Direct to consumer, or DTC retail, is on the rise: According to a study from CommerceNext and Oracle, there are now more than 22,000 companies in the DTC retail category. By cutting out the middlemen, DTC brands can offer quality goods at affordable prices and reinvest in marketing. Traditional retail marketers are left wondering how to keep up, as DTC brands continue to out-market them.
With all of these apparent advantages, many DTC retail brands often still leave one major opportunity untapped: mobile marketing. The majority of DTC marketers focus on social media exclusively, rather than crafting a comprehensive mobile strategy. Some marketers are beginning to see that social media impressions don’t equate to ROI, hence why DTC brands are pulling as much as 30% of their ad spend away from Facebook.
To maximize ROAS, growth marketers should define more concrete KPIs, such as engagements, completed views, trials, sign-ups, app installs and more. Mobile is the most intimate channel for consumer engagement. Here are a few of the best growth tactics mobile marketers can use to maximize their DTC retail strategy.
DTC retail tactic #1: Cost-per-action advertising
Cost-per-action or CPA advertising is a pricing model in which advertisers only pay if and when an ad leads to an action or sale. For DTC retail brands looking to uplevel their mobile strategy, CPA advertising can be particularly effective. For instance, DTC brands that leverage a subscription model could run a CPA campaign that invites users to sign up for a discounted first month. This is ideal for brands with a low-friction and affordable offering, such as Dollar Shave Club’s razor subscription. Meanwhile, DTC brands that have a strong content marketing strategy may run CPA campaigns geared at newsletter signups. For example, DTC luggage brand AWAY runs a branded travel magazine called HERE. A mobile CPA campaign could be an effective way to promote engagement with the brand’s content.
Like other forms of performance advertising, CPA campaigns transfer more liability to the publisher as advertiser payout is not guaranteed with each impression. As such, some publishers may be reluctant to host CPA ads. However, most major digital ad networks, including Tapjoy, now support CPA advertising. CPA advertising remains one of the most valuable growth tactics in the DTC arsenal.
DTC retail tactic #2: Rewarded video to install advertising
In keeping with their status as digital-natives, many DTC retailers have an app to facilitate consumer interactions. One company that has seen marked success with its branded apps is Warby Parker. It offers an augmented reality app for testing and purchasing glasses frames, and a mobile prescription check app. For DTC retail brands, the advantages of investing in a mobile app are numerous, including an in-flux of first-party data and an improved purchase journey. But after the app is launched, a mobile user acquisition strategy is imperative.
Mobile is the ideal environment for app user acquisition. Rewarded video is particularly effective in driving high-quality app installs because the secondary action is not incentivized. Consumers may elect to watch a video ad in exchange for a reward, then choose to download the app of their own volition. What’s more, opt-in rewarded video is the optimal ad experience among consumers, as they perceive it to be more relevant and engaging.
When devising a mobile strategy, DTC retail brands should partner with an advertising network that prices rewarded video on a cost-per-completed-view (CPCV) basis. Industry viewability standards dictate that just 50% of the video player must be in view for at least two seconds. If priced on a CPM basis, advertisers pay by impression — in essence, paying to show an ad that is never watched. A completed video view is infinitely more valuable.
DTC retail tactic #3: Cost-per-engagement advertising
In the CPE advertising model, advertisers only pay for completed engagements as defined by the campaign. These engagements can be intimate branded experiences, such as mini-games or branded quizzes. For example, the DTC vitamin brand Care/of quizzes new customers and provides personalized supplement recommendations — this brand would be an ideal candidate for a quiz-based campaign. Similarly, skincare brand Skinsei offers a holistic skin diagnostic and provides a personalized care regimen. These and other DTC retailers that include personalized quizzes in the purchase journey would get particular value from a CPE strategy.
Mobile mini-games are also a memorable and engaging option for DTC brands across the board. A brand does not need to have a cartoonish mascot or a humorous tone to create a successful mini-game. Any brand could benefit from a gamified product showcase. Perhaps consumers tap to pick their favorite colored product or catch falling items in a branded shopping cart. The potential of the mobile format is limitless — regardless of the CPE format you choose, this strategy will drive significantly more ROAS than impression-based advertising.
On mobile, DTC brands can retain authenticity at scale
Despite the overwhelming popularity of the DTC approach among consumers, the majority of DTC retail brands struggle to achieve profitability at scale. Instead of turning to the traditional retail playbook, these companies should return to their performance marketing roots. Investing in outdated non-digital formats, like television, will only dilute the authenticity, originality, and intimacy consumers have grown to expect from DTC retail. Mobile advertising offers a much more compelling alternative. Armed with these three growth tactics, DTC retail brands can uplevel their mobile strategy and retain authenticity at scale.
For more digital marketing insights, including how DTC brands can drive maximum ROI from their mobile strategy, contact Tapjoy’s mobile advertising experts today.