Beauty and the Bot: A True Love Story in the Beauty Industry (#11)

I’ve spent about 10 years of my career amplifying the growth of both audiences and revenues through digital channels for a variety of beauty brands, from startups to billion-dollar giants. I've witnessed firsthand the passion and innovation that fuel this industry. With absolute certainty It’s been one of my favorite industries to be a part andI am thrilled to explore how artificial intelligence (AI) is reshaping it.

In my journey, I've had the pleasure of collaborating with many industry veterans, including Wendy Ohrbach, whose industry insights have always been invaluable to me. With over 20 years of experience her impacts have been felt across Revlon, Sally Hansen, Coty, and JAFRA where she’s led the development and delivery of many of the products we all adore. Today, we'll delve into AI's continuing impact on the beauty industry, examining how it influences business processes, product development, marketing, and consumer experience, painting a comprehensive picture of this AI-driven evolution.

AI's Impact on Internal Business Processes

One of the things that caught my attention when speaking with Wendy was how the business is being impacted in fantastical ways - only they’ve recently become real. AI in many ways have been around for quite some time. However it’s only been over the last couple of years where the speeds and capabilities have been amplified. In project management, there’s a term known as the Iron Triangle. For those of you who don’t know what it is, thing of a triangle with a word at each point: Cost, Scope and Time. What it represents is you can rarely change one without impacting the other two without reducing the quality of what’s ultimately delivered.? For instance lower budget, the scope goes down or time goes up to deliver what’s expected.? AI can make this concept obsolete. ? It’s not only revolutionizing internal processes, making them more efficient and data-driven, but it’s also able to lower costs and increase output.?

Wendy shared with me a prime example of how AI is making this happen. Citrine Informatics? is capable of leveraging AI to optimize material selection and product formulation. Citrine's AI platform uses vast datasets to predict the properties of new materials, enabling rapid and accurate formulation adjustments. This capability allows brands to maintain product timelines and effectiveness, even when certain ingredients become unavailable and it can be matched to ingredients or elements that maintain quality and costs.? Additional improvements on tools from market research companies like? Mintel have launched their own AI Chatbots delivering answers to the questions your organization might have about customers, products and markets. Why this is important for beauty teams is that AI is only as good as the data it uses. Compared to tools like ChatGPT or Claude AI,? Mintel’s data is? specifically good for the beauty industry and less likely to provide hallucinations or bad insights.

Brands are also taking things internally as well.? On April 26th,? Estée Lauder announced they’ve established an AI innovation lab to develop internal tools like chatbots, which help identify trends, pull authorized product claims, and accelerate R&D. Their AI tools can quickly analyze vast amounts of consumer feedback and market data to identify emerging trends and preferences, speeding up the development of new products. Remember, AI is only as good as the data it uses. Estée Lauder has over 20 brands including those in the prestige/luxury category (Aerin and La Mer) those in premium/mid-range (Smashbox and MAC) and accessible brands (The Ordinary) giving them not only a wide range of customer profiles, but also product type insights.

AI's Impact on Product Development

AI is also revolutionizing product development, addressing specific skincare needs such as acne and aging. By analyzing extensive datasets, AI can identify patterns and predict which ingredients will be most effective for particular skin concerns. This results in more targeted and efficient formulations.

Generative AI for Rapid Prototyping

Generative AI enables beauty brands to accelerate development timelines by allowing for virtual testing and rapid prototyping. AI systems can predict how new formulations will perform, allowing scientists to refine products before they even reach the physical testing phase. This capability not only speeds up the development process but also reduces costs associated with trial and error. For instance, by using AI to simulate the effects of various ingredient combinations, beauty companies can quickly identify the most promising formulations, minimizing the need for lengthy and expensive physical testing phases. This approach is particularly beneficial for brands looking to innovate quickly and respond to market trends and one such company providing this type of service is Silico.

