Sephora, Ulta, and the New Playbook for Beauty Ad Spend

Summary

Retail beauty ad spend grew 23% YoY in the US (Sept ’25–Sept ’26), but the real story is a strategic split between beauty-specific retailers and general merchants. Category spend peaked in December, with a secondary peak in April. Sephora leads with 35% share, followed by Ulta Beauty (18%), Target (7%), Amazon (6%), and Macy’s (6%). All grew, but Amazon posted the strongest gain (+61%) while Sephora had the lowest (+23%). Seasonality also diverged: Sephora, Ulta, and Macy’s followed the typical December spike then January decline, whereas Target and Shop Amazon increased beauty spend into the new year.

Channel allocation reveals different playbooks. Overall, Instagram (+57%) and OTT (+52%) saw the biggest YoY gains, while TikTok dipped 1%. Beauty-specific brands bet on social: Sephora spent 25% of budget on Instagram, Ulta gave 20% to Facebook. General retailers—Target, Amazon, Macy’s—funneled the plurality of spend into OTT. The implication: beauty-specific brands prioritize engagement and discovery; general retailers prioritize raw reach.

ChatGPT-native ads show another divide. Though still a small budget share, Sephora and Ulta each account for 44% of these brands’ cumulative ChatGPT ad spend—88% combined. Ulta ran 149 unique beauty creatives on ChatGPT, Sephora 42, Target 31, Macy’s 5, and Shop Amazon 1. General merchandisers may reserve LLM ads for other categories.

Creative placement: Feed ads 43%, In-Stream 26%, Reels 16%, Stories 6%; video made up 72% of ads. Pinterest received only 10% of category spend but the highest share of individual creatives for every brand except Macy’s—indicating a volume/experimentation play rather than budget priority.

Actionable takeaways: ad ops teams should match channel mix to objective—social for discovery/engagement, OTT for reach—and build creative volume for testing on Pinterest and ChatGPT. Track post-holiday spend shifts, because general retailers are extending beauty budgets into January. Monitor creative-volume metrics alongside spend to avoid misreading platform priority.

Analyst Note

The headline 23% YoY growth matters less than the divergence underneath it. Beauty-specific retailers and general merchandisers are running structurally different playbooks — Instagram and Facebook-led for Sephora and Ulta, OTT-led for Target, Amazon, and Macy's — which suggests allocation is now a function of funnel philosophy rather than channel performance alone. What's notable is that general retailers carry beauty as one line item among many, so their beauty budgets are likely governed by cross-category media planning.

Specialty brands have no such fallback, which may explain the heavier ChatGPT-native investment and the creative volume skew: Ulta's 149 creatives against Shop Amazon's single one. The key implication for ad ops is that creative volume and spend have decoupled. Pinterest absorbing 10% of category budget while taking the largest creative share per brand points to a testing surface that hasn't yet cleared the bar for scaled investment — a pattern worth watching as LLM ad inventory matures alongside it.

With TikTok effectively flat while Instagram and OTT compound, teams evaluating performance on spend alone may misread where experimentation is actually concentrated. Creative production capacity, not budget, looks like the emerging constraint.