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Navigating the New Digital: How to Win When DTC is Expensive and the Cookiepocalypse Looms

23 Jun 2023 Anthony Vespucci & Amanda Zajac

in Media, Digital, Strategy, Trending

A conversation with Anthony Vespucci, EVP Client Strategy, and Amanda Zajac, SVP Client Strategy

Between platform restrictions, cookie deprecation, and iOS updates, reaching consumers and breaking through to success is harder than ever—particularly in the DTC space. Add in a unique economic environment with plenty of uncertainty, an abundance of competition, and consumer demand that is still normalizing post-COVID, and you see that the landscape for DTC brands is challenging, for myriad reasons. At Stella Rising, where we help clients navigate ever-changing marketplaces, our people drive success with a laser-focus on business. Two of our senior client leads, Anthony Vespucci and Amanda Zajac, tackle these issues daily and explain how they are steering brands toward growth in this moment. 

Stella Rising: To set the stage and understand the changes, how has the new landscape impacted demand?

Anthony Vespucci: Before the iOS 14 update, we could target the exact consumer we wanted for a client—as an example, say our target is “Jordan.” Post-iOS 14, no brand can target just Jordan, and so brands are targeting larger pools in order to somehow reach Jordan. This means that—another example—forty advertisers are all targeting this same, larger pool—everyone is fighting for the same consumers. In the past, we had our own mini swim lanes. Now, demand for consumers is much tighter—it’s more competitive.

SR: After iOS 14 we saw consumer acquisition costs (CACs) rise across digital platforms; how are we working to drive greater efficiency for our DTC clients now? 

Amanda Zajac: Shifting our strategic approach to business has been the game changer when it comes to CACs. Pre-iOS, we drove strong returns for brands with media focused/optimized on conversion. Now, we win with a blended approach to our customers’ business: a heavy focus on conversion media with equal priority on brand building.

While you need a significant investment to successfully build awareness, the cost of awareness media is much lower than conversion-based media because the pool of consumers is so much larger. This strategy allows us to fill the top of the funnel with potential consumers while nurturing them down the purchase funnel for conversion. It also primes consumers to think of our brand when they are ready for purchase. Overall, this is a critical approach in such a cluttered landscape—in addition to helping build the brand for long-term success by creating a connection with its customers.

 AV: What also helps is longer lead times. We start working earlier and get ahead of highly promotional periods. We create our awareness campaigns sooner to build up retargeting pools. Also, we take an omnipresent approach.

Another essential is continuing to test and diversify the media mix. Brands need to test new platforms to see what sticks best for their consumer. Overall, it’s important to think of media as an ecosystem, not isolated by channel—rethinking distribution in this way opens brands up to a greater breadth of options and lowers cost. As we speak, the social media landscape is very volatile. Case in point, TikTok has already been banned in one state! Omnichannel has many benefits.

SR: We all know first party data is so much more critical now—what is a smart way to capitalize on that data?

AV: Making sure our client brands lean into first party data could not be more important. We do recommend working with a customer data platform (CDP) which allows us to segment out audiences at a very granular level. We have the ability to port new audiences directly over into our media platforms, allowing us to reach new customers, retain old customers, and be more strategic about negating poorer performing audiences from our buys. CDP’s can be costly for some brands, so a good email provider can function similarly to a CDP.

That data in that CDP can also tell us, for example, which consumers might be ready to replenish a beauty product. If they purchased a face mask product in May, they might be ready to re-order ninety days later; we will push to a channel—TikTok, Instagram, etc.—any audience needing to replenish. That strategy is privacy-safe because those users are in a generalized pool. They are, generally speaking, the 1,000 people who are ready for replenishment.

AZ: Using first-party data also allows us to scale a brand more strategically with the targeting limitations in-platform. For example, we can suppress a client’s current customer list in-platform, build a high value consumer list using their first-party data, and then leverage look-alike modeling to reach more of those consumers, staying hyper-focused on consumers that are likely to have a stronger lifetime value.   

SR: We’ve been hearing a lot from potential clients that Meta and Google are not working for them any longer. General thoughts on the current efficacy of those platforms? 

AZ: There is legitimacy behind that sentiment—CACs have increased within those platforms. However, it’s important that we revisit strategy within Meta and Google versus shifting completely away. There is massive reach within Meta and Google and, most critically, the consumer is on those platforms and so we need to be on those platforms.

That said, there are different strategies we can deploy to offset the continued increase in CAC—we spoke earlier about the ideal blend of awareness- and conversion-focused media. Revisiting full-funnel strategies within each of the platforms should help reach a new consumer more efficiently while using our mid- and lower-funnel tactics to drive conversion. It’s also important that our strategy is in lockstep with our brand’s organic strategy. It’s a digital ecosystem and every channel works together to reach a common goal. Looking at performance holistically across all paid and non-paid channels helps us understand the big picture. Our paid channels, in theory, should help build our non-paid channels (Organic, Direct) if they are doing their job.

Lastly, it’s critical to test new platforms outside of Meta and Google. Your customer is consuming media constantly. We need to understand our audience and where they are spending their time, and we need to be on that platform to speak to them in a meaningful way.

SR: Other than what we have discussed, is there something else new that brands need to be thinking about, to shine in this new landscape?  

AZ: Brands need very strong one-to-one communications with consumers, they need to establish that relationship. This is the case because of what we’ve discussed—competition post-iOS and first-party data—but also because consumers are less loyal now. Loyalty is often going by the wayside for price in the current economy.

Media cannot be the only thing that pushes a brand along; it introduces consumers to a brand, but then the brand needs to nurture a strong long-term relationship by delivering great products and listening to its consumers.


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