Personalization and Ingredient Optimization

AI is also enhancing personalization in product development. Wendy believes this to be a key in today’s beauty industry as consumers are no longer looking at personalization as a nice to have - but a need to have. This hasn’t gone unnoticed. AI-driven diagnostic tools can analyze a consumer's skin condition and recommend personalized skincare regimens. This level of personalization ensures that consumers feel they are receiving products tailored to their unique needs, improving overall satisfaction and effectiveness (examples below).? Additionally, as noted earlier, platforms like Citrine Informatics can reconfigure formulas if an ingredient becomes unavailable, ensuring that production timelines and product efficacy are maintained. This adaptability is crucial in an industry where supply chain disruptions can impact product availability and consistency.

In skincare treatments, AI is being used to develop personalized solutions for various skin issues. For example, AI algorithms can analyze data from skin scans to identify specific conditions such as dryness, redness, or acne. Based on this analysis, the AI can recommend products or treatments that are tailored to address these issues, improving the effectiveness of skincare regimens. This level of customization was previously unattainable with traditional methods, but AI makes it possible to deliver highly targeted solutions.

The Youthforia Case

A recent example highlighting the importance of AI in formulation processes is the backlash against Youthforia's foundation shades. Initially criticized for not offering dark enough shades, Youthforia attempted to rectify this by expanding their range. However, their darkest shade ended up resembling blackface paint, which last week, led to further criticism. This issue arose because the product lacked the right ingredients to match darker skin tones. I’d bet AI wasn’t used in this process. Had AI been used, with a tool like Citrine, or for this start-up,? even ChatGPT -which correctly identified yellow and red iron oxide for the formulation when prompted, it might have caught these issues before the products reached the market. AI could have analyzed the formulation and ensured the shades were appropriate and inclusive, preventing the backlash. This underscores the potential of AI to help brands avoid such pitfalls by thoroughly testing and refining products before they launch.

External Marketing/Advertising Efforts

L'Oréal, an innovation leader, first introduced the Makeup Genius Augmented Reality app in 2014, allowing users to virtually apply makeup using their phone as a mirror to apply augmented reality cosmetic looks like “Cats Eye” and “Glam Star” and then buy the look or individual products instantly. It was an instant hit globally. ??This year, its successor Beauty Genius was demoed at CES in January showcasing some of the same features OpenAI proclaimed on Monday would soon be available in GPT4o, and Google followed suit two days later. Again, L'Oreal did it first. During my 10 years in beauty, I saw this a lot. The Beauty industry is often ahead of the curve in digital technologies.

AI art generators, speech AI for audio/video ads, and AI chatbots are also becoming integral to their marketing strategies. Brands are harnessing these technologies to craft personalized, engaging content. For example, L'Oréal's AI tools can generate thousands of variations of an ad, each tailored to specific audience segments, ensuring more effective and relevant marketing campaigns. These tools analyze vast amounts of data to predict which types of ad content will resonate best with different demographics, allowing for highly targeted and efficient marketing efforts.

Additionally, L'Oréal uses AI to produce product shots quickly and adjust them for different contexts, such as social media and e-commerce platforms. This reduces the time and cost associated with traditional photoshoots and allows for more dynamic and responsive marketing efforts. AI can adjust lighting, background, and other elements to create visually appealing product images that are optimized for various platforms and audience preferences.

Speaking of Social platforms,? the age of Influencers is also being impacted by AI. At one point in my career, I was generating videos for social platforms that would build awareness and partner with OG mega and macro influencers Elle Fowler and Michelle Phan to create product videos when rev-share wasn’t seen as a non-option.? With AI, there are now AI Influencers which at this point have the potential to make that model active again.?

AI influencers, or virtual influencers, are computer-generated personas created using CGI, motion capture, and artificial intelligence to promote products on social media. These digital characters, like Lil Miquela and Lu of Magalu, mimic human behavior and interact with followers just like real influencers. For beauty companies, AI influencers offer significant advantages. Brands can maintain complete control over their messaging, eliminating the risk of unpredictable behavior or personal scandals associated with human influencers. This control ensures consistent brand representation and minimizes reputational risks. At this point AI influencers are often more cost-effective, with lower rates than top human influencers. They can work 24/7, continuously engaging with followers and generating content without needing rest, increasing their efficiency and output.

However, I truly believe, there’s a novelty now that’s boosting AI and AI influencers. One major drawback is the lack of authenticity. We know AI is not like us. Young consumers, particularly from Gen Z and Gen Alpha, often seek genuine connections and relatability from influencers. Despite their lifelike appearances, AI influencers lack real-world experiences and emotional depth, making it harder for followers to trust and connect with them.

