How E.l.f. Cosmetics Stays Ahead with Strategic Marketing Investments

E.l.f. Beauty's Marketing Strategy Pays Off

E.l.f. Beauty executives revealed during discussions with investors that their increased focus on marketing has successfully attracted younger consumers and boosted sales.

The beauty and cosmetics marketer has significantly increased its marketing spending in fiscal 2024. Five years ago, it was only 7% of net sales, but now it has risen to 25%. In the most recent fiscal quarter, the marketing and digital budgets were even higher, accounting for 34% of net sales.

E.l.f. has been exploring new partnerships, such as teaming up with the sparkling water brand Liquid Death. Additionally, the company made its debut with a national Super Bowl commercial in February. Looking ahead, E.l.f. plans to maintain similar marketing budgets in the coming year to ensure it remains innovative and disruptive in the industry.

E.l.f.'s Successful Marketing Strategy

E.l.f., short for Eyes. Lips. Face., is currently experiencing success due to a more assertive marketing approach, especially during a period where many brands are being cautious with their spending. The company's executives have identified a "disruptive marketing engine" as one of the key factors driving the growth of the business, alongside a strong value proposition and a focus on innovation.

E.l.f. saw a significant increase in net sales during fiscal 2024, with a 77% year-over-year growth to reach $1.02 billion. Sales for the period ending in March also showed a strong growth of 71% YoY, amounting to $321 million. This marked the 21st consecutive quarter of net sales growth and market share gains for the company.

The brand has been actively promoting itself on TikTok, a popular platform for cosmetics trends, and has ventured into unconventional areas to enhance its brand recognition. One successful collaboration was with beverage marketer Liquid Death for a goth-themed Corpse Paint product. Boosted by influencers like Julia Fox, the makeup collection sold out in just 45 minutes and led to a significant increase in traffic to E.l.f.'s website. Interestingly, 68% of Corpse Paint buyers were new customers to the brand. Additionally, E.l.f. has been engaging with gaming platforms such as Roblox, targeting audiences like Gen Alpha, which may not be as popular among other beauty competitors but offer a valuable way to connect with a diverse customer base.

E.l.f. has expanded its reach beyond skincare and makeup products by venturing into traditional media platforms. In February, the brand aired its first national Super Bowl ad, following a regional ad buy in 2023. A bold out-of-home campaign launched in May, featuring ads around Wall Street that challenge corporate America for its lack of diversity on boards of directors. This initiative, named "Change The Board Game," aims to promote corporate diversity.

The brand's positioning has resonated particularly well with young audiences, such as Gen Z. According to CEO Tarang Amin, E.l.f. was identified as the top cosmetic brand among teens in a Piper Sandler research, increasing its market share by 16 points to 38%. Unaided brand awareness for E.l.f. among U.S. consumers has also doubled since 2020 to 26%, narrowing the gap with established competitors like L'Oréal, CoverGirl, and Maybelline.

In the upcoming fiscal year of 2025, E.l.f. is aiming for a more balanced approach to marketing and digital spending, as stated by CFO Mandy Fields during the investor call. The company plans to allocate around 24% to 26% of net sales towards marketing and digital investments.

Editor's P/S:

E.l.f. Beauty's aggressive marketing strategy has paid dividends, propelling the brand to new heights. By embracing innovative partnerships, unconventional platforms, and traditional media, E.l.f. has captured the attention of younger consumers, particularly Gen Z, who are drawn to the brand's disruptive spirit and affordability. The company's success highlights the importance of staying ahead of the curve in a competitive beauty market, where reaching and engaging with new audiences is crucial for growth.

E.l.f.'s focus on diversity and inclusion, as exemplified by its "Change The Board Game" campaign, also sets it apart from competitors. By addressing social issues and promoting a more equitable industry, E.l.f. has demonstrated its commitment to making a positive impact beyond its products. This approach has undoubtedly resonated with consumers who are increasingly seeking brands that align with their values.