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Julianna talks to Elaine Li of Iremia Skincare about how beauty brands manufacture demand to make their products seem more popular than they really are.

[JD]: Hi, and thanks for listening to The Highlight, a podcast about the beauty and wellness industry hosted by myself, Julianna of Deco Miami Cosmetics, and soon to launch Souki. Whenever I have conversations with other founders about the beauty industry, I think, wow. I wish we could have recorded that. And that's exactly what The Highlight is.

People like things that are popular. Seeing that something is in demand signifies to a consumer that a thing is good and wanted. From a business perspective, popular products sell, but how do you make a popular product even after months of marketing research and meticulous product development? It could all be a big flop. There's no formula to predict the way that the public will react to a new thing.

So, what if instead of focusing your efforts on marketing a product, you manufactured popularity around it yourself. Today, I talk to Elaine Li, founder of indie beauty brand, Iremia Skincare about her take on this marketing trend.

Elaine worked in corporate marketing for a Fortune 500 company before starting her brand, and has been on both sides of the fence of marketing a product. Elaine, thank you so much for talking to me today.

[EL]: Thank you for having me.

[JD]: Knowing that you have a corporate background in this, and obviously some academic training, this is something that I really wanted to talk to you about and I think we need to clarify the word manufacturing in relation to demand, because Marketing 101 is creating demand for a product.

[0:01:36] So, in your eyes, what is the difference between creating demand by marketing a product, and manufacturing demand for a product?

[EL]: I think the basic thing here is remembering what we learned in school. Creating demand is really looking at the strategy behind, for example, launching the product. Your actual product, your story, price points, basically the four P’s, right?

[JD]: The four P’s. Yes. I haven’t heard that in so long.

[EL]: Exactly.

[JD]: I'm not going to put you on the spot, but okay... The four P’s are…?

[EL]: Product, price, place and promotion.

[JD]: A+.

[EL]: So, that is creating the demand. The four P's, looking at the strategy, coming up with all the different tactics and executing the go-to market strategy. So, when it comes to that, there's a lot of stuff that goes into it as well. When you think about the actual product, it has to work, but in some cases it doesn't.

[JD]: Sure.

[EL]: We’ll talk about that later. But I truly believe that products usually will speak for themselves. So, when it comes to manufacturing demand, there's a whole world out there now that really, you're relying on word of mouth. Word of mouth is--. But at the same time, it's not just word of mouth, right? It's more advanced than that. Back then, before social media, it was, I will go and tell somebody how amazing a product is. We didn't share so much on online. It was the world of magazines, TV, and whatever was popular.

[JD]: [Big] media placement.

[EL]: Exactly, and now we're definitely shifting towards influencer marketing, a lot of social media. So, that's kind of where there's a huge shift, and manufacturing that demand, it has become easier, right? Now you're creating an army of people who are willing to talk about your product, but at what cost?

Marketing in general, any sort of brand and the success of it, in my eyes, lies heavily on your budget. It all comes down to how much money you have to spend. Granted, yes, there are brands that rise from nothing.

[JD]: They get lucky and go viral.

[EL]: Exactly. That and ‘viral’, that term. There's always a strategy behind that. Always, you know, unless you have some sort of like amazing cat video or dog video. Those things, to me, that is truely going viral.

[JD]: I think for something to go viral, you have to have a good piece of content. It has to be relevant, and you have to be doing it or pushing it out at the right time. And then you have like some secret sauce on top of the whole thing that is unique probably to the content or the product. Like you can't manufacture something going viral, but there are some independent variables that you can control, but who knows? I don't know if they've cracked the code for how to make something like a piece of content go viral, but definitely not for beauty anyway.

[EL]: Well, and that's the tricky part. That's a conversation I actually had internally when I was in corporate, somebody had said in one of the briefings, “Yeah, we want this  content to go viral.” Like that’s the strategy. But then if you take a step back, how is that a strategy? That's not a strategy.

[JD]: To me, that shows that someone has no idea. Like if they're saying like, “Your job as a marketer for this is to make this piece of content go viral.” I don't think they understand how that works. You know, it’s like, what?

[EL]: You're right. So yeah. I mean, going back to your question. When it comes to corporate marketing and in manufacturing that demand, it does come down to budget. It is in rare cases where a brand can have that incredible story and get picked up by media outlets and shared, and then people are willing to buy. But it's tough to close that loop, right? It's tough to say, I'm going to create this brand. It has this incredible story behind it, and the reason, the purpose, the whole philosophy behind it, and you share it.

