It’s not easy to make a killing in the competitive cosmetics industry. These guys have done it.
Start-up founders Nik Mirkovic and Alex Tomic have much to smile about after generating a $10 million turnover in just 18 months. They credit the glowing results from their teeth-whitening business HiSmile to just one thing – social media influencers.
The pair took a scattergun approach to targeting social influencers when they launched HiSmile in 2014. They have since refined whom they select, aiming for big names with broad reach.
The biggest name to spruik the product is Kylie Jenner, part of the Kardashian clan, who posted a photo of herself with a HiSmile box to her Instagram account and 75.7 million followers.
“It’s really just putting your product or your brand where the attention of your target market is,” Mirkovic says.
“For us, at the moment, it’s social media but who knows, in six months time or five years time it might completely do a U-turn and be something else.”
Mirkovic wouldn’t disclose how much Jenner was paid for the endorsement, but says his company will continue to chase social media influencers.
“We’re going hard across a lot of platforms, so Snapchat, YouTube, Musical.ly,” he says.
“So we’re spending money in different places rather than limiting it to just the one platform, like Instagram. So we’re really trying to go hard on all the platforms that we think suit our target market.”
Mirkovic, 21, and Tomic, 23, bootstrapped HiSmile using $20,000 of their personal savings. The Gold Coast duo spent much of this sending their $79.99 home whitening kits to influencers, convinced it was the best way to reach their demographic of 15 to 24-year-old women.
“It’s important for us and our marketing team to understand who the 15 to 24-year-old female is looking up to and looking at for inspiration, who are they looking at for their look,” Mirkovic explains.
“So we’re not trying to sell as such – we’re more trying to build a lifestyle.
“So rather than forcing something down someone’s throat and be like ‘Buy this, buy this’, because a lot of people try to sell by offering discounts and really pushing their product, as opposed to selling a lifestyle and then getting people interested.”
Mirkovic predicts his company will turn over an additional $40 million by the end of 2018. He says the company, which employs 20 staff, is profitable and hopes to one day set up offices in London, New York and Hong Kong.
Yet marketing expert Professor Mark Ritson from Melbourne Business School warns social media marketing isn’t a one-size-fits-all solution for small businesses.
“Too often social media marketing is portrayed as a revolutionary force within marketing,” he says.
“Clearly there are businesses, and HiSmile appears to be one, where a focus on social media marketing communications has provided splendid marketing results.
“The problem comes when social media take those results and extrapolate them to every other business and insist that what has worked for one brand will work for all others.”
Social media may be the best way to reach a young demographic, but Ritson insists it isn’t the only way. He advises business owners to think carefully before pouring all their marketing spend into social media.
“If social media fits with your product, your positioning, your target segment and your marketing strategy then it makes sense to double down on social,” he says.
“But in many cases it makes just as much sense not to invest too heavily or – and this is the most common situation – integrate social media with other media choices for optimal impact.
“There is a huge raft of data to show that if you take an exclusively social media execution and take 10 per cent or 20 per cent of that investment and put it into TV or outdoor or print, your overall budget will go further. It’s really not a matter of ‘which’ and more a case of ‘and’.”
It’s not easy to make a killing in the competitive cosmetics industry. Almost 3800 businesses have a stake in Australia’s $3.7 billion cosmetics and toiletry retailing sector, according to research by IBISWorld. Oral hygiene products account for $222 million of industry sales with IBISWorld research suggesting a growing popularity in teeth-whitening has played a big part.
Yet that popularity has also seen a spike in recalls by the Australian Competition and Consumer Commission. The consumer watchdog recalled some brands for containing unsafe levels of hydrogen peroxide or carbamide peroxide. The recalls forced some suppliers to reformulate their whitening solutions so they did not exceed six per cent hydrogen peroxide or 18 per cent carbamide peroxide.