Direct to consumer marketing is entering a new heyday. Modern DTC marketers distinguish their brands with an underdog narrative, taking a stand against retail giants in the name of quality, convenience, and integrity. That spirit of innovation also informs the marketing strategies of these DTC disruptors. After all, these brands were among the first to buy into modern digital advertising channels, such as Google and Facebook. However, the DTC landscape is constantly shifting and continual innovation is necessary. In this article, we’ll provide actionable insights to help you stay ahead of the curve.
So what’s changed today? As more DTC competitors saturate the space, customer acquisition costs (CAC) are skyrocketing. At Tapjoy, we’ve heard first-hand from partners how challenging this influx of competition can be. Those brands that remain characteristically disruptive by embracing emerging channels will soon outpace the competition. Meanwhile, brands that are slow to adapt will fall behind their more exploratory counterparts. Now, more than ever, DTC brands can benefit from a diversified growth strategy.
Keep reading to explore the risks of a narrow acquisition strategy, and the benefits you stand to gain by testing new channels.
The risks of a narrow customer acquisition approach
Social media and search advertising are the building blocks of the modern DTC empire. Likely, established channels like Google, Facebook, and Instagram will continue to drive success in the short-term, but that strategy is hardly future-proofed. If you’ve primarily relied on search and social media, it’s crucial to evaluate the advantages of testing additional media channels moving forward.
A diversified strategy limits risks, keeps you agile, and provides a much-needed competitive edge. Here are a few of the pitfalls inherent to a narrow customer acquisition approach:
- You won’t be prepared to manage market saturation. Brands that fail to test alternative channels today may struggle to target new customers as saturation increases. Targeting the same pool of users repeatedly is a surefire way to lose relevance. Also, remember to take into account that similar DTC competitors may be targeting the same pool of users, resulting in audience fatigue.
- You will be out-bidded by the competition. As DTC brands and subscription offerings proliferate, the cost of customer acquisition is rising. Even established brands, such as Nike, are leaning into their direct to consumer strategy. Mainstream advertising channels may cease to be cost-effective if this trend continues.
- You will not be agile enough to cope with big shifts. If Facebook updates its platform, or if Google makes changes to its algorithm, will you be equipped to deal with any problems that arise? DTC brands with a diversified customer acquisition approach will be prepared to shift their marketing strategy quickly and accordingly.
The benefits of an omnichannel growth strategy
In the past five years, savvy DTC brands have increased their annual marketing budgets and prioritized direct response campaigns. These explorations enable them to test quickly, invest in new channels, and break out ROI by source by accurately tracking and attributing every sale. By leveraging new performance channels, these brands discovered that they can combat rising CAC and improve overall ROAS. After all, testing additional channels widens the net. Each individual channel offers its own unique value, enabling marketers to reach 100% of their ROAS goal. Here are examples of the different benefits marketers can achieve with a diversified mix of acquisition channels:
- Brand awareness – Mainstream media channels such as Facebook and Google serve well for broad brand awareness. Today, DTC brands also increasingly experiment with out-of-home buys and commercial spots.
- Brand recall – If your goal is to promote brand recall, video is one of the most powerful tools at your disposal. Here mainstream channels, such as YouTube and Instagram can yield positive results. Whenever possible, prioritize channels that allow you to pay only for completed views. This option is available on some streaming platforms, as well as the majority of in-app networks.
- Brand affinity – The best way to foster brand affinity is through a value exchange. That’s why opt-in, skippable, rewarded experiences are rated most favorably by consumers. In exchange for their time and attention, they receive the power of choice and in-app rewards. Rewarded video is a consumer favorite.
- Measurable engagement – Personalized engagement is the best way to tap into the hype factor. These campaigns are memorable, story-based, and ideally, shareable. Interactive platforms, such as desktop, mobile web, and mobile in-app, are ideal for this. Playables are particularly effective. Just make sure you’re paying only for completed engagements.
- Precision targeting – Social media channels are optimal for precise targeting or retargeting. These channels have a wealth of first-party data that provide insight into user interactions. In-app is another good solution here, retargeting specific users with a rewarded ad campaign can be a valuable strategy to close the marketing loop.
- Direct communications – Some things change, while others remain the same. Interestingly, many of today’s DTC innovators are going old school with direct mail when it comes to coupons, trials, and signups. Incentivized email signups can also help establish leads, opening up another direct response channel.
- Down-funnel conversions – The holy grail of marketing — the purchase. If you’re looking to pay only for verified, attributed purchases, mobile in-app channels drive unparalleled results. Subscription-based brands, in particular, tend to see success driving signups in the rewarded in-app environment. These campaigns consistently generate high conversion rates and, as a result, strong ROAS.
Stay ahead of the curve
While mainstream channels like Google and Facebook will surely continue to play a prominent role in DTC growth strategies, brands that test alternative channels will have a leg up in this increasingly crowded market. A diversified customer acquisition strategy insulates you from risk and delivers a broad range of unique benefits — all of which contribute to your total ROAS goal.
DTC brands own the entire supply chain, which gives them data surrounding the entire customer journey. That means that unlike traditional brands, they have the agility to test new advertising channels and digest results quickly. If you’re interested in diversifying your approach, but not sure where to begin, start with a test! As always, our UA experts at Tapjoy are here to help.