Furthermore, AI influencers can perpetuate unrealistic beauty standards by embodying idealized physical features, contributing to issues of body image and self-esteem among social media users. Ethical considerations regarding diversity representation and the reinforcement of stereotypes also need to be addressed, as creating idealized digital personas can perpetuate harmful societal norms. But unlike the impact the Kardashians have had, It’s not someone to envy or aspire to be like, a keystone to their continued popularity.

Not all brands are having it though. Dove Beauty, outright has delivered a campaign using AI criticizing AI while sticking to their roots of what beauty should be and is to the brand. Beauty should be kept real.? I found it to be both inspiring and extremely well done.? Here’s a look at their spot.?

AI's Impact on Consumer-Facing Tools/Experiences

For customer facing tools, there’s also a lot of activity. The benefit doesn't just sit with customers using the tools, the data collected provides the brands with a wealth of information that not only strengthens product insights, but also provides the ability to see emerging trends and potential threats.

Sephora and Smart Skin Scan

Earlier this year, Sephora announced Smart Skin Scan, a new skin diagnostic tool that allows for enhanced personalization. This tool is designed to capture personal data to tailor the entire onsite experience and enhance in-store clienteling. By integrating this with its existing ColorIQ diagnostic, Sephora can drive increased conversion across channels. The Smart Skin Scan, was developed in partnership with personalized skincare brand Proven. It uses AI to analyze skin types and conditions, providing customized product recommendations and uses machine learning algorithms to refine its recommendations over time, making it increasingly effective as it gathers more data.

Ulta and Haut AI

Following Sephora's announcement, Ulta announced a partnership with Haut AI to incorporate personalized skincare diagnostics at the store level. Haut AI's latest product, SkinGPT, uses generative AI to visually simulate the effects of products based on a personalized quiz and the brands' clinical data. This AI-driven approach allows Ulta to offer customers a highly tailored skincare regimen.

If these two tools sound familiar, they should. I remember building website skincare tools using decision trees to recommend products, and I wasn’t alone. Perricone MD and Murad, key competitors to the brand I was working with, also had similar tools. They’re gone now.? Perricone has embraced human personalization and Murad has abandoned it all together. What Ulta and Sephora are launching now are slightly evolutionary in what they’ll deliver to the consumer. Skincare takes time to show results, and while image or video manipulation is nice, once the product is tried, and weeks go by and what was remembered isn’t seen, that’s the end game.? Plus, we've already got Snapchat, Instagram, and Facebook filters that provide these visual benefits across their own platforms and they can extend onto other platforms like Tinder, Bumble, and Match. With that being said, here are a few innovations that will? likely have a far greater impact on customer satisfaction and retention.

Galderma and FACE by Galderma

Galderma launched FACE by Galderma, an interactive consultation process that shows patients the potential results of cosmetic injectables. Developed in partnership with Crisalix, a pioneer in 3D, virtual reality, and augmented reality aesthetic simulation, this tool uses AI to provide realistic visualizations of treatment outcomes. By integrating AI with VR and AR technologies, Galderma offers a more immersive and informative consultation experience, helping patients make more informed decisions about their treatments, and make no mistake,? when you see it, you believe it. ? When you see it, you believe it and these are more immediate.

Prose and Customizable Skincare

Prose, known for its customizable haircare, recently entered the skincare market with an AI-powered line that is fully customizable based on a user-led online consultation. By generating custom formulations tailored to individual needs, generative AI can provide consumers with products precisely suited to their unique characteristics and desired outcomes. The online consultation collects detailed information about the user's skin type, concerns, lifestyle, and environment. This data is then processed by AI algorithms to create a personalized skincare regimen.

Prose's AI-driven approach goes beyond simple customization by continually learning and adapting to each user's needs. For instance, as users provide feedback about their experience with the products, the AI system refines its recommendations, ensuring that the formulations evolve with the users' changing skincare needs. This ongoing customization process ensures that users receive products that are always aligned with their current skin conditions and preferences.? It’s the ongoing relationship that has potential to improve and extend loyalty.?

