Conor Begley is the Co-Founder and President of Tribe Dynamics, a company he started with Jon Namnath in April 2012 after discovering the power and potential of influencer marketing while working in Australia. With extensive experience in search marketing, reputation management and CRM systems, Conor and Jon decided that influencer marketers needed their own analytical systems and enterprise-class technology. What began as an intuitive theory shared by two long-time friends, the Silicon Valley-based startup in just over two years has become a leading authority in technical marketing and social analytics within the beauty fashion, and lifestyle industries. Here, Conor uncovers two shifts that are affecting the digital marketing realm.



Understanding the Relationship between Digital Marketing and Revenue

A fundamental disconnect exists in marketing today in the age of social media and e-commerce, and the problem is not unique to the beauty industry. There are two important shifts that are particularly interesting and are affecting business, one being the democratization of influencer content creators and the other being the flaw that exists in measuring the value of certain digital initiatives.

The First Shift: The Democratization of Influence

Twenty-five years ago our ability to communicate with customers was limited. At the time, there was essentially an oligopoly on consumer influence between print, TV, radio and in-store. That has since changed.

As of 2008 there were roughly 7 million active blogs, as of 2013 there were roughly 1.3 billion active publishing profiles. This explosion in content creators has altered the way in which information about brands is being distributed in two very specific ways.

1. The type of content being created has become significantly more specialized. Two decades ago Glamour magazine discussed beauty, fashion, celebrities and gossip. Today, publishers are creating niche specific content. An example of this evolution is “All Lacquered Up,” a site which creates content solely about nail design, and has a fan base of 4.2 million.

2. Consumers have become more concentrated. As content creators become more specialized, consumers are now more attracted to the news sources that fit their particular interests. Although this has decreased the number of consumers per publisher, it has provided fantastic opportunities from a targeting perspective, as brands like Essie can now target consumers that are inherently very interested in nail products, as opposed to consumers that are generally interested in beauty.

The Second Shift – Measurement Mistaken for Meaning

The arrival of the digital age has brought measurement and significantly more data along with it. This has allowed marketers to be more measured in their activities and output, however, when the wrong things are being measured it can cause significant misattribution of value. Here, two examples.

Example 1 – Online Content to Offline Revenue
Currently, when a piece of content is created online about a brand (such as a YouTube video), most marketers measure the impact of that content from the revenue it generates through their e-commerce platform. But think about this intuitively: What is the likelihood that watching a YouTube video will cause a consumer to immediately go to a brand’s website and purchase that product? The significantly more likely scenario occurs when that consumer enters Sephora and recognizes the product from the video. During this scenario, the likelihood of the consumer purchasing that product versus comparable products increases greatly. The fact is, online content creation has a large impact on offline revenue, even greater than online revenue, it’s just much more difficult to measure.

Example 2 – Google Ads
Flaws in measurement have led to budget allocation towards digital activities that can be measured, but that aren’t necessarily effective, such as Google Ads, also known as Pay Per Click (PPC) Ads. Now there are many flaws in putting the majority of your digital budget towards these activities (when was the last time a banner ad convinced you to buy foundation?) but I’ll let the following two data points do the talking:

1. In a survey conducted with 30 major US beauty brands and WWD, it was found that the largest percentage of a beauty firm’s digital budget was spent on digital ads (such as Google PPC), however, they thought that digital ads were the least important activity for building their brand.

2. Ebay’s lab research team performed a study titled, “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment” to test the efficacy of paid search. At the time of this study, eBay was the second largest advertiser with Google, but had questions about the efficacy of the ads. The experiment saw eBay remove ads for 25% of their products and measure the impact on revenue. There was no impact.

For Those Who’ve Made It This Far

The tips mentioned here encourage brands to be bold but warn that they should not be restricted to certain online marketing activities only because they’re easily measurable. There’s currently a new wave of beauty companies, such as NYX Cosmetics, Too Faced, NARS Cosmetics, Anastasia and others that have embraced this new age of marketing and are profiting. Figure out who your customers are listening to—and connect with them.