Q4 Female Gen-Z DTC Opps: Ulta launches holiday ad, increases digital ad spend after pausing ad spend (Score 77)

Since fewer consumers than ever are currently visiting brick-and-mortars, Ulta Beauty temporarily suspending the majority of its marketing efforts in H1 2020 while its stores remained closed, but in Q3, it launched "Where Dreams Began," a campaign reflecting the next chapter of its brand journey, via liner TV and digital streaming platforms. Ulta is shifting away from print media, instead investing more highly in digital channels. Amid the holiday season, marketing spend will be heavier.

The company began leveraging cloud-based AI to offer personalized recommendations and realistic try-on services via consumers' mobile devices. This allows Ulta to gain access to large amounts of customer data from sources such as its loyalty program and analyze it to provide personalized customer experiences. According to the company itself, this service has fueled upticks in sales and decreases in returns. Since the coronavirus outbreak, this service, GlamLab, has increased by 9x.

As it prepares for 2021, Ulta is particularly focused on US expansion and its Target partnership. The company's leaders hope to expand Ulta's stores, opening 1,500-1,700, within the next several years.

Per execs in the company's Q3 2020 earnings call, Ulta's eCommerce business delivered sales growth grew by around 90%, and buy-online-pickup-in-store remained strong. The company had to open a new fulfillment center, expand operations in existing distribution and expand its ship-from-store program in order to keep up with its online orders.

According to iSpot, Ulta indeed cut off its national TV spend in April and restarted it in September. Its national TV commercials of 2020 targeted Gen-Z and millennials with a female skew and including Hispanic audiences, with top targeted shows including Ridiculousness, The Big Bang Theory, Exatlón Estados Unidos, Love It or List It and Home Town. An approximate YTD spend of $31.3m marks only a slight (7%) drop from the approximately $33.7m spent by this point last year. Ulta's full 2019 spend grew by 8% to around $38.2m from around $35.3m in 2018.

Since the beginning of 2020, Pathmatics estimates the company earned 3.7b digital impressions via Facebook (44%), desktop video (30%), Instagram (17%), desktop display (7%) and mobile display (2%) ads. YTD spend of roughly $32.8m reflects a 38% increase from the roughly $23.7m spent within the same 2019 timeframe. In all of last year, Ulta allocated $26.1m toward this channel, up 35% from the $19.3m allocated within 2018.

Additionally, Magellan reports the company aired 93 podcast ads within the past year, a sharp increase from the 3 aired within the year prior.

This increased focus on digital channels, particularly via paid social and podcast, reinforce my stance that Ulta's historically female target demographic currently consists primarily of Gen-Z. To reach this audience, I expect the company also invests in OTT. Kantar data reports that while Ulta also invests in OOH, print, radio and local broadcast, investments in these channels have dropped severely in 2020, at least as of H1. Remember the company is specifically shifting away from print media. Additionally, Ulta has recently shown a high level of interest in entertainment.

Agency & martech readers - Since Ulta promoted Shelley Haus to CMO around a year ago, we have not heard of any roster shifts; keep reaching out for potential work here. The company currently works with creative AOR McCann NY, media AORs Mediahub Global Boston and MullenLowe NY and digital and social agency partner Rise Interactive.