Apps like Neutrogena's Skin360 use AI to analyze skin and recommend products, offering consumers tailored solutions at their fingertips. These apps use advanced image recognition and machine learning to provide detailed skin assessments, helping consumers make informed decisions about their skincare routines. The AI analyzes images of the user's skin, identifies issues, and recommends products that are specifically designed to address those issues, providing a highly personalized skin care experience.

Positives & Negatives of AI's Impact

AI brings numerous benefits, including increased efficiency, personalized experiences, and rapid innovation. However, it also poses challenges. Ethical concerns, potential biases in AI algorithms, and the need for human oversight are significant issues that must be addressed.

AI's ability to process and analyze large datasets can lead to more informed decision-making and innovation. However, it also raises concerns about data privacy and the potential for bias in AI models. Ensuring that AI systems are transparent, ethical, and inclusive is crucial to maintaining consumer trust and delivering fair outcomes.

For instance, AI-driven personalization can enhance customer satisfaction by offering tailored product recommendations and experiences. However, the reliance on data raises concerns about ethics, privacy and data security. Brands must be vigilant in protecting consumer data and ensuring that their AI systems are designed to avoid biases that could lead to discriminatory practices or misunderstandings.

Bias in AI models can occur if the training data is not representative of the diverse consumer base. This can lead to products and recommendations that do not cater to all skin tones and types, as seen in the Youthforia case. Addressing these biases requires ongoing monitoring and updating of AI models to ensure they reflect a broad and inclusive range of consumer needs.

Moreover, the automation of tasks through AI can lead to job displacement, which is a significant concern for the workforce. While AI can handle repetitive tasks efficiently, it is essential to find a balance that allows for human oversight and intervention where needed. Training and upskilling employees to work alongside AI can help mitigate these challenges, ensuring that the workforce adapts to new technologies rather than being replaced by them.

Emerging AI Applications

AI's future in the beauty industry extends beyond current applications. Blockchain technology and the metaverse are emerging areas where AI could play a pivotal role. Blockchain could enhance transparency and trust in product sourcing and authenticity, while the metaverse presents opportunities for immersive, interactive brand experiences.

For example, AI-powered virtual stores in the metaverse could offer consumers personalized shopping experiences, allowing them to explore products and receive recommendations in a virtual environment. These virtual stores could use AI to analyze consumer preferences and behavior, offering tailored product suggestions and interactive experiences that mimic real-world shopping. There are plenty of examples of metaverse successes beginning to occur on platforms like Fortnite, and it’s only a matter of time where beauty customers are targeted there as well.?

Blockchain can ensure the authenticity and traceability of beauty products, addressing concerns about counterfeit goods and ensuring ethical sourcing. By recording every step of the production and distribution process on a blockchain, brands can provide consumers with detailed information about the origins and authenticity of their products. This level of transparency can build trust with consumers and differentiate brands in a competitive market.

The integration of these technologies could revolutionize how consumers interact with beauty products and brands, offering new levels of personalization, engagement, and trust. As AI continues to evolve, its applications in the beauty industry will likely expand, offering even more innovative and transformative solutions.

AI is undoubtedly transforming the beauty industry, offering incredible opportunities for innovation and efficiency. From internal processes and product development to marketing and consumer experiences, its impact is profound. Yet, as we navigate this AI-driven future, it's crucial to balance technological advancements with ethical considerations, ensuring that the industry remains inclusive and responsible.

With insights from industry experts like Wendy’s, we can embrace AI's potential while addressing its challenges, paving the way for more personalized products, more effective products and a more connected and innovative future in beauty.??

SOCIAL BENEFIT RATING

• Business Benefit Score: 5 (Very High)
• Beauty Industry Worker Risk Score 3 (Medium)
• Consumer Benefit Score 5 (Very High)

Enjoying the Pandora's Bot Newsletter series? Don't forget to subscribe! And if you think your friends or colleagues would enjoy it, please share!

Also, I'm offering 5 free hours for any Digital Marketing or IT needs for any new client - feel free to see what my team and I can do, no strings attached!

#BeautyIndustry #cosmetics #AI #productivity #Skincare #TechTrends