Are beauty influencers still a good investment?

Plain and simple, influencers have rewritten the rules of marketing the beauty segment. Brands used to spend millions to create a buzz for a new item. Today, with one post, consumers may flock to a new lipstick or shampoo they see or hear about on Instagram or YouTube. 

But are the social stars losing their luster — especially as they fight among themselves? Have they sullied their reputations with too many ads? Are celebrities reclaiming territory that was once theirs when they were the ones whose influence used to move the sales needle?

Buckle your seat belts, as these are just a few of the questions the industry faces as it gears up for a new year and still more constant change in the way consumers buy merchandise. 


Many suppliers are putting their faith in the power of influencers. Just last November, for example, Coty got involved with Kylie Jenner, perhaps the most important influencer in the business, by acquiring a majority stake in Kylie Cosmetics in a deal that valued the company at $1.2 billion. Kylie Cosmetics brings about $200 million in annual sales to the Coty financial ledger, up 40% over 2018 levels. 

Coty CEO Pierre Laubies said the brand delivers younger shoppers obsessed with Kylie Jenner’s every move. Part of the deal is that Jenner, who maintains a 49% share, will stay on as a creative force. She has not eased off posting since the Coty deal was announced. Instead, she is amplifying her voice and launching a collection inspired by her 1-year-old daughter Stormi. 


Coty CFO Pierre-André Terisse succinctly summed up why Coty was willing to shell out big bucks for the brand, which it has renamed Kylie Beauty. “With a single post, she’s able to reach more than double the number of people who watch the Super Bowl every year,” he said in an analyst call. 

Coty, which still is digesting the 41 brands it bought from Procter & Gamble, plans to expand the brand internationally and extend into other categories. Coty will act as the licensee for skin care, fragrance and nail polish — categories where Coty has expertise. Jenner already has a successful skin care collection in her arsenal. “In May, Kylie Skin sold out in 10 hours and is on track to produce $25 million in 2019,” said Terisse, who added that 50% of its sales were repeat purchases. “The brand has moved from cosmetics to skin care with so much success,” he said. “We don’t see signs that this will not be a sustainable brand.”

Jenner is not the only powerful name in beauty, though. Numerous other influencers post both organic and paid advertising for beauty brands. Many even collaborate on collections, especially palettes that fly out of the stores. Among the biggest names are James Charles, Bretman Rock, Kandee Johnson, Jefree Star, Tati Westbrook, Patrick Starrr and Jaclyn Hill. Some collections are so popular people line up overnight and are even left crying when the item sells out.

Influencers, such as Jaclyn Hill, also have their own brands, but they do not always fare well as she found out when social media posts called out production flaws in her namesake brand. She had to pull the line off the market to reboot. 

The mass market industry benefits from tutorials from popular YouTubers who often devote entire tutorials to a look accomplished entirely “with drug store” makeup. Some of the popular brands used include e.l.f, Nyx and Wet ‘n’ Wild. 

Not all of the publicity generated by social stars is positive. The influencer community came under the microscope last year as several of the most visible figures had public fights. Negative publicity is not always what a brand wants. One high-profile squabble was between Charles and Westbrook. Charles, who skyrocketed to fame after CoverGirl named him the brand’s first male spokesmodel in 2016, and Westbrook had a public feud that started over a gummy vitamin post and quickly escalated, resulting in Charles losing about 3 million subscribers (he has since gained many back) while Westbrook gained nearly 4 million.

Two social media watchdog sites, Estee Laundry and Hereforthetea2, are calling out influencers for everything from cultural appropriation to “greenwashing.” When brands launch products claiming to be vegan or clean, users dig into ingredients and call out ones that don’t make the grade. Social media watchdog sites, whose posts are penned anonymously, have even convinced brands to change what they consider offensive product names and advertising campaigns.


Beyond controversy on social sites, influencers have lost some credibility because of sponsorships. Many marketers are shifting to micro influencers (those who have between 1,000 and 10,000 followers), who have higher trust and better engagement with followers.

Maesa takes great care to find influencers who are aligned with their product positioning. For example, Maesa and Walmart’s newest exclusive brand, Hairitage, is in partnership with Mindy McKnight, known for her YouTube channel CuteGirlsHairstyles. Scott Oshry, Maesa’s chief marketing officer, said McKnight has shied away from teaming up with a brand in the past. “She was waiting for the right brand, and this was it,” he said of the hair care line, which addresses all hair textures. Influencers have worked well in the past for Maesa — the Kristin Ess line sold at Target is a $100 million-plus franchise.


The entire influencer ecosystem also could be rocked with major changes in social media trends. Instagram growth has slowed, and there is a huge buzz around TikTok. A recent report from eMarketer noted that Instagram is losing relevance, which it suggested could be from the bevy of paid posts and drama. Instagram’s U.S. user growth rate fell from 10.1% in 2018 to 6.7% in 2019, the first time that rate reached a single-digit pace, according to eMarketer’s report — “Instagram User Growth in the US Will Drop to Single Digits For the First Time.” The market research company predicted that Instagram’s growth rate will drop to 4.5% in 2020 and continue to decline throughout the next few years.

Before there were social tastemakers, however, there were celebrities who liked to get behind beauty products. They were nudged out by influencers who consumers felt really knew products rather than the stars who they felt just “slapped” their names on fragrances or cosmetics. Now famous faces are borrowing a page from influencers and co-creating beauty brands with leading marketers. Tracee Ellis Ross just launched Pattern, a hair line in conjunction with Beach House, a brand-building firm. Taraji P. Henson, who was cooking up her own scalp care in her kitchen, has teamed up with Maesa for a line called TPH. “Stranger Things” star Millie Bobby Brown recently worked with the Beach House Group on a beauty line exclusive to Ulta Beauty called Florence by Mills

Shaun Neff, co-founder of the Beach House Group, said what’s different about this go around with celebrities is that products are made and then matched with the right star. “We’re not here just to make products for celebrities. We pick celebrities who resonate with the brand,” he said.

Neff’s blueprint for brand success is for stars to stick with what they do best. “All of the kids are so smart these days and see through things. They know people are paid to post. Stay in your lane and only sell what makes sense,” he added. “If a celebrity is known for cooking, they shouldn’t start talking about trucks.”

Several brands that never had famous faces are giving stars a spin. Clinique, for example, just signed Emilia Clarke as its first global brand ambassador. In the past, Clinique relied on models for its campaigns.

Whether an influencer or star, Stephanie Wissink, managing director of investment banking firm Jefferies, cautioned that a lot rides on the behavior of the person touting a brand. “Despite the benefits, there are numerous risks with celebrity brands, such as faddish affinity value, unpredictable behavioral risks and lifecycle changes,” she said. “Protecting authenticity and driving repeat purchase can prove a challenge.”