Our DIGITAL intelligence at L'OREAL's service_Connected Life 2014

1. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Digital intelligence at your service - introducing Connected Life 2014 - Media fragmentation is often described as the biggest brand challenge of the digital age. In reality, it’s the greatest opportunity.

2. Digital intelligence at TNS - Connected Life outlined - Including: 1. Geographic scope 2. Purpose & added value 3. Key questions answered 4. Digital consumer segmentation

3. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Connected Life 2014 explores how technology is transforming the lives of consumers across the planet Covering regular internet users in 50 markets around the world, the Connected Life study offers essential insight into the impact of the growing digital ecosystem on the media landscape. It uncovers new and exciting opportunities for marketers to connect with their consumers in this increasingly complex environment. WHERE A en voir l'intense activité autour des blogs beauté, des tutoriaux maquillage, des avis et échanges sur les réseaux sociaux autour de la Beauté, envie des femmes de se sentir belle ne se dément pas. Mathilde Lion, NPD Beauty Industry Expert 3

4. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Connect with your consumers on a whole new level As consumers move across multiple channels and adopt more advanced devices, targeting becomes a more complex task. Indeed, a fragmented landscape demands a shift in focus - the question is no longer ‘how can I reach my consumer?’ but ‘how can I reach my consumer at a time when my brand is most relevant to them?’. Understanding local preferences and touch-point patterns allows to target individuals and groups far more precisely, and to deliver against long- and short- term marketing objectives with greater accuracy. Connected Life is about better decision making in a connected world. WHY 4

5. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Each Connected Life report is structured around key questions facing today’s marketers How has the digital ecosystem developed? How should brand strategies adapt? Role of digital in driving Brand activation To what extent is online research and purchase prevalent across categories? What are the barriers and drivers of eCommerce? What’s the share of voice for digital and social channels throughout the P2P? How do these paths change across segments? Role of digital in increasing Brand awareness What do consumers use these devices for? What content or services do they access, why? What is the incremental reach of different digital channels? What are the key market trends? Where are markets going and how quickly are they changing? How does this compare across segments? Role of digital in the overall Media Landscape Research Questions What does the device infrastructure look like either locally or globally? What is the interaction between devices and media? What does a day in the life of a digital consumer look like across the world? What are the different types of digital segment that exist across markets? Role of digital in Brand building How do digital consumer behaviours, attitudes, needs and motivations change across categories? What channels or routes of engagement are used? What content needs exist across categories? How does this compare across targets, categories and markets? 1. How has the growing digital ecosystem impacted media habits? 2. What is the reach of digital platforms and channels? 3. How and why do consumers engage with brands? 4. How digital is the Path to Purchase? HOW 5

6. What is CONNECTED LIFE and its added value for L’OREAL? © TNS In addition, the study guides marketers with a segmentation developed along two strategic axes LowHigh Digitalinfluence Low High Social engagement LeadersObservers Functionals Connectors To what extent should I focus on digital, rather than other channels? The answer to this question is based on the level of influence digital channels hold, which grows with improving access. The more devices or bandwidth a consumer has, the more time they will spend online and the more influential the medium becomes. Where should this focus be? On social and earned media or owned and paid? The answer to this questions is less clear cut as it is more closely linked to attitudes than access, but wherever consumers have a stronger attachment to social channels they will play a more important role. WHAT 6

7. Digital innovation at L’OREAL - Internet sourced - Including: 1. Creativity, content & connectivity 2. Digital media 3. Ecommerce

8. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Creativity, content & consumer connectivity at Countless Google searches regard Beauty. Beauty, with its tendency to foster dialogue and connection, suggests a high degree of affinity between what the L’Oréal Group does and what the digital has to offer. The Group also uses online as the most reliable touch-point to reach the highly dynamic and increasingly more affluent middle class in emerging markets. To begin with, Internet is a great tool for delivering personalised services (such as – for example - the "L’Oréal Paris Make-up" app which was launched in 2011 and which transforms a tablet into a professional make-up studio). Moreover, social networks allow L’Oréal brands to leverage the viral power of loyal (brand and/or product) advocates’, bloggers’, vloggers’ and star ambassadors’ recommendation and word-of-mouth. L’Oréal, the world's largest cosmetics company, is thus always on the lookout for new opportunities to create proximity with consumers in a yet more creative, relevant and efficient way. 01 02 04 0305 8

9. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Digital media at For example, L’Oreal looks into virtual reality as one of the biggest digital trends. The mobile app "Makeup Genius", already launched in France, the U.S. and China, help evaluate a new makeup offer without having to apply a single cosmetic product. L’Oréal spends 13% of its net media investment on digital media. Its online share of voice is set to increase from 20 to over 200 websites. Makeup Genius is the California-based Connected Beauty Incubator’s first product. The breakthrough app was released only 18 months after L’Oréal had initiated the incubator. Consequently, all flagship websites (e.g. YSL Beauty, Clarisonic and em - a pure player brand designed with the YouTube star vlogger, Michelle Phan) are to use the common DemandWare framework that enables brand fans to create their own personalised estores. It is the "Digital Factory", a 50-person large internal expert team, that is in charge of driving the digital revolution at L’Oréal and placing the consumer at the heart of the online site creation. 06 07 09 0810 9

10. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Ecommerce at L’Oréal’s efforts to boost online purchase rates pay back already: the Group’s ecommerce results are up by 25% (owned estores only). Yet, ecommerce performance is far from geographically homogenous: many markets have their own local patterns in terms of Internet penetration, device ownership, security, payment methods and logistics. To benefit from local expertise, Best Practice cases are being identified worldwide: Japan for mcommerce (at 30% of the country’s online sales), China for Net Promoter Score and the U.S. for conversion funnel (soon retooled with Shoppable?). 14 1315 After the digital media and the ecommerce sites, connected objects are under consideration at L’Oréal (possibly all the more so since the recent snatching of the Kering’s Puma licence from the American competitor, P&G?). Meanwhile, at the Ecommerce One to One event in Monaco, Vincent Stuhlen, International Digital Director for L’Oréal Luxe, presented the roadmap towards digitalisation of the brand portfolio, aimed at achieving - by 2017 - 8% of sales via the ecommerce (5% currently). 11 12 10

11. L’OREAL’s challenge - based on publically available data - Including: 1. Globalisation 2. Customisation

12. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Challenge: To move L’Oréal from product company towards product+service company* The Group’s digital revolution breaks out internally with the major focus on operational excellence to be attained via cutting-edge technology (common platform) and employee support («Digital that works» training module for 500 marketing and sales staff). At the heart of the revolution lies the need to explore digital horizons in an effort to build ever tighter ties with (existing and potential future) consumers. To fully benefit from the existing in-house expertise, local best practices should be investigated closely in order to understand their roll-out feasibility. Operational excellence leading to consumer centric digitalisation * Lubomira Rochet , L’Oréal Chief Digital Officer 12

13. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Quiz: Based on findings below, would you propose the same media mix for South Korea and Nigeria? 13

14. Exploring today’s local patterns… - non-exhaustive illustration - Including: 1. Japan 2. China 3. The U.S.

15. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Breadth of findings (as delivered by all Connected Life reports) Patterns in media consumption & device choice ■ xx% of the total market in Japan uses Internet at least once a week ■ xx is the main access point to online for all age groups although younger consumers are spending more time on xx ■ Mobile-centric internet users tend to be… ■ Japan’s xx consumption remains high. There are, however, xx% of consumers who are shifting their… ■ Online xx and xx sites have the widest reach in Japan – weekly usage is at xx% and xx% respectively for these activities ■ Japanese internet users prefer to use xx to communicate online (xx%), ignoring the global trend towards xx ■ xx dominates as the top social platform in Japan followed by xx, xx and xx ■ Consumers are online throughout the day, but usage drops off during xx, when xx dominates Online content & channel preference Attitudes towards ecommerce & connected objects ■ Japanese consumers have a high incidence of purchasing online (across segments) ■ xx will drive eCommerce sales across categories ■ To recruit, ensure xx and xx and offer xx ■ Compared to other markets, there is not a big opportunity to introduce xx ■ In the Personal Care category, consumers engage with brands they 'like', enabling those with strong equity to deepen this bond by engaging brand fans online ■ Personal Care has a xx level of research and any research conducted is xx ■ xx and xx play an important role Path to Purchase in the Personal Care category

16. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Example_1: Optimise your media plan 16

17. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Example_2: Prioritise the right digital channels

21. … for globally connected future Including: 1. Example of cross-market data 2. Case study

22. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Example of how Connected Life data can support real-life decision making and drive digital initiatives 22

23. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Case study: L’Oreal Ombre Case of leveraging multi-platform incrementalism and mobile centrism to boost brand/product relevance in the eyes of the target Source: Mobile Marketer 2014 – L’Oreal personalises mobile ads by hair colour to drive relevancy (Link) Business issue Users access more content across multiple devices, but online clutter and differing screen sizes create a challenge for marketers Action Beauty brand L’Oreal incorporated GumGum’s photo recognition technology to pick up on the hair colors of models or actors in content users were viewing. Hair colour was then reflected in ads for their Ombre colour line An in-ad slider tool was incorporated so users could easily view multiple, personalised options The campaign was delivered seamlessly with the same user experience across PC or mobile platforms Result By linking content users were interested in to a distinct style and colour, L’Oreal created a more personalised ad, in sync with user preferences The approach L’Oreal utilised photo recognition technology to drive greater engagement with online advertising, regardless of how content was accessed 23

25. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Contact our TNS Team to set up a digital meeting and learn more! Cecile Hayat - Consumer Department Director, B&C Digital Lead Cecile.Hayat@tns-sofres.com 0140926651 Jacques Latreille – Global Account Director, L’Oréal Jacques.Latreille@tns-sofres.com 0140923318 Guénaë lle Guenaelle Gault – International Digital Director, Southern Europe Guenaelle.Gault@tns-sofres.com 0140924527 Constance Leroy – Head of Consumer Department, Brand&Communication Constance.Leroy@tns-sofres.com 0140924627 Karolina Gniewowska – Research Director, Consumer Digital Lead Karolina.Gniewowska@tns-sofres.com 0140924707 25

26. What is CONNECTED LIFE and its added value for L’OREAL? © TNS Bibliography La révolution digitale chez l’Oréal (24/04/2014) http://magazine.loreal-finance.com/fr/la-revolution-digitale-chez- loreal.htm L’Oréal prépare des objets connectés pour le parcours beauté (26 mars 2014) http://www.larevuedudigital.com/2014/03/actu/loreal- prepare-des-objets-connectes-pour-le-parcours- beaute/?relatedposts_hit=1&relatedposts_origin=5431&relatedpost s_position=1 L’Oréal planche sur la convergence technologique de ses plateformes digitales (28 juin 2014) http://www.larevuedudigital.com/2014/06/digital/loreal-travaille-a- la-convergence-technologique-de-ses-marques-a-lheure-du-digital/ Pré-visualiser son maquillage en réalité virtuelle, avec la nouvelle App l’Oréal (16 mai 2014) http://www.larevuedudigital.com/2014/05/directionmarketing/pre- visualiser-son-maquillage-en-realite-virtuelle-avec-la-nouvelle-app- loreal/ "Le défi de notre incubateur, c'est d'insuffler l'esprit start-up à l'énorme organisation L'Oréal", selon Guive Balooch (02 juin 2014) http://www.usine-digitale.fr/article/le-defi-de-notre-incubateur-c- est-d-insuffler-l-esprit-start-up-a-l-enorme-organisation-l-oreal- selon-guive-balooch.N266210 Jean-Paul AGON, Chairman and CEO (September 18th 2014) http://www.loreal-finance.com/_docs/pdf/autres- evenements_PAI/2014/Cheuvreux.pdf [E-Commerce One to One] L'Oréal révolutionné par le digital (19/03/2014) http://www.ecommercemag.fr/Thematique/strategies-omni-canal- 1009/strategies-10040/Breves/Oreal-revolutionne-digital- 234758.htm Conférence L’Oréal " Flagship Digital : the ultimate customer experience » (19 mar 2014) http://blogecommerce1to1.com/2014/03/conference-loreal- flagship-digital-the-ultimate-customer-experience/ YSL Beauté dévoile les coulisses de son nouveau site (24 MARS 2014) http://michellephan.com/em-cosmetics-goes-international/ L'Oreal Retools Online Shopping Cart Thanks to Digital Mentorship Effort (September 16, 2014) http://adage.com/article/cmo-strategy/l-oreal-retooled-online- shopping-cart/294955/ L'Oreal goes back to the future with content marketing agenda (10 February, 2014) http://www.cmo.com.au/article/537719/l_oreal_goes_back_future_ content_marketing_agenda/ Personalization is key for beauty omnichannel strategy: L’Oreal Luxe exec (January 17, 2014) http://www.luxurydaily.com/personalization-is-key-for-beauty- omnichannel-strategy-loreal-luxe-exec/ 26

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