As the retail paradigm shifts in favor direct-to-consumer and subscription-based offerings, the media landscape shifts as well. Marketers of DTC subscription brands must lean on their knowledge of eCommerce and consider their offering through the consumer lens. Still, growth marketers constantly weigh rising CACs against projected LTV. In 2020, many DTC players now turn to emerging growth channels to expand their presence and mitigate risk.
Tapjoy met with Rohan Panjiar, Winc’s Director of Performance Marketing, Partnerships & Business Insights, to talk about how the wine distributor grows its subscriber base across a variety of media channels with a uniform test-and-learn approach.
What We Learned:
- To be successful as a subscription brand, you can’t merely market a product. You must communicate the ongoing value of your offering as a recurring purchase.
- With the rise of DSPs, transparency is a persistent challenge. Managing your media relationships in brand-safe channels is the ideal solution.
- When testing mobile in-app, marketers ought to treat it like any other media channel and bring a consistent media planning and creative optimization playbook and approach.
Thanks very much for chatting with us, Rohan. Can you tell us a bit about Winc and its business model?
Winc is a wine distributor that began as a direct-to-consumer wine membership and recently evolved to include a direct to business wholesale unit. Both of these business units have grown significantly in the last few years. The vision for the company going forward is to develop Winc as a house of wine brands, each of which will have enterprise value and brand equity. For example, our “Summer Water” brand has been quite successful in this respect — it’s become a $5 MM+ brand in the short span of two years. This year we plan to launch a new brand called “Wonders Wine” which will offer a clean/health-focused collection of wines.
In your experience, what’s the best marketing team composition for a growing DTC brand like Winc, and how does it differ from tradition? What gets managed in-house vs with an agency?
I oversee the direct-to-consumer business unit within Winc, so that’s where I can comment. In my experience, an effective DTC marketing team is comprised of individuals with ecommerce and direct-to-consumer experience across a wide set of industries. For example we have someone on our team who has a background working in influencer marketing for beauty brands. And prior to Winc, I worked in online media and eCommerce, where I managed growth. So having a wide breadth of expertise and on the team, and individuals with strong DTC backgrounds outside of the industry vertical has proven effective for us.
When it comes to outsourcing, I’m not a proponent of any one view. Play to your strengths. If you have a person on your team who is strong on social, do it in-house, but if you don’t, outsource it. My approach is to look at agencies to help build marketing channels from scratch until it is sizable enough to warrant in-house support. Start by engaging an agency — once you understand how to be successful on those channels, then you may consider hiring an in-house team.
As an alcohol brand, what sort of brand safety challenges are you faced with, and how do you approach them? Are some channels more difficult than others?
As a marketer in any field, it’s very important to be sensitive to brand safety. Most marketers think of brand safety as the protection of their brand image and the ability to control where they’re ads are displayed. But it’s equally important to be sensitive that your product is not for everyone. There are a number of ad opportunities and channels in which we do not participate, or in which are not permitted to participate — and for good reason. Even on major channels, there’s no strict compliance protocol to ensure that only 21+ adults will see alcohol ads.
When it comes to knowing where our ads actually run, any form of display advertising is a challenge for brand safety. The problem has been exacerbated by DSPs that plug into every network out there. It’s the new wild west, and that makes it hard to say for certain where your advertising is actually being served. As programmatic bidding has taken over, marketers achieve results with less human optimization. But when you remove the human from the equation, it only adds to the opaqueness of where your ad is running. Display is a challenge, but we’ve found that Facebook, Google search, in-app, and affiliate are more brand-safe environments.
As owners of the Winc brand, our secondary consideration is to be sensitive to the people we’re advertising with. In general, we try not to be exclusionary in terms of which outlets share our views. We try to be present on any media that our customer base consumes. That said, we are sensitive about being progressive on social values. We protect associations with podcasters or influencers and avoid those that share opinions that Winc feels are discriminatory on the basis of gender, religion, and creed for instance.
What are the opportunities and challenges of marketing a subscription service vs a more traditional product?
As a marketer, working with a subscription brand is a fascinating challenge. You have to have a long-term view of how you acquire customers because your monetization strategy depends upon it. You have to look 6, 8, or even 12 months out for purchases to justify the cost of acquisition. You have to have a long-term view on media planning and customer acquisition because how you acquire a customer is very much related to how you retain them. If you don’t retain them, you won’t recoup the up-front investment and the subscription model simply won’t work.
