Photographer: Susana Gonzalez/Bloomberg

Perfume Makers Spend $800 Million on Ads That Apparently Stink

The fragrance industry uses old-school marketing methods that waste a whole lot of money.

Little ever changes in the perfume industry. Shoppers still get spritzed as they walk through department stores, sexy ads are still the norm, and scents that are big hits usually stay that way.

Fragrance is stuck in a never-ending loop that keeps shoppers in line with the status quo, according to a new report from management consultancy A.T. Kearney. Four of the top five women’s fragrances have remained entrenched for half a decade despite constant efforts to unseat them. Last year alone, fragrance makers launched more than 100 new brands and label extensions, backed by hefty marketing budgets. An estimated $800 million is spent on fragrance marketing each year, according to the firm, from television commercials to billboards to in-store samples and magazine ads.

The problem is that much of that marketing is wasted.

"They need to think about where the waste can be reduced," Nemanja Babic, a co-author of the report released on Wednesday, said of the fragrance companies. "Because at some point, it's just not sustainable. It'll just erode margins further." 

Top sellers include Dolce & Gabbana’s Light Blue, along with three Chanel scents: Coco Mademoiselle, Chance Eau Tendre, and No. 5. The newcomer is Daisy, a scent from Marc Jacobs that first hit shelves in 2007. Prestige fragrances in the U.S. represent a $4 billion market, according to data from NPD Group.

The study, which surveyed nearly 1,000 fragrance shoppers, found that over 40 percent of purchases are for more of the same, as shoppers lock on to a scent they like and stick with it. In stores, the majority of shoppers don't even notice, or aren't influenced by, in-house advertising.

Then there are the dreaded spritzers: The industry has long used these ubiquitous store associates to home in on you, spray in hand. Spritzers are, in essence, a version of mass advertising. They don't know anything about the people who walk past them, blindly promoting scents to all. Targeted marketing this is not. 

The in-store sampling system is broken too. Sample products can often be a waste, because the cost of designing, producing, and training salespeople to sell them outweighs any eventual benefit. The sample strategy, where a few are thrown into the bag along with your purchase or handed off as you pass the fragrance counter, follows a similarly inefficient, one-size-fits-all approach.

Many customers just hate these tactics outright, craving a more individualized, guided way to purchase what is a very personal item. A more tailored method, where store associates learn about customers first, then offer them scents that better fit their tastes, would help, said Babic. "What they really want is advice, based on their needs, wants, and preferences," he added.

Television ads, the most prominent and expensive of marketing tactics, don't do much to spur purchases either, the study found. Only 6 percent of respondents said advertising was the reason for a purchase. Still, those kinds of ads do serve a longer-term purpose of building brands and keeping them in shoppers' minds.

That nurturing process has allowed some scents to last more than a lifetime. Take Chanel, the storied French fashion house that boasts the majority of the top five fragrances. Chanel No. 5 is a near-century-old scent that's retained its allure throughout. 

"The industry will always capitalize on the big successes," said Babic. "However, the return on investment is a bigger concern."

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