Turning your employer into your customer

When I first met Total Beauty’s CEO, Emrah Kovacoglu, the company was a mere PowerPoint deck and some well credentialed execs. Joining early on as an adviser, I’ve had the opportunity to see TotalBeauty.com grow into large enterprise helping women get unbiased beauty advice and selling millions of dollars in advertising to company such as Kovacoglu’s alma mater, Procter and Gamble.

Given his ten years with P&G and role as global digital brand manager for cosmetics just prior to Total Beauty’s launch, I thought I’d invite Emrah to join us and talk about how to turn your employer into your customer as well as catch us up on the beauty industry.

What’s the purpose of Total Beauty?

While working at P&G, I identified a consumer need and marketer need in the beauty space. Consumers were overwhelmed by the amount of beauty products being launched and were looking for resources to help them make the right decisions. None of the current resources were quite doing the job and they were pretty clear on what they wanted. On the other hand, P&G began shifting a lot of money from traditional media online and couldn’t find enough contextually relevant ad inventory to buy in beauty—and they planned on spending a lot more in coming years. Total Beauty Media was started as a company that would live at the intersection of those two needs. We want to own online beauty from a consumer, marketer, and retailer perspective.

How’s it going?

We launched our flagship site TotalBeauty.com a year and a half ago, we acquired another online beauty website called BeautyRiot.com earlier this year and we have another 180 sites in our premium beauty ad network. In total we are now reaching almost 5 million women making beauty decisions every month. We sold millions of dollars in our first full revenue year and hit almost all of our milestones. And this is in the worst economic climate of my lifetime, especially for advertising supported businesses. Needless to say I am very proud of what our team has been able to accomplish with the leadership of our board.

How did you turn your former employer into a customer and not ruffle feathers?

Who says I didn’t ruffle feathers (smiling). The truth is that I originally wanted to build what eventually became Total Beauty inside of P&G. However, getting funding was difficult and I came to the realization that if this were going to be done right then it could not be done inside of one beauty company. And I think P&G realized that too. P&G believes, as do many other marketers, that they have superior products and brands. They are looking for opportunities to reach an audience in the right mindset to expose them to those products and brands. I felt that was best accomplished as an independent company and told my former colleagues and managers that. They agreed.

So the stage was set even before I left. However, I had to pay my dues and it took 1.5 years before I was able to sell P&G anything. We still had to execute by building a product that consumers loved, had reach, and provided the marketing opportunities P&G was looking for before they would even test advertising with us. We’ve since done significant business together and when you are primarily an ad supported business it’s nice to have the #1 advertiser in the world on board.

How big a business is Beauty in general?

In the US, the beauty product industry is a $42 billion a year business and beauty services are probably another $20 billion. So you can see it is a very large industry. But more importantly for us it is a very emotional category for women and extremely frustrating because of the fragmentation. The average woman spends $450k in her lifetime on beauty products and services and there are over 4000 brands in the US alone.

Is Beauty recession proof?

As a whole I would describe beauty as one of a handful of categories that is recession resistant. Certain brands are more resistant than others based on distribution channels, price points, and their value equaltion.

What are the big trends?

There are so many because the beauty industry can be broken up into sub categories such as cosmetics, skin care, hair care, hair styling, etc. But, there are a couple of trends I’m seeing.

The first is we are finding that value, not just price, is a key driver for consumer beauty purchase decisions in this recession. Getting priced out of certain beauty products and services is just a fact of life when millions of consumers lose their jobs; in addition, those still employed have gone into money-saving mode. This is a very dangerous time -- and yet simultaneously a fantastic opportunity for beauty brands. Right at this moment, millions of consumers have given themselves a license to experiment with brands that provide better value or simply speak to them better. And that means market share is there for the taking.

Higher-priced brands have the most to worry about, granted. And while mass brands must be careful not to lose consumers to private labels, they have technology as good as luxury brands', and tons of money in the advertising coffers, which nets an opportunity to permanently capture those luxury consumers who are trading down. But the biggest opportunity of all? It's the smaller brands and private labels that in the past may not have gotten the glance they now will from consumers.

The other trend we’re seeing is brand managers are having to give up some control of their brands. Social networking sites, blogs, review sites, etc. have all increased the amplification of messages that are generated about brands. This can be a plus or minus for brand managers. In either case it’s undoubtedly bringing on change in the marketing world. It means that others will impact your brand’s equity and be able to get that message out to masses.

You’ve built a beauty media company by putting together dozens of authentic voices? Is that the future of media?

I think that when people are making decisions they tend to triangulate different points of views before deciding. People check out what the “experts” are saying, they check out what their friends are saying, and they check out what the masses are saying. Let me give you an example. If you’re considering going to see a movie quite often you will go online to see what the critics have rated the movie, what Yahoo users or Rotten Tomato users have rated it, and what your friends who usually have similar tastes as you when it comes to movies are saying about it. We don’t always do this as consciously and thoroughly as I’m describing it but it is human nature to triangulate before making key decisions and the media companies who can bring those points of views together in one place for various topics have a greater chance of winning.

We keep hearing about magazines failing? Will sites like Total Beauty take their place?

Yes and no. There is no doubt the web is taking over many aspects of what magazines delivered for consumers and providing services and utilities that a magazine can never provide. The numbers don’t lie. Magazine circulation is flat at best and down for most of the woman’s magazines. Ad revenues have followed the audience. In the last four quarters we have seen magazine ad pages year over year declines of -12.9%, -17.2%, -26.1%, and -29.4%, respectively. 2009 will be the worst year for magazines since 1932 when ad pages dropped 30%. Comparatively internet advertising has been very strong during the same time period racking up year over year quarterly numbers of +10.8%, +2.6%, -4.9%, and the latest quarter isn’t in but we expect a similar mid single digit drop.

So you can see there is no doubt the growth is on the internet and magazines are flattening out. But they aren’t going away completely anytime soon. Consumers will still want to curl up with a magazine now and then.

What advice would you give to someone looking to launch a targeted media company?

Figure out why you will have a “right to win.” There has to be something about your idea, your approach, or your execution that gives you a right to win. For us we had several things. I had worked for the number one beauty company and the number one advertiser in the world. So we went into this business with an unfair advantage of knowing what beauty consumers wanted, beauty advertisers wanted, and had the relationships to get a leg up on competition once we built it.

How do you Stay Smart on business?

First I listen to many people. My peers, my customer, my consumers, my employees, even people that others have written off as not being business savvy. It never hurts to listen. After all my listening, I ultimately still have the responsibility to make and live with my own decisions. I also read and listen to business and biography books. If I can learn from others mistakes and triumphs it will accelerate our company’s learning curve.

Lastly, I study as many detailed numbers on my business as I can. Spreadsheets and charts are my passion. They help me to determine issues and opportunities to get my creative juices flowing.

To check out TotalBeauty.com, Click Here

This post was originally published on Smartplanet.com


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