Using AI To Elevate Your Beauty Brand (Plus What To Avoid)
AI is revolutionizing the way cosmetics brands do business.
From saving time and facilitating innovation to improving your product formulas, AI has the potential to skyrocket your small cosmetic business’s success.
But there’s a catch.
If you misuse AI, it has the potential to destroy your business.
So, how can small beauty brands like yours implement AI correctly and avoid catastrophe?
Innacos is here to help!
Our in-depth guide below provides an overview of the best uses of AI for small cosmetics brands like yours. Plus, we discuss the potential pitfalls associated with using AI, and how you can avoid them.
AI In The Beauty Industry: The Story So Far
Since OpenAI launched ChatGPT in 2022, more and more cosmetics companies have integrated AI into their business practices, and there’s no sign of AI adoption slowing down soon.
According to the Business Research Company, the AI in beauty and cosmetics market is projected to grow at an annual compound growth rate (ACGR) of 19.6% between 2023 and 2028.
Businesses are already noticing the difference: a 2025 report by PWC revealed that one in three CEOs say AI has improved revenue and profitability in 2024, and half expect their AI investments to increase profits in 2025.
Let’s talk about the four key ways AI is changing the game for beauty businesses.
1. Improve Your Market Research With AI
Every great cosmetic product starts with thorough market research. But it’s hard to get the full picture when you rely on Google. To get deeper insights about your target audience, you need to do more digging.
AI is changing the way cosmetics brands analyze consumer behavior and uncover market gaps, making the research process faster, and more accurate, which leads to more insights.
For example, SAAS company Intellico utilizes AI to analyze data from multiple sources to improve businesses’ understanding of consumer needs and preferences.
This guides new product suggestions, product development plans, and marketing strategies developed by beauty brands.
Smaller beauty brands like yours can use AI tools in a similar way.
Try using ChatGPT or Claude to find customer insights about your specific target market, the best questions for surveys or focus groups in your niche, and information about the biggest gaps in the market and upcoming trends for the next five years.
As AI tools are not always accurate, always tell the AI bot to explain the logical thought process behind every answer and cite sources where possible.
2. Using AI To Optimize Your Product Formula
AI isn’t just influencing the types of products created, it’s also making them better.
For example, a new white paper released by Cosmetics Design Europe explains how Citrine, a SaaS company, uses AI to optimize the product formula process for personal care companies.
This product formula improvement process includes up to an 80% reduction in R&D time, reduced ingredient costs (by as much as 20%), reformulating to produce cleaner products, and increased sustainability metrics.
Although this technology is relatively new, it’s already being adopted by top brands. According to Citrine (via In-Cosmetics), 2 of the top 10 personal care companies already use their technology for the product development process.
This type of technology will not only have a hand in developing more effective and less expensive formulas, but it can also help personal care businesses gain a competitive advantage in other respects.
For example, it helps brands be first to market by developing formulas quicker, which is a significant advantage in a trend-heavy market like the beauty industry.
Plus, these AI innovations will also assist with responding to new regulations by reformulating products to comply quickly. This is key in the era of MoCRA and the trend toward a more globalized standard for product safety.
Product Development AI Tools Are Not A Replacement For Professional Chemists
As outlined by Beauty Matter, large cosmetics companies are making use of tools like Ideas AI and IdeaFlip, designed to help brands identify the product concepts with the most market viability and profit potential.
Plus, BeautyMatter also reveals how this technology is being adopted at the top – cosmetics conglomerates like L’Oreal are already using AI technology to generate product ideas, help with ingredient selection, and streamline the regulatory compliance process.
Although these tools can provide a helping hand for developing optimized formulas, they must always be used in conjunction with (and never act as a replacement for) the knowledge of professional chemists who are experts at creating safe and effective cosmetics.
Always partner with a legally compliant and skilled cosmetics lab like Innacos to create your skincare or color cosmetics range. Learn more about our professional formulating services here.
3. AI And AR Integrations To Boost Conversions And Consumer Satisfaction
More consumers shop online than ever which is creating significant problems for color cosmetics brands.
It’s hard to accurately represent each color across different screens when you offer a product in several shades, leading to buyer hesitation and also higher return rates.
From chatbots to ‘try-on’ apps, AI and AR (Augmented Reality) innovations are helping beauty brands overcome this problem, which boosts sales and reduces the likelihood of returns.
For example, a 2019 study describes how Estee Lauder worked with ModiFace to develop an AI-driven chat box that allows consumers to search for lip products, virtually ‘try on’ the shades, and purchase straight from Facebook Messenger.
Plus, this technology is also changing the skincare industry. Research from 2021 explored AI that can analyze a month’s worth of selfies during an anti-aging treatment and found the AI was accurate at assessing the anti-aging performance of the skincare regime.
AI is not just helping users choose the right products and analyze their results, it is also customizing products to match each customer’s specific preferences.
PRNewsWire describes how haircare brand Prose developed a new AI-powered customized skincare line that begins with a simple online consultation. The results of the consultation are then analyzed using AI to create a highly customized skincare routine specific to each person.
Read our full blog post on AR and AI website integrations for cosmetics brands here.
4. Improving Marketing Communications With AI
Beyond helping you choose the right product concepts or formulas, and optimizing your website for conversions, AI can also be a useful tool when it comes to improving your marketing funnel.
