Cosmetics marketers in China have reaped rich rewards from the recent boom in celebrity marketing. According to the iResearch and Sina Weibo report, 2017 Insights on the Development of China’s Online Celebrity Economy, the number of online celebrities with a fan base exceeding 100,000 followers soared by 57.3% during the past year. The total fan base for China’s online celebrities topped more than 470 million in 2017 further fueling the growth in its online celebrity economy.
Online Make-up Celebrities Open New Social Media Channels
The recent study on China’s online celebrity economy revealed that “beauty” and “make-up” now rank alongside humor and entertainment as one of the top eight categories that fans follow on Sina’s Weibo. To reach this audience, brands and retailers have turned to online celebrities to market their products.
Celebrities that blog about make-up have seen similar jumps in their fan followings. Celebrities such Wang Yuepeng Niko saw fan volume increase by 79.5%, or 400,000 during the 2016 to 2017 period. Other beauty celebrities such as Zhang Dayi and Make-up Artist MK have both built followings with more than 700,000 to 800,000 fans. Make-up Artist MK sends Wechat messages every evening and pageviews on popular messages can easily exceed 40,000 within half an hour of release. Anecdotal data indicates that many fans do end up buying the products endorsed by celebrities. After watching a lipstick demonstration by Make-up Artist MK, one consumer reported purchasing four different colored lipsticks, commenting, “The colors in the video are eye-catching and her description made me want to buy them.”
A recently interviewed manager from an industry consulting firm noted that online celebrities function similarly to traditional celebrity endorsement, but they also aggregate and curate product details in a market that is overloaded with product information. The fragmentation of both consumer attention and product information across China’s large and segmented social media landscape leaves brands struggling to find the most efficient channels to reach their targets. As this industry consultant added, “Marketing strategies need to shift from unilateral image promotion by brand spokespeople to discussions within social media. In this process, online celebrities have become important entry points.”
L’Oreal’s 2016 financial reports released in February showed sales from e-commerce channels increasing by 33%. During the same period, L’Oreal drove this growth with multi-channel promotion strategies – one of the most notable being its key opinion leader (or KOL) campaigns across social media. L’Oreal indicated that it has become increasingly aware of the power of online celebrities. In one 2016 example, L’Oreal partnered with Taobao’s Juhuasuan e-commerce site to deliver a livestreamed online celebrity program via the video Website, Bilibili. During this livestreamed program, e-commerce orders topped RMB 10 million.
Complex Product Sources and Relationships Raise Questions
Online celebrities are reaping the rewards for their stardom from numerous sources. Livestreamed video programs enable them to receive “gifts” from fans in addition to endorsement income from brands that they promote. Some of them also sell beauty products directly. Make-up Artist MK is one celebrity who is cashing in on her popularity with her own Taobao e-commerce store. Currently, more than 800,000 fans follower her Taobao store, generating a growing stream of revenue through product sales. But followers also can see a clear split between products sold in her online store and those promoted via her Weibo and Wechat social media accounts. Her brand-supported product endorsements tend to be for premium-priced international brands such as Lancome and Clarins, while her own online store sticks to lower end Korean and Japanese make-up products around the RMB 100 price point.
According to a study by leading market watcher, Horizon Research, students and young people are still the mainstay of online shopping in China. So, value-priced products at the middle and low-end of the market sell the greatest volumes and are likely to be those that online celebrities stock in their stores.
But these medium and lower-end products often come from gray market channels. Product sources are often opaque and regulation is weak. Claims of “overseas sourcing” or “direct from overseas manufacturers” are common. In some cases, online celebrities are also experimenting with their own formulations. Recently, an online celebrity who goes by the screen name, “Cosmetics Formulator Xiao Xin” released a video to his 630,000 fans that compared a series of sunscreen products. Deriving his analysis of sunscreen effectiveness from their ingredients list, he concluded that some sunscreen products fell far short of their current claims. The video raised considerable controversy across China’s Internet community. But shortly after releasing his questionable research, “Cosmetics Formulator Xiao Xin” launched his own sunscreen product.
Weighing in on this celebrity’s claims, an expert from the Institute for Food and Cosmetics Control at China’s National Institute for Food and Drug Control commented that it is “extremely imprecise and irresponsible” to draw these types of conclusions when you have no understanding of the actual formulation of the product. He emphasized that government regulations clearly stipulate that sunscreen products are classified as special-purpose cosmetics and require administrative licensing before being sold in China. Prior to receiving license approval, these products are evaluated for efficacy according to the Code for Administrative Licensing Inspection of Cosmetics. This evaluation involves human testing to verify that SPF and PA values actual comply with stated levels and indices. These cases of freewheeling online celebrity product claims and promotions underscore the need for caution and regulation in this new marketing channel.