ModiFace’s virtual experimentation technology has been changing the way consumers shop for makeup. It can recommend the perfect shade of foundation based on a photograph or show a user what a specific shade of lipstick would look like on his or her face, not a model selected by the brand or retailer. ModiFace uses machine learning to power its suite of augmented reality offerings, including:
- Beauty try-on simulations on live video: simulations can reproduce precise makeup shades from brand partners and turn them into realistic digital simulations with dynamic lighting adaption
- Real-time facial analysis and feature tracking: precise measurement of 68 unique facial parameters like lip and eye edges, iris size and location, head pose, skin features such as spots, textures and wrinkles1
During early trials, ModiFace ran an assessment of its technology on a broad set of social media users, scanning a sample of 1.6 million photos across 364,012 users to accurately identify a user’s skin tone. The scan accurately detected skin tone with 98.3% accuracy2. This kind of feature recognition is critical in a consumer’s beauty journey, especially in categories like foundation and concealer, where a key consumer concern in the shopping process is how a brand’s new product offerings fits that consumer’s specific skin type and skin color. Retailers and brands spend significant time and resources training in-store staff to approximate those same details for consumers in store to better facilitate the decision-making process.
L’Oréal Acquires ModiFace
L’Oréal, the largest global beauty conglomerate with €26.02 billion in sales in 20173, acquired ModiFace in March 2018 because of machine learning technology’s growing role in the beauty industry. “We see technology bringing so much innovation in the consumer decision journey for beauty,” says chief digital officer Lubomira Rochet4. “It’s the first time L’Oreal acquired a tech company, a non-beauty brand. So it’s really very significant from a strategic standpoint. And what we have in mind with ModiFace is to create the heart of our digital research and development.5”
Beauty has historically been one of the later adopters to technology trends, but with the rise of hugely successful digital-native brands like Kylie Cosmetics, the industry is actively seeking ways technology can give their brands a ‘boost’ in the consumer ecosystem.
In the short-term, ModiFace is currently being integrated into L’Oréal’s new digital arm, the Digital Services Factory, a network that creates digital solutions for the portfolio of brands under management. Before the integration, the revenue model hinged on the number of platforms (e.g., mobile, online, in-store) a brand or retailer wished to purchase, roughly $200,000 to $500,000 per year for use of the technology. Integrating new categories, from hair dye to new tools like live streaming, applied to all brand partners, with no ‘pay-to-play’ discrimination between brands6. The business model fits an odd niche in the L’Oréal portfolio – many of its customers are either direct competitors to the L’Oréal family of brands or retail partners, like Sephora. Historically, ModiFace has powered technological offerings for many of L’Oréal’s direct competitors including augmented reality mirrors for MAC stores, virtual try-on services for Bobbi Brown Cosmetics’ mobile and web sites – two brands owned by the Estée Lauder Companies7.
In the long term, diversified data is critical to the evolution and continuous learning principles of machine learning – the ability to serve brands and retailers beyond the L’Oréal portfolio is critical to maintaining ModiFace’s leading position in the beauty technology marketplace. Competitors have faced similar organizational challenges and succeeded – LVMH has managed to keep its brand incubator Kendo Brands (creator of brands like Rihanna’s Fenty Beauty, Kat Von D and Marc Jacobs Beauty) a separate business line from its retailer, Sephora, by maintaining rigorous guidelines on innovation to prevent imitation.
Future of the Consumer Journey
The ModiFace deal has triggered key competitors to think more critically about how machine learning and augmented realty technologies will complement brand portfolios, like Coty’s acquisition of YouCam Makeup in 20175. Partnerships with technology giants like Samsung give L’Oréal significant access to consumer behavior data. ModiFace’s embedded software in Samsung’s Bixby vision camera create new opportunities for L’Oréal to integrate its marketing prowess with this new source of data.
The future success of the L’Oréal-ModiFace partnership hinges on a few key questions: how exactly will the consumer beauty experience evolve online and offline with AI in the industry spotlight? What changes will beauty conglomerates make to the shopper experience given this wealth of new consumer behavior data?
How consumers and industry players react to the increasing presence of AI and personalization technology will certainly shape the future of the beauty industry.
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 ModiFace, “Products,” www.modiface.com, accessed November 2018.
 “App Scans Your Social Media Photos for Optimal Skin Tone,” Global Cosmetic Industry, Vol. 184, No. 2 (March 2016): 6.
 L’Oréal, 2017 Annual Report (Paris: L’Oréal, 2017), p.1.
 “AI technology to take beauty to new reality,” Chain Drug Review, Vol. 40, Issue 9 (March 4, 2018): 28-28.
 Jack Neff, “L’Oreal buys ModiFace to get edge in beauty augmented reality and AI,” Ad Age, March 16, 2018, https://adage.com/article/cmo-strategy/l-oreal-acquires-modiface-edge-beauty-augmented-reality-ai/312764/, accessed November 2018.
 Hilary Milnes, “Modiface is becoming the go-to provider of augmented reality to beauty brands,” Glossy, October 6, 2017, https://www.glossy.co/new-face-of-beauty/modiface-is-becoming-the-go-to-provider-of-augmented-reality-to-beauty-brands, accessed November 2018.
 Allison Collins and Adriana Lee, “Beauty Brands’ ModiFace Dilemma: Other AI and AR providers are seeing an influx of inquiries from beauty companies following the deal”, WWD: Women’s Wear Daily, April 12, 2018, https://wwd.com/beauty-industry-news/beauty-features/beauty-brands-modiface-dilemma-1202644840, accessed November 2018.