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Scaling Direct-to-Consumer Brands

13 Jun 2019 Marlea Clark & Elizabeth Timmis

in Digital, Strategy

Just last year, Adweek wrote that direct-to-consumer brands are “eating the lunch” of big brands, and that “buying big audiences to reach consumers” doesn’t work anymore. Now, more than a year later, we see that DTC brands are continuing to evolve, and we are now at a stage where many of those original disruptors are beginning to plateau, and need to shift their marketing focus toward how to scale past this moment. DTC brands are still powerful, reaping the benefits of a pure, focused relationship with consumers, including passionate feedback (DTC shoppers feel a sense of ownership and communicate as such), loyalty, and data. Yet a disadvantage that DTC brands face is that they are born with a conversion-focused mindset. ROI matters, but so does audience expansion, particularly when DTC brands reach a level of stagnation because they have inundated the same consumers.

Get Ready to Grow

Once DTC growth slows, focus needs to shift toward reach, which is often measured by the softer KPIs, such as brand awareness and purchase intent, that can be anxiety-producing for young brands. Why do those metrics produce anxiety? Many of the smaller DTC brands haven’t yet received private equity or venture capital investment, and so the second key to growth emerges: budget management. Pairing the meaningful budgets with correct messaging and ideal frequency drives success. The IPA Databank report Media in Focus—Marketing in the Digital Age, noted that, “…Marketing is still primarily a numbers game. The main way brands grow is still by increasing penetration, not loyalty… For firms that invest at the right level, and in the right way, mass marketing is working better than ever.”

How to Go Wide? Take the Long View

By layering reach KPIs into overall strategy, DTC brands can move beyond their passionate but often niche audiences and reach a wider market. To scale, it’s important to understand not only your current audience, but who the likely next target audiences are, and where they spend their time. You’ll need messaging that maintains what is core to your brand while appealing to a wider, less familiar set of consumers. Creative is vital in this effort. Nielsen Catalina Solutions found that, while a number of factors, including context, targeting, and recency, matter in effective advertising, strong creative is the most crucial factor to success in driving sales.

A brand-building mindset, a willingness to invest in a long-term strategy, and strong creative are an effective framework for boosting growth and pushing past DTC stagnation. At Stella Rising, we excel in working with disruptors, those brands driving change and excitement. Reach out to us to discuss how we can help your digitally native brand navigate this pivotal moment toward continued growth.

Digital Strategy