The Barefaced Podcast: How Advertising Laws Changed the Beauty Industry

Release Date: October 4, 2024
Host: Lily, Barefaced

Introduction

In the episode titled "How Advertising Laws Changed the Beauty Industry," host Lily delves into the profound impact that advertising regulations, particularly the use of the hashtag #ad, have had on the beauty sector. She explores the evolution of beauty influencing, legislative changes, and the shifting dynamics between brands, influencers, and consumers.

The Rise of Beauty Influencing on YouTube

Early Beginnings:

• 2005 Onwards: Beauty blogging and vlogging gained traction with the launch of YouTube, making beauty one of the platform's defining niches.
• First Decade: Makeup tutorials became popular, allowing viewers to see product application and performance firsthand. Lily cites the early success of creators like Michelle Fan and Zoella, whose reviews significantly boosted product sales.

  "Michelle Fan in 2010 was known for her use of Lancome products... those products saw a substantial uptick in sales." ([04:15])

Entrepreneurial Ventures:

• Brand Creation: Pioneering beauty YouTubers launched their own brands, setting precedents for influencer-driven business models.
  • Marlena Snell's Makeup Geek (2008): Started as a tutorial resource, quickly evolving into a cosmetics line.
  • Pixiwoo's Real Techniques (2011): Achieved $30 million in annual sales by 2014.

  "Marlena really did something never seen before. It was crazy." ([10:45])

Regulatory Response:

• 2013 FTC Guidelines: In response to influencer-driven sales spikes, the Federal Trade Commission updated its rules, mandating clear disclosure of material connections between endorsers and brands.

  "The FTC's guidance made it clear that any endorsement... must be accompanied by disclosure." ([12:30])

Social Proof and the Mechanics of YouTube Growth

Social Proof Dynamics:

• Emotional Attachment Over Expertise: A 2020 study highlighted that emotional connections, rather than expertise, were primary drivers of vlogger popularity and influence on purchasing decisions.

  "A YouTube beauty blogger's expertise had no significant effect on their popularity. Emotional connection did." ([15:10])

YouTube's Discovery Flaws:

• Algorithm Limitations: Poor discovery mechanisms meant growth was exponential for big creators, fostering trust and loyalty but making it hard for smaller creators to emerge.

  "Bigger creators just kept getting bigger. Smaller creators would grow so, so slowly." ([17:50])

Collaborative Growth:

• Influencer Partnerships: Collaboration between YouTubers became essential for reaching new audiences, exemplified by partnerships like Laura Lee and Manny Mua or James Charles and Morphe.

The Shift to Gray Areas and Eroding Trust

PR and Unboxing Culture:

• Mass PR Seeding: Brands began sending products to influencers without mandates to post, leading to unboxing and haul videos that fueled consumption.

  "This no pressure to post narrative was intentional... creating unboxing culture." ([20:05])

BrandTrips Phenomenon:

• All-Expenses-Paid Trips: Brands offered luxurious trips to influencers, fostering alliances that blurred the lines of genuine endorsements.

  "Influencers never wanted to speak badly about a brand anymore because of these trips." ([22:15])

Declining Trust:

• Skepticism Rise: The influx of free products and trips led consumers to question the authenticity of influencer recommendations.

  "Many people stop trusting influencers altogether." ([23:30])

Regulatory Crackdowns and the Rise of TikTok

Increased Regulation:

• ACCC Investigations (2017-2021): The Australian Competition and Consumer Commission intensified scrutiny on influencer practices, targeting fake followers and misleading reviews.

  "The ACCC made it clear that misleading consumers could result in penalties." ([24:25])

Impact on Platforms:

• Account Deletions: Facebook and Instagram cracked down on buying/selling accounts, leading to the loss of numerous ghost followers.

  "I followed so many influencers where it just felt like their followings halved." ([24:45])

TikTok's Emergence:

• Consumer Shift: Disillusioned with YouTube influencers, consumers turned to TikTok for authentic, everyday beauty reviews, valuing product quality over influencer prestige.

  "With TikTok, we wanted to see everyday people's beauty reviews without hidden incentives." ([25:10])

Evolving Media Literacy and Expert Influence

Enhanced Media Literacy:

• Consumer Awareness: Increased awareness of influencer marketing tactics led to more discerning consumption of beauty content.

  "We're becoming increasingly aware of this type of marketing and its implications." ([26:30])

Rise of Experts:

• Credible Voice: Growth of expert-driven content (makeup artists, dermatologists) on platforms like TikTok provided trustworthy product evaluations.

  "We now trust makeup reviews from professionals like Patrick Ta or dermatologists like Dr. Shah." ([27:15])

Stricter Health Regulations:

• TGA Guidelines (2022): Influencers must disclose relationships when endorsing therapeutic products like sunscreen, ensuring compliance with advertising standards.

  "Influencers are prohibited from promoting these products unless content complies with advertising standards." ([28:40])

Conclusion and Recommendations

Navigating the New Landscape:

• Focus on Engagement Over Reach: Brands are urged to prioritize meaningful engagement with target audiences rather than chasing vanity metrics.

  "Stop chasing vanity metrics and worry about who is listening." ([30:20])

Product Over Marketing:

• Emphasize Efficacy: Lily emphasizes the importance of product quality over aggressive influencer marketing.

  "A good product is going to drive so much more sales value than working with influencers ever will." ([31:10])

Regulatory Compliance:

• Stay Informed: Brands should familiarize themselves with relevant advertising guidelines (e.g., ACCC, FTC, ASA) and consider consulting legal experts to avoid costly violations.

  "Look at having someone like the Social Law Co into your business for the day for training." ([32:00])

Innovation and Authenticity:

• Address Market Gaps: Encouraging innovation by addressing genuine consumer needs rather than exploiting marketing gaps can lead to sustainable growth.

  "There are so many gaps in the beauty market when it comes to needs for innovation." ([32:45])

Final Thoughts

Lily concludes by acknowledging the complexities of influencer marketing within the beauty industry. While influencer-driven strategies have democratized brand launches and increased accessibility, they have also led to challenges in trust and authenticity. Stricter regulations and a shift towards platforms like TikTok reflect a maturation in consumer expectations and media literacy, pushing brands to adapt by focusing on quality and genuine engagement.

Notable Quotes:

• "The FTC's guidance made it clear that any endorsement... must be accompanied by disclosure." ([12:30])
• "A good product is going to drive so much more sales value than working with influencers ever will." ([31:10])

Resources Mentioned:

• Australian Competition and Consumer Commission (ACCC): barefaced.substack.com
• Social Law Co: Instagram handle @SocialLawCo

This comprehensive overview captures the essence of how advertising laws and evolving social media landscapes have reshaped the beauty industry, highlighting both challenges and opportunities for brands and consumers alike.