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Past the Point of Diminishing Returns: Where DTC Brands Should Invest After the Social Media Plateau

18 Sep 2019 Elizabeth Timmis
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in Digital, Strategy,

Born online and conversion-focused, DTC brands have thrived through investments in social media advertising. Acquisition efforts were the top priority for 93% of North American DTC retailers last year, and Facebook and Instagram—in particular—have driven remarkable reach with competitive CMPs. Social media ads are working for these brands: when asked where they heard about the first DTC brand that they had purchased from, the majority of consumers responded that it was through social media ads (34.6%). Furthermore, social ads have staying power with users: 74% of survey respondents remembered seeing digital ads on social via mobile over the course of a week. Yet a limit exists, and as DTC brands hit plateaus they are exhausting the audiences on social channels. The prescription is a diversification of media.

TOP OPPORTUNITIES

'[Being Instagrammable] was important for the first chapter of our brand, because we are a digital company. Instagram and Facebook were important for growth, but if we want to be taken seriously, those things become a smaller part of who we are,’ said Katerina Schneider, Ritual founder and CEO.”

Brands can see that social conversion tactics have hit a point of diminishing returns when they cease generating the same customer growth and revenue attributed to those efforts flatlines. As Stella Rising VP of Analytics, Zafreen Zerilli explains: “When DTC brands are ready to evolve, they need to layer in traditional media and diversify their digital channels. To begin, we typically suggest expanding into a video-first strategy.” New insights support that a blend of connected TV and YouTube is a smart approach. By 2021, user time spent with online video is predicted to expand more than 20% to an average of 100 minutes daily. Additionally, 75% of users turn to YouTube for digital video currently. By 2023, analysts expect to see 214.4M connected TV users in the U.S., up from 195.1M this year. The rising star within digital advertising, digital video is forecasted to see the highest percentage growth, soaring to $43.6B by 2024.

RUN THE NUMBERS FIRST

Research aside, why does video make sense in practice? A video-first strategy allows brands to grow the retargeting pool and drive brand awareness simultaneously. Video allows for a broader audience. Then, the video data can be analyzed and advanced analytics applied to gauge brand interest, a process that unveils new audiences to retarget. This diversification of media must happen intelligently. At Stella Rising, we run analytical exercises to show brands how much they can afford to diversify, mitigating any potential initial loss.

WATCH THE GROWTH

Iterative approaches that drive potential for bottom of the funnel tactics—whether through connected TV or traditional media—will scale audiences and allow for stronger digital marketing. Conversely, a plan that runs only through social media paid ads can be likened to circling the drain.

 

At Stella Rising, we work on the forefront of change and disruption, connecting brands to the consumers who will love them. To ensure that your marketing and media strategy is a smart one, connect with us.

Additional Sources: Graybo, “Global Video Trends Report 2019,” June 26, 2019, Mintel, Digital Advertising –US— August 2019, eMarketer, February 2019

 

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