Say it does get picked up by the press. There's always going to be a barrier when a consumer purchases. If it's not in store already, if it saved online, we're focusing on e-commerce. There's always going to be that moment where, oh, okay, something's going to prevent me from buying this particular product. Theoretically, it does take between eight to 12, and I can't remember the exact number, eight to 12 interactions with a brand per person before that person makes a purchase.

If you think about how much time, effort, and money has to be spent to gain one consumer, that can be pretty expensive. So, it's a combination between, all right, there's mass marketing and we want to funnel everybody through the purchase funnel to get them to really buy into this brand, buy into the story, and then convert at the end. That's why when I say it's a function of budget because you have to be able to reach those people or as many people as you can within that demographic that you're targeting in order to get them into that funnel to even consider you as purchase intent.

The beauty industry, as you know, as you and I both know, it's hard. It is hard and it is very competitive and everybody has a story. But it really is, at the end of the day, its finding that niche consumer and really just continue to talk about your brand, your story.

[JD 0:08:04]: Most indie brands don't have a huge marketing budget to blow through with manufacturing demand and popularity around their product. But I can't help but think of Sunday Riley, which I talked about in another episode, and their fake Sephora review scandal, where they were basically caught at the direction of the CEO having employees write five star reviews about their products. So, essentially faking the appearance that normal consumers were giving their products a perfect score on the Sephora website for other people to see.

So, have you seen instances of any brands manufacturing demand besides this, and how does it compare it to how big brands do it?

[EL]: I am not surprised. In the indie beauty world, it would be a scandal, but I'm really not surprised that this happened because it's not uncommon. I think what happens is big brands, we always hire agencies. We always hire agents to come up with the creative strategies. Also, as a brand manager or a director, it is up to you ultimately to figure out what that strategy is. There can be miscommunication or a misalignment when it comes to creating the demand from the brand to the agency or the agency to the actual market. I'll dig a little bit deeper because a lot of the times what happens is brands just end up, when they hire these agencies, letting go of control.

[JD]: Interesting.

[EL]: They don't leave a whole lot of detail, all the backend to how these agencies might come up with certain strategies. Brands pay a lot of money to agencies. They pay a lot of money, and of course, if you want that relationship to continue, as agencies, of course, they'll want the business. They can do certain things without telling the brand.

[JD]: This is so interesting because I never really thought about agencies as these middlemen in this whole process when a product is launching or when a brand is pushing some initiative.

[EL]: Yeah. When I was at corporate, I managed a digital marketing department as well, and I oversaw all of the -- I did an audit on agencies. PR agencies, creative agencies, media buying agencies. There's a lot of stuff that happens, and I think we'll save that for another day, but--

[JD]: Sure.

[EL]: There's a lot of stuff that happens. But anyways, I mean, going back to that whole scandal. It's not surprising and I don't think, there's no major differentiator between, for example, if with Iremia, how I would go to market would be the same process as I would take if I were working in corporate. But that's just me. Right?

[JD]: Got you.

[EL]: Manufacturing that demand, you take similar strategies and approaches, but on a much smaller scale. I might not have the big budgets to do it, but you try to have that similar process.

[JD 0:11:40]: We haven't specifically talked about how social media has changed how brands, big or small, can manufacturer demand. One thing that I think about a lot is how to do this on Instagram, and Instagram wants you to manufacturer demand. That's how I feel. I think this because when you boost a post on Instagram, your business profile, the likes from the sponsored version of your post aggregate on the original post. Meaning, if I boost every single one of my Instagram posts for 100 bucks, $1,000, whatever, however much money I want, I'll probably have a few thousand likes per photo from people liking my ad, but my followers, when they're just looking at my grid and not my profile, they see all of those likes. They don't know that that's from [paying to] boost a post.

So, do you think that this is a form of manufacturing demand and what do you think about Instagram forcing brands hands to do this by?

[EL]: A very good question because it touches upon their revenue stream, right? Because they need to make money in order to support their platform, which I get from a business perspective. But when it comes to actually having a brand and getting it out to people that are genuinely interested, then yes, those numbers will be skewed. It affects the look, or at least the perceived popularity around the brand. Hey, again, it comes down to budget. If I had $1 million in my pocket to spend on marketing and I decided to boost every single post part as one of my strategies and work with influencers, and have samples sent out to everyone, and to get them to talk about it, then yeah, that's part of manufacturing that demand.

