co-founder Dean Rojas Rojas.

So far, The Sasquatch Soap Company invested 49% of its Dr. Squatch ad investment towards Facebook and Instagram ads. Around 16% of the TV and digital ad spend was dedicated to Meta ads that were 31 to 45 seconds in length.

For advertisers at Colgate-Palmolive, the investment in TikTok kicked off in January after their toothpaste went viral because consumers were curious how the toothpaste’s stripes came out of the tube perfectly every time. 

The shift to TikTok comes as beauty advertisers move away from Meta, Twitter, and other established players amid rising costs, ad loads, and privacy concerns. 

But TikTok isn’t the only way beauty advertisers are diversifying their media mixes. 

e.l.f. Cosmetics is leaning into entertainment with “Vanity Table Talk,” a social-first show combining elements from late-night talk shows and TikTok to “inspire viewers to celebrate their own unique beauty.”

Ekta Chopra, e.l.f.’s Chief Digital Officer, said, “We have our feet on the ground, but we also have our head in the stars.” We are where Gen Z is, and we don’t just show up, we show up bold.” 

Expect other beauty advertisers to follow the trend. Axe certainly is. 

In March, Axe (Unilever) advertisers teamed up with award-winning rapper Lil Baby to launch a new campaign aimed at the heart and wallets of Gen Z, which included a 30-second national spot promoting the company’s premium fragrance line. Axe advertisers also pushed deeper into eSports and other entertainment-based marketing tactics that keep them in front of Generation Z.  

A Time of Change for Beauty Advertisers

Don’t let the overall decline in beauty advertising mislead you—the industry is doing just fine. 

Consider this: Advertisers at Function, Inc. (Function of Beauty product lines) decreased spending by over 90% through April despite launching a hair styling line at Target in January and the appointment of a new Chief Marketing Officer—20-year L’Oréal vet Marianna Trofimova—last year. All spend this year is digital, with 61% dedicated to paid social videos and April being the peak spending month. 

Beauty advertisers are changing their ways and embracing all things Generation Z, and as they do, their investment in traditional tactics is waning. Through April, advertisers decreased their investment in TV and print by 11% (down to $686mm) and 44% (down to $127mm) YoY, respectively. At the same time, digital ad spending increased by 1% YoY to $856mm+, with video and native driving the increase (both were up by 11% and 84% YoY).

But that doesn’t mean advertisers will completely abandon the in-store displays and demos. According to Diana Haussling, “The lines between physical and digital experiences are becoming blurred, and businesses need to resource and cater to both adequately”—and that’ll impact advertising strategies in a big way. 

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