- Direct-to-consumer companies matured in 2019, moving from short-term goals like consumer acquisition to long-term objectives like profitability.
- In the process, many of them started using traditional advertising like TV and set up their own content studios. They also made inroads into physical retail.
- At the same time, legacy brands including Procter & Gamble and Express launched direct-to-consumer brands of their own to fend off the threat.
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Direct-to-consumer matured in 2019, moving from short-term goals like consumer acquisition to long-term objectives like profitability, leading them to fundamentally change their playbook. Here are some key themes that Business Insider tracked in the direct-to-consumer landscape.
After spending millions of dollars building their businesses on social channels like Facebook and Instagram, many DTC brands branched out to traditional channels.
Read more: Direct-to-consumer brands that built their businesses without traditional advertising are now embracing it in key ways to fuel growth.
DTC brands’ ad spend increased by 37% on average over the last two years, and a growing chunk of those ad dollars started being directed toward traditional advertising such as TV and print, according to MediaRadar. Brands like Peloton, SmileDirectClub, and Leesa Sleep started using traditional advertising like TV and hired executives from thoses backgrounds.
As these brands scaled back on the now-saturated online platforms that fueled their initial growth, many also turned to content marketing.
Read more: Popular direct-to-consumer brands like Away, Dirty Lemon, Glossier, and Mailchimp are pouring money into building content studios of their own as they go beyond performance marketing.
Companies saw content marketing as a way to cultivate loyal audiences and often did it themselves to maintain control over quality, which let them limit the number of agencies they use to work faster and save money.
Read more: Popular direct-to-consumer brands like Bombas, Mailchimp, and SmileDirectClub are increasingly bypassing traditional agencies and working directly with production companies.
Others ventured into physical retail. Some opened pop-ups. Casper and Glossier opened a string of physical locations, and clothing rental startup Le Tote shocked the retail industry by acquiring beleaguered department store chain Lord & Taylor.
Read further: The cofounder of the rental startup that bought Lord & Taylor reveals its secret weapon and shares its plan to reverse the department store’s decline.
As direct-to-consumer brands went mainstream, legacy brands including Procter & Gamble as well as Express launched direct-to-consumer brands of their own to fend off the threat.
Read more: P&G and M13 just launched a new direct-to-consumer brand for women going through menopause called Kindra, as the former tries yet another response to the DTC threat.
The direct-to-consumer economy shows no signs of slowing down. Fashion retailer Express is launching its own DTC brand to catch up.
P&G and venture firm M13 launched menopause management product line Kindra and fashion retailer Express launched wellness brand UpWest.
The agency world also got in on the action. Gin Lane, an ad agency that helped take direct-to-consumer upstarts including Harry’s and Hims to market, raised $14 million and spun off into a direct-to-consumer brand conglomerate called Pattern.
Read further: A leading direct-to-consumer ad agency behind upstarts including Harry’s and Hims just raised $14 million to spin off into its own multi-brand DTC company.
Other agencies Decoded and The Engine Is Red rolled out products like yoga equipment, cannabis-infused beverages and ricotta snack cups to crack the market.
Read more: CBD-infused sparkling water, ricotta cups and yoga gear: Advertising agencies are building their own brands to crack the direct-to-consumer market.
Former AOL and Google executive Tim Armstrong also jumped on the bandwagon with the dtx company, his new company focused on the direct-to-consumer retail market. He promoted DTC brands through ads featuring their founders and products on TV, billboards and digital media on Nov. 15, a day he proclaimed “DTC Friday.”
Former AOL and Google exec Tim Armstrong is pronouncing a day for direct-to-consumer brands to rival Black Friday and promising them an audience of at least 100 million
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