The other part is, whether or not they genuinely like the product. But again, I think a really, really good example is Glossier because they do a fantastic job of manufacturing that demand. It really is, again, a function of budget because I think a lot of brands have beautiful products, but they might not be as popular just because I can't discover them because they're not in front of me all the time. When Glossier launched, they had their ads everywhere.

[JD]: Everywhere, and they were a little bit controversial, if I remember correctly. So, they were being covered and noticed.

[EL]: Exactly, and someone like me, who they might not eve n be targeting, it caught my attention. I purchased because I was interested in their beautiful packaging and the story behind it. But that's part of that manufacturing demand because really I didn't need anything from them. So, it really does come down to how much money a brand can spend.

[JD 0:15:01]: I have family members that watch talk shows. They get really excited when they see products being advertised as bestselling in the US, number one in the world, number one product was celebrities, blah, blah, blah, blah. Do you think that there are consumer groups that are more susceptible to fake demand, and also would you consider using phrases like this? Do you think that this equates fake demand or manufacturing demand?

[EL]: Yes, it does. So I think when I was in corporate, a lot of this stuff was based on market research. When it comes down to numbers and even with number one blah, blah, blah, in North America. That statement, you can back it up with research of your own; it’s really hard unless you’re a P&G or somebody in that space. It’s very hard to fight.

If I said, “Oh yeah, I'm the number one cream for sensitive skin.” First of all, who's going to notice, and secondly, based on what? I can say, “Yes, it's number one.” It's easy to manipulate numbers. I think that's the point I'm getting at is that you can take anything from market research or whatever it is. You can take those numbers and you can manipulate it to your advantage. It's not an uncommon practice. I mean, you see that in a lot of different spaces in industries.

I definitely think that is something that brands use to their advantage because it gives them clout, right? It gives them something to boast about and you can put it on your packaging, and yes, I do think that people give those brands more attention because you want the best. So for example, if I'm watching TV and you see those As Seen on TV--

[JD]: Sure.

[EL]: --Any one of those shows. I think that hits a certain demographic. It might not hit our demographic, but I think within our space, it's manufactured in a different way.

[JD]: When you look at an Instagram profile and you see that an account has a million followers or you know, a crazy amount of followers, and it's a consumer product brand, you're kind of like, “Hey, what's this?” So, without saying number one shampoo in the world, or whatever, it kind of denotes that information without saying it so blatantly.

Who knows how that brand got those followers. I'm very skeptical after just being aware of how many legitimate brands started off on Instagram by buying followers.

[EL]: Oh, yeah.

[JD]: Maybe, the first a hundred thousand followers were fake or something, some ridiculous number like that, and then they picked up speed and gained a bunch of organic followers after for that. But knowing that happens, it makes me look at any very, very popular account with very skeptically because if you started off popular for no reason, red flags go up for me.

[EL]: I know this is a bit crazy, but sometimes when I look at an account, I'll go in and I'll look at their followers. Or even if on a post, I'll click on the likes and I'll just mindlessly scroll down, see who's actually liking the posts, and if half of those are not their demographic, it is very obvious to see then you know that that particular account is using something to help them.

[JD 0:18:54]: I have pretty much given up on trying to get organic press coverage for my brand, and I'm defining “organic press coverage” creating a press release and sending it out to like a hundred different journalists, hoping that one of them will decide that my product or my story is a good fit for something they’re working on. I've had one organic press mention in four years and it sucks to get no response when you put out a blast like that.

I know I have a good product. I know I have a good brand. I know people like my stuff. How do I get these editors to want to talk about my product? Eventually I just chalked it up to being a nobody with no advertising budget. I can't pay a PR firm or a media outlet for advertising, and none of the editors care about my brand because I don't have money to give anyone to talk about my product.

You mentioned the middlemen agencies before. I know you were talking about marketing firms and not PR firms, but the PR firms play a huge part as gatekeepers for brands to get into the magazines and to get press coverage. Sorry, saying magazines is probably a little dated now. It's just media.

I know that you've said it a few times that money, of course, affects brand's ability to their marketing power, but how does a small brand get over that hump? Do you take my approach where you try it and you just throw up your hands and then you just move on? Or do you keep trying? Like what’s your hot take on my vent?

[EL]: It is frustrating because even for me, I mean within the founders I talk to, PR is their biggest thorn in their side because they are gatekeepers. When I was in corporate, we worked with a small independent beauty PR person, and yes, the story has a lot to do with it. There's the story, what the editors are focusing on, the editorial cycle, but it is constant work trying to get in front of them.

