Online Exclusive: Fragrance Foundation Balance Sheet—Making the Most of Celebrity
Celebrity fragrances remain on a roll, but new ideas in marketing can increase profits generated from using the personality spin.

While fragrance endorsements by celebrities may seem to be a somewhat recent phenomenon, in fact

(L-R): Karen Grant, Rochelle Bloom and Jamie Matusow

the trend started 50 years ago with a certain iconic blond bombshell. Today, another voluptuous blonde has turned a designer fragrance into one of the most coveted perfumes in the world.

An Elizabeth Taylor scent still captures the top of the retail charts, as does the Bieb’s record-setting fragrance, which turned retail on its ear with its multitude of savvy marketing strategies.

In a celebrity-obsessed world, how do high-profile endorsements affect sales? What are the most effective collaborations—and how can the best fragrance deals be made?

On December 1st, The Fragrance Foundation brought together several industry executives for a discussion on celebrity fragrance, titled “The Celebrity Balance Sheet: Is It A Win-Win for Everyone?” The session looked at the history and trends in celebrity fragrance and how brands and marketers can find new ways to grow the category and make it more profitable. How can we get celebs to take the marketing of their fragrance as seriously as a movie launch or a new CD release?

Panelists at the event held at the Time-Life Building in midtown Manhattan included Rochelle Bloom, president of The Fragrance Foundation, who acted as moderator; Karen Grant, vice president of beauty/senior global analyst-The NPD Group (and a member of Beauty Packaging’s Board of Advisors); Terry Darland, president of Parfums Christian Dior-NA; Linda Levy, vice president marketing & cosmetics, Macy’s; Ron Rolleston, executive vice president, creative and business development-Elizabeth Arden; and Theo Spilka, vice president new business development & licensing worldwide-Firmenich.

Grant led off the discussion with an overview of celebrity fragrance, recounting Marilyn Monroe’s offhand endorsement 50 years ago. When asked by a reporter what she wore to bed, the husky-voiced actress replied, “why Chanel No 5 of course.”

There’s no doubt about the power of a celebrity endorsement, said Grant. “It raises awareness and broadens the reach.”

Grant pointed out that celebrity leads the fragrance mass market, and said the No. 1 overall fragrance brand remains White Diamonds.

(L-R): Levy, Darland, Spilka, Bloom, Grant

She added that J.Lo’s Glo and Britney Spears’ Curious “catapulted the celebrity fragrance market.” Today, she noted a new group is carrying the torch—with Someday (Justin Bieber) and Wonderstruck (Taylor Swift).

Celebrities have been the push behind prestige, noted Grant: “By 2006,” she said, “without celebrity fragrance, prestige would have declined.”

Grant gave the crowd gathered in the Time-Life auditorium the good news that there’s been an increase in dollars and in units according to data from January through June 2011, and said, “there’s definitely been a turnaround.” She reported that there’s been a “compelling” sales volume, which has rung up $1.3 billion since 2002. There’s also been a sixfold increase in the number of celebrities involved in fragrance endorsements since 2002.

While celebrity fragrances seem to rule the counter—and the web—in reality, they have slipped below designer fragrances, which feature celebrity endorsers of their own. In fact, celebrity represents only about 5% of fragrance sales. So while Grant admitted that $1.3 billion is not a drop in the bucket, she countered that there are ways to leverage it as “we’re not making as much on each as we used to.”

The great recent success she noted was Someday, which she said was “lighting a new path” with the appeal, audience, marketing and positioning. She said, especially with the charity bent, every mother had to give in to her daughter’s requests for this fragrance.

LVMH offers no celebrity fragrances, but that doesn’t mean that famous endorsers don’t play a tremendous role in promotion and sales. Darland spoke specifically about Charlize Theron’s single-handed turnaround of J’Adore, admitting, “J’Adore would probably not be what it is without her.” She added that especially at holiday, husbands flock to department store counters hoping that by gifting the fragrance to their wives, they too will drop their clothes to the floor upon spritzing.” [A reference to the star’s performance in the advertising campaign for the fragrance.]

When asked if personal appearances by Theron would prove as effective a strategy for boosting sales as they were for Bieber, Darland conceded that they could boost the day’s sales but would be hard to sustain.

When another idea arose, for having stars tout their fragrances on the Red Carpet at events such as the Oscars, the consensus was that at those galas, the celebs want to be recognized as artists, and not as self-promoters. Stars like Theron could be an exception though, as Darland pointed out that the actress is enmeshed in Dior and recognized as a spokesperson for the brand.

Linda Levy said recent celebs’ appearances in Macy’s stores have been beyond belief, with fans lining the streets and camping out overnight. Key, she says, is knowing your customers. “At Macy’s,” said Levy, “we know our customers and every celeb has a different audience.” She added that 95% of those who bought Someday did not purchase Wonderstruck—and vice versa, though both were hugely successful. For Black Friday, Levy said they knew it would be a younger audience shopping in the early hours, so they promoted the fragrances that would appeal most to this crowd. Though, with a nod to Darland, she added that afterwards, shoppers flocked to the Dior counter.

Rolleston spoke about Taylor Swift and how Arden decides which celebrities show the most promise. With Swift, it wasn’t difficult. Rolleston noted that the young singer was communicating with 26 million fans daily—and the girls who follow her know every word to every song. When she performs in another country, he said, her fan base can increase by tens of thousands.

Spilka, too, said that signing a celebrity requires a nurturing process of sorts. He said they love the creative side, but push back when it comes to store appearances. He pointed out that everything is negotiated—from number of appearances to number of tweets.

Levy noted that there have been too many “hits and runs.” She suggested that celebrities must make a year or two commitment at least. As with the Taylor Swift fragrance, Levy said, “The authenticity is as important as the commitment and the dollars.” And, “If the package is not a thing of beauty, it’s not going to make it.”

(For details on the Wonderstruck package, please go to beautypackaging.com)

Bloom wrapped up the Q&A, asking, “So are we going to keep doing celebrity as we’ve done it for 10 years—or are we going to change?

Spilka proposed that equity will likely grow in popularity as motivation for celebrity endorsements in the future. “If they have a stake, they’ll be more inclined to promote it,” he said. Royalties, mixed with charities, as with Someday, is another possible successful path.

“Only available at” was a success with fragrance launches such as Katy Perry’s Purr at Nordstrom.

Levy noted: “I think the fragrance business is very healthy right now, with both classics and celebrity. Consumers want a portfolio of fragrances,” she said. “Celebrity is not taking away from anything. Celebrity is here to stay.”