K-beauty conglomerates such as Amorepacific and LG H&H are ramping up marketing by sharply increasing the share of advertising and promotion in recent sales. As emerging K-beauty brands such as APR and d'Alba Global have established a success formula by rapidly scaling overseas with social media, short-form content, and exposure on global platforms at the forefront, large companies are also expanding related investments and focusing on strengthening consumer touchpoints. The industry says competition in the K-beauty market is shifting to online visibility and securing consumer response, and big companies are actively absorbing indie brand-style marketing strategies.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 2nd, Amorepacific's advertising and promotion expenses in the first quarter of this year were 147.6 billion won, up 19.7% from a year earlier. During the same period, sales were 1.1358 trillion won, up 6.4% from 1.0675 trillion won a year earlier. With the growth rate of advertising and promotion outpacing sales growth by threefold, the ratio of advertising and promotion to sales rose 1.4 percentage points, from 11.6% in the first quarter of last year to 13.0% in the first quarter of this year.
LG H&H also spent 114.8 billion won on advertising and promotion in the first quarter of this year, up 11.7% from a year earlier. In contrast, sales during the same period were 1.5766 trillion won, down 6.8% from 1.6918 trillion won a year earlier. Even as sales declined, spending on advertising increased, pushing the ratio of advertising and promotion to sales up 1.2 percentage points, from 6.1% to 7.3%.
A key reason cosmetics conglomerates are increasing advertising and promotion is the new growth formula created by indie beauty brands. In the past, Amorepacific and LG H&H generated steady sales through traditional channels such as department stores, duty-free shops, and door-to-door sales, centered on long-running brands including Sulwhasoo, Hera, Laneige, The History of Whoo, and O HUI. But as the K-beauty market has diversified from a China focus to North America, Japan, and Southeast Asia, there is growing need for marketing to imprint brands anew on overseas consumers.
According to a recent report published by Samil PwC, the K-beauty market is shifting from a structure in which sales expand after brand awareness is formed to one where demand is first created through distribution channels and platforms. In the past, the main pattern was to expand the sales network based on brand recognition. Recently, however, products are first gaining consumer response on TikTok, e-commerce, and global multi-brand platforms and then spreading to offline channels, a trend that is gaining traction.
In practice, indie brands have actively leveraged a "high marketing spend" strategy as a growth formula. APR's advertising and promotion expenses in the first quarter of this year were 116.7 billion won, a sharp increase of 147.1% from a year earlier. During the same period, the ratio of advertising and promotion to sales also rose from 17.8% to 19.7%.
d'Alba Global also spent 22.9 billion won on advertising and promotion in the first quarter of this year, up 33.8% from the same period a year earlier. As sales during the same period increased 50.5%, from 113.8 billion won to 171.2 billion won, the ratio of advertising and promotion to sales edged down from 15.0% to 13.3%. However, d'Alba Global has engaged in aggressive marketing, spending about 23% of total sales on advertising and promotion over the past two years.
Large companies are also expanding online and short-form-based marketing. In November last year, Amorepacific carried out the global campaign "SHINE YOUR SCENE," led by the Mise-en-Scène brand's "Perfect Serum" product. The method involves rolling out TikTok challenges in the United States, Thailand, and Indonesia based on participation from influencers, including the girl group aespa. LG H&H, for its part, is strengthening content collaborations with local creators on TikTok and Instagram, using the recent entry of the Dr. Groot brand into Sephora as a springboard.
S him Yang-gyu, a researcher at Samil PwC, said, "In the recent K-beauty market, product competitiveness and consumer response have become the key elements determining performance, rather than brand awareness," and added, "The industry has transformed from a structure that depends on each brand's overseas expansion to one that absorbs global demand around channels, with online and offline channels working complementarily."