How digital advertising is helping the Indian beauty industry to grow

It wouldn’t be wrong to say that it is ‘Day 1’ in the beauty and personal care space in India. Why? Maybe because the two-year innovation cycle is compressed to less than four months. More than 50-60% of new customers are now coming from smaller towns and rural areas, and an explosion of choice and accessibility has created new habits for beauty consumers in India. 

It has never been a better time to be a beauty brand, as the large Indian population still has one of the lowest per-capita beauty consumption globally and is rapidly consuming content for inspiration and education, and eagerly leveraging digital platforms to not just learn but also fulfil their newly learned needs through ordering their brands with a single click! 

There is no denying the rapid growth of the beauty industry in India. In the last decade or so, digitisation has transformed and influenced almost every industry globally. One such industry that has been impacted hugely is the beauty and cosmetics industry in India. There could be multiple factors strengthening the connection between brands and customers or reducing entry barriers for newer brands to tap into the earlier inaccessible niche customer cohorts. 

Going back to the roots

As per Statista, India is ranked fourth globally for generating the highest revenue from the beauty and personal care market in 2021. According to the IMARC Group, the Indian beauty and personal care market is expected to exhibit a CAGR of 6.5% during 2022-2027. 

So far, international giants have dominated the Indian market without really recognising if their products are adept for the Indian skin type with over-exposure to heat, humidity, and moisture, and found a market in a certain section of women. But with the advent of media and awareness campaigns, the audience is more aware of what works for their skin. ‘Gharelu nuske’ made a comeback during COVID and has inspired many brands to go back to the Indian roots and rehash the importance of natural products. 

As per Bharat ki #FestiveFeeling Report by ShareChat, 80% of Bharat women go online to buy beauty products and prefer 80% of natural ingredients in their beauty products. This paved the way for local companies such as MamaEarth, Khadi Essentials, Plum, and SoulTree to promote their homemade cosmetics and personal care products. 

Beauty brand MamaEarth was started by its founders due to the lack of good quality and organic products, and they began with a direct-to-consumer model. What started with Facebook and Instagram has now found its way to one of India’s biggest online beauty destinations, Nykaa, amongst others, as the top organic brand for skincare. That is the power of digitisation in the beauty industry.

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The power of technology

At this point, this is preaching to the choir, but the pandemic enabled the world of online shopping and transformed it for good. According to a report by Unicommerce in collaboration with Wazir Advisors, many digital-first brands have emerged over the last two years in the beauty and personal care segment, which provides tough competition to traditional players," but also influenced them to build their ecommerce capabilities.

One such success story in the sector is that of Nykaa, one of the leading cosmetic companies with the largest share in the online beauty and personal care market.

There was no option but to depend on the flexibility and safety of online purchasing and home delivery. Thus, ecommerce surged the beauty industry. 

There are multiple Apps like B612, Facetune, etc., that have really upped the game of the selfie/photos fever that took over the era. They’re pretty much like their bigger, more popular predecessors like Snapchat and Instagram. But B612 offers a camera for live edits. Additionally, it offers body editing features, and voila, you have the selfie game on point! Almost a decade old, it was one of the first to introduce augmented reality filters, an innovation that earned great industry recognition. 

Speaking of Augmented Reality (AR) and its power to penetrate the deepest parts of India, many top e-retail brands, including the beauty industry, are now leveraging this technology to introduce try-on features on their Apps. This enables the consumers to try a product on themselves without physically visiting the stores and helps them in making an informed, trusted purchase. 

As per Deloitte and Snap Study across the US and international markets such as in Australia, Canada, France, Germany, India, Japan, Malaysia, Mexico, the Netherlands, Norway, Saudi Arabia, Sweden, the United Arab Emirates, and the United Kingdom, more than 100 million consumers have shopped using AR either online or in-store.

Of them, 94% agree they’ll use AR the same amount or more when shopping next year. It reported that companies with branded AR experiences are 41% more likely to be considered by consumers than those without. Further, 56% of those surveyed said AR gives them more confidence about product quality, and more than half say they want to use AR technology for a risk-free “try before you buy” experience. Evidently, interacting with products that include AR experiences leads to a 94% higher conversion rate, according to the survey.

Other factors that have contributed to the expansion of the beauty and personal care market was the emphasis on using clean and environmentally-friendly products. It hit the loyalists like a wave leading to the wider acceptability and in turn inspired a significant shift towards more ‘local’ brands & products. 

According to Statista, the market size of the Indian cosmetics industry is expected to touch $20 billion by 2025. Further, as per a story, ‘Beauty, makeup and personal care have made it to the top three topics that dominate social media feeds globally. This has, in turn, boosted the $26 Bn beauty and personal care market in India, home to a host of new and often niche cosmetics and personal care brands targeting people’s lifestyle needs rather than gender or age.’ 

What’s more? Top brands are now investing in regional influencers to penetrate the non-urban markets. There has been an undeniable surge in regional communications as the brands are realising that people connect more with someone who speaks their language. As per ShareChat, a whole lot of ‘Bharat’ getting access to the internet, a lot of hyper-local language content is getting prominence and the next India growth story must have a regional focus!

In a nutshell

International and local brands compete in India’s market for personal care and beauty products. According to Statista, the online beauty and personal care market had a value of Rs 91 billion. The pandemic has forced producers in the online personal care market to adapt by better preparing themselves to meet rising consumer expectations. To flourish in the personal care market, brands must create tactics that appeal to consumers.

The growth of the beauty industry is driven by digital advertising, which allows marketers to reach potential consumers more efficiently than traditional advertising. Digital media and apps help consumers understand and accept products and trends faster, also because brands can now gauge customer feedback due to the two-way communication channel and keep up with their preferences, needs, a shift in demand and the narrative that persists. 

Basically, as a marketer, it would be unwise at this stage to underestimate the power of influencers, social media, and digital advertising to win over your target audience, beauty industry and beyond.