Poshly: Helping beauty brands understand their consumers
Poshly allows beauty brands to access consumers' personal information on beauty habits and tastes
As consumer data has become increasingly valuable in the eyes of companies and advertisers, a number of companies have made access to data a primary or additional revenue stream for their business.
Founded in 2012, New York start-up Poshly has made provision of data central to their business model, focusing on the beauty industry.
Overview
Poshly offers consumers the chance to win various beauty-related freebies in exchange for filling out questionnaires and providing detailed personal beauty-related information. Poshly collects basic information like demographic info, skin or hair type, etc, but also delves into the details of their beauty routines, problem areas and products preferences via specific short surveys. The site has an active community of over 400,000 users who have collectively responded to over 15 million questions, and which the site claims match US Census representation across various demographic dimensions. Poshly sells this information to beauty brands who value the opportunity to gather more in-depth information about their consumers. Poshly also partners with publiations like People or Teen Vogue to reach users or help them conduct their own surveys.
Value creation
Poshly’s main value proposition is B2B – selling collected data to beauty brands. Brands can run “campaigns” on Poshly, creating customized questionnaires to answer specific questions, which can inform their strategic planning and product creation. The start-up has a client roster that includes consumer product giants like l’Oreal and Unilever, to whom it sells its data through various packages that range from raw data to treated data including key takeaways. While the data collected by Pohsly is anonymized before being sold, for beauty brands, it is more detailed and provides more information about consumer habits than much of the sales or marketing data they’ve collected in the past. It’s also less expensive for them to purchase large amounts of data from Poshly than to conduct extensive surveys or focus groups themselves. Brands use the insights from this data in product development, sales, marketing and other areas, better responding to consumer needs and complaints. Brands are also able to better target specific segments of Poshly users with new products, giveaways and messaging.
Poshly also offers beauty publications the opportunity to conduct surveys on their sites via a customizable API that allows Poshly quizzes to be integrated into the publication’s own site. This may be of interest to publications interested in better targeting advertising to the needs and interests of its readers.
Poshly’s value proposition for users, on the other hand, is somewhat limited. Often, consumers can win the products that they’re being asked about, or some other freebie related to the particular questionnaire. While this means that only some users get rewarded for their time, it seems that users find the site appealing and are willing to share. In fact, over 60% of users return on a monthly basis, and users spend an average of 6 minutes on the site during each visit, which is far longer than the average site visit to a beauty magazine’s site, for example. As Poshly has collected more data, it has been able to offer more targeted freebies to the most receptive customers, thus improving the value proposition. It has also introduced Poshly Perks, which include special promos, offer and giveaways targeted to a specific user as they answer more questions.
Value capture
Poshly started off by running one-off campaigns for its clients, asking specific questions and offering freebies usually provided by the client. For these campaigns, clients would pay anywhere $2,500 and $25,000. Considering that Poshly’s own marginal expenses per campaign are relatively limited (particularly since they have so far been able to attract and retain users with relatively limited rewards), the site is likely able to capture significant value from campaigns. Nonetheless, looking to smoothen it revenue stream, Poshly aims to transition to a subscription model with its clients.
Revenue, while still limited, has been growing, and is expected to reach $1 million at the end of 2015.
Looking to the future
Of course, there is still a lingering question of whether the site will be able to continue attracting – and especially retaining – users under the current model in which rewards for participation are somewhat modest. It’s possible that the site will have to improve its value proposition to users in order to grow.
Poshly may also face increased competition – whether from similar types of external data providers, or from improved data analytics capabilities within their clients’ organizations. While the beauty industry has a need for better data, it’s possible that it may come from other sources. Poshly will want to continue expanding its user base, creating stickiness, and perhaps offering its clients other data-related services in order to stay on top.
More information:
http://www.inc.com/ananya-bhattacharya/2015-30-under-30-poshly.html
http://fashionista.com/2014/03/poshly
http://techcrunch.com/2014/08/07/beauty-data-startup-poshly-scores-1-5-million/
Interesting article. Proprietary brand data is still overwhelmingly popular these days. However, as more brands buy data from Poshly, the differentiating factor becomes how they interpret and use the data. I wonder if we will see brands who rely on surveys for customized experiences (i.e., subscription boxes) to up the incentives for customers in order to obtain proprietary data and attract brand investments.
It is hard for beauty product retailers to establish a loyalty program that will reveal the preferences and behavior of their customers. Poshly creatively solves this problem by allowing companies to get product feedback in exchange for freebies and Poshly’s fee. In the end it is a win win!
My only concern was about ensuring that product ‘reviewers’ align with the product’s target market, but it seems like Poshly is using a data driven approach to solving this problem.
My las question is why Poshly’s revenues are “still limited.” Is poshly capturing enough value to cover its costs? What is the demand for this type of service? What is the WTP? How much can Poshly realistically grow?
I’m curious to learn more about the site’s stickiness for its browsers. I see the value for large beauty companies to use data from sites like Poshly, but wonder what’s preventing other similar sites from attracting revenues away from Poshly?
I see customization and data as the key to creating beauty products people will like and consume. I’d be curious to learn more about brand loyalty for product type–for example, are people more loyal to certain foundations given skin type specifics vs. something more commoditized like nail polish?