Lessons to Draw from How DTC Disruptor Brands Market Themselves
Some of the most forward-thinking and innovative companies today are DTC (direct to consumer) brands. Selling products directly to consumers, rather than through traditional distribution and/or retail channels, has proven successful for these brands, which aim to grow quickly and stay ahead of the competition.
DTC brands are emerging across dozens of categories. Early and best-known examples of DTC brands include Casper, Brooklinen, Warby Parker, and Tesla. Most DTC brands not only bypass the typical retail sales and distribution model but also act in other nontraditional ways. This has earned them a label as disruptors.
Advertising intelligence and sales enablement platform MediaRadar took a close look at DTC brand trends to find what’s fueling DTC advertising and to gain an understanding of how DTC companies make ad buying decisions. MediaRadar surveyed our own DTC clients and analyzed our data for deeper insights.
DTC Brand Advertising
As we investigated advertising strategies for DTC brands, we discovered the following, consistent trends:
1. DTC companies typically begin with highly targeted spending on social media. This allows brands to get in front of an initial, often narrowly defined audience. Instagram was often the primary choice of partner.
2. As DTC companies scale their businesses, they begin to shift marketing and ad spending. Many rely significantly on TV to create broad, top-of-funnel awareness. For example, Casper has spent over $30 million dollars annually on TV advertising.
3. DTC companies have made commitments to native advertising, placing branded content three times more often than traditional brands. According to our deep dive, we discovered that the top publishing partners are Yahoo! and Buzzfeed. In fact, both were the top choice with the top 250 DTC brands (as ranked by the Interactive Advertising Bureau).
How fast is DTC spending increasing? Our analysis reveals that DTC brand spending is up across almost every product category, rising 7 to 20% annually in each of the past five consecutive years. A good example are brands in the apparel category, which invested about $200 million in advertising in 2014. Investment in the category lifted to $250 million in 2016 and over $300 million in 2018, with continued growth on pace so far in 2019.
How can ad sales teams sell media successfully to DTC firms?
In most ways, selling to DTC firms is the same as doing business with anyone else: Get to know the client’s business completely and demonstrate why your audience is the best fit at the best possible price. Here are five quick tips:
1. Do your homework. It’s important to demonstrate that you’re truly knowledgeable about a brand before the first meeting. Do this by following the brand on social media, knowing its products, and understanding its target audience. Buy the company’s products so you know what defines them. This way you develop your own opinion, in addition to being informed by news on the market.
2. Know the mission. More than half of all DTC brands are mission-driven. Know this mission and what really matters to the brand.
3. ROI impact. Track and study how ads running on your company’s platform impact a DTC brand’s business. This is essential so your media property is not only evaluated on CPC or purchase conversions. You want access to top-of-funnel media investment too, where attribution metrics are less common.
4. Study shifts in media spend. Unlike media spend in traditional brands, DTC brands tend to shift media investment more rapidly. Year-over-year shifts in ad schedules can be dramatic. Change will not only happen in the selection of media brands but also in an evolving collection of media formats (e.g., Snapchat).
5. Know the competition. DTC go-to-market strategy for media investment differs from company to company. There’s no one playbook. Study the competition’s media plan in advance, and see what’s working for the competition. By knowing this information, you become a better partner.
Growing up in Palo Alto, Todd Krizelman was born and raised near the epicenter of technology innovation. Todd joined veteran web architect Jesse Keller to found MediaRadar in 2007. After years of thorough research, development, and data collection, MediaRadar is now the most comprehensive data company focused on the ad sales market. He previously co-founded one of the world’s first social media sites. Todd led the site theGlobe.com, from inception to taking it public on NASDAQ. Krizelman is a graduate of Cornell University and Harvard Business School.