L’Oréal is entering a new period of transformation it calls ‘marketing 3.0’; something the 110-year-old beauty giant hopes will help it to stay relevant and keep pace in a fast-growing market and create a more trustworthy digital economy for both brands and consumers.
“We have pretty much changed everything in terms of the way that we are organised as marketing teams: we call it marketing 3.0,” L’Oréal’s chief digital officer, Lubomira Rochet, told Marketing Week at Cannes Lions.
“The deepest part of the digital transformation is de-siloing the organisation and having people come together as a team in a project mode versus a very sequential, ‘this is the innovation, this is the marketing plan, this is the go-to-market strategy and this is the operation and execution plan’. This becomes a very holistic approach to consumer experience versus doing just a product strategy.”
L’Oréal tested marketing 3.0 in the UK first, with improvements in a number of areas including upskilling employees, team productivity and consumer satisfaction, prompting the brand to scale it globally.
“L’Oréal is a pretty de-centralised company because we believe de-centralisation is an asset in a fast-changing world where new platforms emerge every day from everywhere, so you really need to have your fingers on the pulse and your skin in the game,” Rochet explains. “What we do is test and learn some models; when we see some models are really successful we scale them.”
How do we bring value to our consumers so they willingly start a conversation with us, so it’s not just because they spend minutes on our website that we have the right to have a conversation?
Lubomira Rochet, L’Oréal
Another integral part to L’Oréal’s transformation has included rethinking the way it works with agencies, which are being “transformed and disrupted in exactly the same way”.
While L’Oréal still relies heavily on its agency partners, it believes it can drive a “mutual transformation process” by in-sourcing some of its strategic capabilities. For example, it has in-sourced part of its media buying, although only a “tiny minority”, to help it better understand the buying process on Facebook, Google or Amazon.
“We believe being strong of that expertise we can be better partners with our agencies, both to upskill them but also to better control what we get out of that,” Rochet says. “It’s about mutual upskilling.”
Reinventing currencies and algorithm ethics
According to Rochet, there are two big currencies that need reinventing: trust and attention, which have been damaged by problems such as fake news, fake followers, ad bombardment and re-targeting.
However, she says the excesses of advertising technologies have been pushed to their limits, while GDPR has come in a very timely manner to re-stage the conversation around transparency, consent and permission-based marketing.
L’Oréal CMO: Companies that just sell products will not be successful
“The key question is how do we move from cookie-based marketing to more people-based marketing,” she asks. “How do we bring value to our consumers so that they willingly start a conversation with us, so it’s not just because they spend minutes on our website that we have the right to have a conversation?”
While brand safety “absolutely” remains a concern, it is the ethics and accountability of algorithms that Rochet is most concerned about at present.
“Many compartments of your life are regulated by algorithms – the product you buy on Amazon, the content you see on YouTube, the information you receive on Facebook, the brands you see on Instagram,” she says.
We are seeing a market that is resembling an hourglass.
Lubomira Rochet, L’Oréal
“All of that is not an optimisation game, it makes consumers take decisions. Something that makes consumers take decisions needs to be transparent and consented. If I don’t want to be driven into a circle of decision, I want to have an opt-out of that.”
Rochet believes a ‘Bill of Rights’ needs to be created for algorithms. But she acknowledges this will be tricky given the whole platform business is based on algorithms.
“So obviously we don’t want to challenge that because it’s their business model as we have our own business model,” she says. “But we still need, for our consumers – our common good is consumers – to create rules for transparency and consent and to make sure people are aware why they do receive that recommendation versus another one, where it comes from, and if they want to opt out of receiving that they should be able to do it and receive the organic, unfiltered, un-algorithmic view of the feed.”
This is an important discussion that needs to be had between platforms, brands, regulators and consumers, Rochet says, and one she believes will “benefit the whole ecosystem at the end of the day”.
The ethics of algorithms and the risks of getting it wrong
New marketing codes
L’Oréal is the world’s largest cosmetics company. However, with digital lowering the barriers of entry to the market, a number of new players have been able to enter the beauty space, making it a very different field to play in compared with 10 to 15 years ago.
In spite of this, L’Oréal has just had its best sales growth in more than a decade (up 7.1%) with the largest proportion of that coming from its biggest brands: L’Oréal Paris, Maybelline, Lancome, and Laroche Posay.
Rochet says this shows that big brands can still grow if they adapt their ways of working and “embrace” new marketing codes, such as shorter formats, new platforms, touchpoints and services.
“For years the question has been, are indie brands or digital disruptors eating up your market?What we see is if you integrate the new codes of marketing in the digital age, if you master the algorithm based economy, the big gets bigger versus the opposite,” Rochet says.
“We are seeing a market that is resembling an hourglass: the bottom of the market starts to see more and more creation, but the top of the market also sees big brands getting bigger if they master the codes.”