What I learned when I was in corporate was that it is all about relationships. Relationships, and budget. So, with relationships, a lot of the times it comes down to who do you know? Who do you have the ears of? Then you factor in budget.

When I was working on another brand in corporate, one of the things that we kept being asked for is do you have more budget this year because we did this, and we got you in these placements in the magazine, we had X number of impressions. So, can I get more budget now?

Okay, so we increased the budget. Then came the, okay, let's do more guerrilla marketing. Let's do sampling. That in the traditional PR sense, that was the focus is to get people to write about you and also sampling the products to consumers so that they can at least try it and buy it in the store. And then the third thing is obviously the editors. The editors, and how do you get these editors to write about your product?

We spent a ton of money on events. PR launches, bringing in the brand, getting them to do lunch, hiring celebrities so that the editors could come, flying them to different places, putting them out--.

[JD]: So, by flattering the editors?

[EL]: Absolutely! Absolutely! They get flown down to different places to look at process behind the products, the ingredients maybe, but everything had a purpose. For example, we launched this new cream and it was using a certain type of ingredient that was harvested in Africa. Get flown down to Africa for a two, three day event. This is where we source the ingredients, and then they have like an editor lunch, and then they talk to the founders and then they get flown back. So, then that creates one story.

Now I'm not saying that small brands can't do it. I think the smaller brands just need to find that angle, that story. And the unfortunate part is, how do you know what the editor is working on unless you have a relationship with them already? So it's trying to get that relationship, trying to keep very top of mind because they get bombarded by tons of emails and products all the time. So, what makes your brand so special that I should talk about your product?

So, yeah. I mean, working with a PR company or a PR person is part of the process as a big brand. It's needed in a sense because a brand isn't going to be knocking on doors all the time. But as a small brand, it depends on the positioning, honestly, but it's very time consuming and it doesn't always pay off.

The one thing I failed to mention also is we really can, as any beauty brands compare to the corporate space, because from a budgeting perspective, you have to spend that money. If I have $1 million, I have to spend that money. If I don't spend the money, I am not going to get it back.

So, we do annual reviews. We always try and get more money for marketing. If I can prove to the higher ups that, yeah, for 1 million bucks this year I did this, this, this, and this, and I drove the business X percent. Then there's a better chance of me getting more money next year so I can spend.

So, it's this, again, creating that cycle. The more money I have in my pocket, I can spend more with the different agencies to create that demand. And if I don't, then that money's going to be lost. They're going to give it to somebody else, another brand. It’s hard coming out of that world, because constantly I'm thinking, wow, what if I had that? Then I would be in a different space.

[JD]: I get that. I mean for me, my marketing budget, it's like a leftover kind of thing.

[EL]: Yeah. It is always an afterthought. Even for me, like I used to run an $18 million business. Yeah. We had the marketing budget. It was like people would spend between 13 to 20% of the total sales for marketing in the small business space. It's not reasonable.

It's almost like this vicious cycle where if we don't have the sales, you can spend on marketing. Right? But then if you could spend on marketing, how do you get the sales?

[JD 0:26:00]: My last question for you, Elaine. What do you wish consumers were aware of in the advertising industry?

[EL]: The budget that goes into advertising, we only see about 20% of it. If I had $100 to spend as a brand, what I see in terms of, maybe it's TV, maybe it's a digital ad, whatever it is that you as a consumer will see. It's only 20% of the total spend. There's about between 60 and 80, so about 20 to 40% that we're seeing, but like on average it's about 20 goes to all get behind the scenes to creating that particular piece that you are seeing. So all the people that are involved in that, they have to get paid, right. And then you have to think about on the retail.

That's just the advertising. That doesn't even [touch on] retail. If you get into retail, the margins that they take and then the spend that you have to spend with them, and also the listing fees… that's a whole other world as well. So, really, at the end of the day, there's just a lot of money being spent to create demand.

[JD]: That's a perfect period, I think. Elaine, thank you so much for talking to me about this. I feel more educated on the topic and also a little wearier about the whole thing.

[EL]: I didn't mean to make it sound so morbid! It's just, you know, being conscious as consumers, I think we really have to be just aware of what type of information were being fed. That’s all.

[JD]: That's a great final thought. Thanks so much, Elaine.

[EL]: You're welcome. Thanks for having me.

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