Also, unlike traditional brands, subscription brands cannot simply market a product. You have to have a real pain-point or motivation to compel consumers to subscribe to a solution because it is not a one-time transaction. The relationship requires a higher level of involvement on both sides. And your advertising must communicate why your solution is best consumed in the form of a subscription. At Winc, the pain-point we try to address is that it’s not easy to discover wines you like. We provide a subscription that is tailored to your taste profile and helps you discover more wines you like.
Where do Facebook and Google sit in your overall growth strategy, and how has that changed over the years? At what point in the growth should DTC marketers start looking beyond the duopoly?
Facebook and Google currently make up around 35-40% of our media mix, but they used to be more like 60%. I think this is fairly typical. When your business starts out, it’s smart to think about using Facebook and Google first, and diversify once you have the resources. Also, once you reach a certain size, you have more skin in the game — you need more risk mitigation strategies.
At Winc, we’ve diversified our media mix considerably over the past few years. The landscape is constantly shifting, so it’s important to always be testing and exploring. For example, we started to participate in podcasts in 2016 and now we’ve exited that space because it’s actually overpriced. You have to be optimistic about where you see emerging trends. If you see that you’re only leveraging a certain type of advertising, it’s time to branch out. Once your media spend starts to really skyrocket, you may also want to think beyond direct response — when you reach a certain level of market penetration, not everything can be DR targeted to high-purchase intent consumers on standard growth channels. You may need to start building brand awareness at that point. That’s the other natural evolution.
What role has mobile in-app advertising played in your growth strategy, and what channel-specific practices have you found most effective?
Consumers are spending more time on mobile devices, which is why the level of attention given to mobile in-app ads is so significant. That’s why we think advertising on mobile in-app is a very successful marketing strategy.
To be successful with in-app, treat it like any other media channel and bring a uniform media planning and creative optimization approach. As marketers become more skilled in that environment, we can help grow the channel and its capabilities. We need more creative testing and more advancement in bidding strategies. And to achieve this, marketers need to bring a test-and-learn mindset to promotions. When you’re looking at performance, try to understand the campaign’s effect on CAC and LTV. In my experience, that’s a common playbook to be successful on any media channel, though they all have their peculiarities.
Keep in mind, too, that the conversion rate on mobile may not be as strong as what you’re used to on desktop, so it’s even more important to bring that test-and-learn approach. Think about how you can create urgency of purchase — maybe through limited time offerings, more compelling promotions — and hit the customer at a time when they are attentive and responsive.
At a high-level, how does Winc’s marketing engagement break down across device? Are most of your acquisitions through desktop, mobile app, or mobile web?
Most of our traffic comes from mobile — around 70%, I’d say — but about only about 40% of our conversions happen there. The rest still happens on desktop. That does not mean that mobile is not an important platform for Winc and it’s ecomm presence. When it comes to the breakdown between desktop and mobile web are our primary platforms. We use these for acquisition and to manage existing relationships.
On the media side, it’s clear that people are spending more time on mobile so every advertiser out there has had to evolve. At a high-level, 70-80% of our media spend happens on mobile devices because that’s where the customer is. 100%, practically speaking, of our Facebook media buys are on mobile. Mobile is now 70% of our Google search and shopping spend, and that’s growing year over year. And on networks like Tapjoy that are mobile-specific, we’re seeing impressions, conversions, and spend, grow every year.
What emerging channels and/or features do you think will be the most valuable for DTC marketers in 2020 and beyond?
On the media side, I’m excited to solve the ongoing challenge to better understand and attribute the effect of mobile advertising and traffic. The consumer path to purchase is becoming more complex, but it’s clear that mobile is still being under-valued. As marketers, we have to develop a way to determine cause and effect relationships and develop our view on the value of mobile.
I think it will be critical for DTC marketers to build value and differentiate by developing new features to enable product discovery. AR and machine-learning driven shopping experiences will be critical for achieving this. I think consumers are looking for more than convenience and cost saving from their ecomm experience. There’s a desire to engage with the product category in a new way and discover new products as a result.
In the DTC category, I think we’ll see a shift as companies realize that they cannot continue to be online-only. For example, Everlane thought they would never open stores and they have now opened several. This is the year that direct-to-consumer companies will become more like retail companies — which is not too different from where this all started. Maybe not in 2020, but definitely in the years ahead, I expect that both physical retail and online will become equally important as distribution channels.
Tapjoy would like to thank Rohan Panjiar for taking the time to join us. For more insights from our Mobile Champions, check out our interview with Susan Borst, VP of the Interactive Advertising Bureau (IAB).