Although using AI to create your entire marketing strategy from start to finish isn’t advised (more on that below), it’s an excellent brainstorming tool.
For example, AI can help you save time by generating ideas for new brand awareness campaigns, suggesting content calendars for email marketing, and refining your social media strategy.
AI can also be a game changer for branding and packaging design. Struggling to communicate your packaging vision to your graphic designer? Prompt Image AI tools to generate visuals that convey the style you want, then compile the results into a mood board that represents your ideal packaging design.
How Not To Use AI: The Pitfalls Of Using AI For Your Business
AI should be used as a brainstorming aid – not a copy-and-pasting tool!
Although it can be tempting to save some time and money by creating your entire product line and brand strategy from start to finish using this new technology, the reality is many applications of AI won’t just fall short – they can actively damage your business.
For example, many businesses write all of their website copy, blog content, and product names using an AI platform, without awareness of how this can damage their brand’s reputation, lead to IP issues, or even result in legal troubles.
If the current age of AI could be summed up in one sentence, it’s this: huge potential, significant uncertainty.
To stay on the safe side, you need to ensure there’s significant human input at every level of your business. Treat AI as a powerful tool that enhances your human work, not one that replaces it.
Let’s take a look at the biggest issues with AI for small cosmetics businesses like yours, and what you need to do to avoid them.
1. AI Lacks The Human Touch That Connects People to Your Brand
While AI can support your marketing efforts and improve your customer service, the reality is a majority of consumers don’t want to read AI-generated content from your brand. Hootsuite’s 2024 Survey found that 62% of people say they are less likely to trust AI-generated content.
Huge brands have already taken a hit by passing off AI-generated content as journalism. Futurism accused Sports Illustrated of publishing 100% AI-generated content with fake AI-generated avatars. Once this came to light, Sports Illustrated quickly deleted all of the content.
AI-generated content could negatively impact your SEO in the future, making your website harder to find.
Although current iterations of AI detection tools are inaccurate (as MIT explains here), search engines like Google, notorious for changing its algorithm every few months, will likely improve its ability to detect AI-generated content.
In the future, search engines may decide to favor websites that publish human content over AI content, which could have a huge impact on your site visits.
2. When AI Goes Wrong: Understanding AI ‘Hallucinations’ And JailBreak Issues
A major issue with AI technology is its tendency to make up facts from thin air. This is called ‘hallucinating’. Plus, AI can also be manipulated by clever users to generate inappropriate or illegal content that it is trained to avoid. This is called ‘jailbreaking’.
For example, Cio recounts a 2023 court case in which an attorney submitted an AI-generated brief outlining past case law. Due to ChatGPT’s hallucination, six of the case files in the research document were completely made up, resulting in a $5,000 fine for the attorney.
More relevant to cosmetic brands, when users ‘jailbreak’ AI tools like chatbots, it can cause major issues for your business.
As outlined by Evidently AI, AI chatbots have inherent weaknesses that can result in reputation-damaging viral social media moments at the least, and legal troubles at the worst.
For example, a customer managed to jailbreak the DPD AI chatbot and forced it to speak negatively about the company on their own website. The customer then posted the screenshots on social media, leading to public embarrassment for DPD.
Even worse, a customer convinced Chevrolet’s chatbot to promise a ‘legally binding’ contract for a brand new car in exchange for just $1.
If you choose to use AI chatbots, you need to plan for these AI slip-ups in advance.
3. IP Issues: Infringement And Copyrighting AI-Generated Content
AI can help you create better product concepts and formulas, as well as generating fresh branding ideas. However, given that AI is trained on copyrighted materials, what are the legal implications of using AI-generated content for your business?
Will Using AI Prevent Copyrighting For Your Business?
Can you copyright your brand’s content if you partially produced it using AI?
The situation is evolving, with the US Copyright Office currently holding a nuanced position that prevents the copyrighting of AI-generated material in many, but not all cases.
As outlined by the Congressional Research Service, the Copyright Office’s current guidance states that content containing AI-generated material can be copyrighted, but only under specific circumstances, such as “sufficiently creative” human involvement.
Brands may only claim copyright protection for the parts that involved their human contributions and must disclose how AI was used to create the material.
This position is likely to evolve in the future as more and more AI copyright cases head to court.
Does AI Content Infringe On Existing Copyright-Protected Material?
The future of copyright law specific to AI-generated content remains uncertain.
In 2023, the US Copyright Office opened a public inquiry into potential policy issues caused by AI technology, while Rep. Admin Schiff introduced a bill in 2024 requiring a submission to the Register of Copyrights disclosing any copyrighted works used in AI training.
This could lead to copyright infringement issues for businesses that use AI generated content to create products or marketing materials in the future.
The Bottom Line: AI For Small Beauty Brands
Given all of this uncertainty, small beauty brands like yours need to approach AI with caution.
Use it as a tool to brainstorm and streamline your work processes. Never rely on AI to create any core elements that will define your brand.
Focus on what will make your brand successful: choosing the right professional manufacturer (like Innacos!) to create the high quality formulas your customers will love.
We understand that as a new small business owner, it’s tempting to rely on AI for your entire business strategy. Avoid the legal traps by investing in real consulting services that are personalized and specific to your business concerns instead.
Ready to create your cosmetic products or looking for professional consulting to help grow your business? Innacos would love to help your brand! Get in touch to learn more via phone: +18123291105 or email: customerservice@innacos.com
