The rise of the direct brand economy has been swift and far-reaching, upending nearly every industry, from retail to insurance. But even the direct-to-consumer darlings of the world aren’t untouchable, especially as they recognize the inevitable – growth is easy to spark and hard to sustain. As a recent Wall Street Journal article chronicling three once-promising, now-defunct, DTC startups noted, "the strategy is getting harder to pull off successfully."
As a result, some of the biggest DTC brands—brands like Uber, Peloton and HelloFresh—have already encountered an emerging marketing hurdle, the "DTC Plateau." And this has lead them into linear TV advertising in a big way.
DTC brands’ moving into TV represents yet another blurring of the lines between legacy brands that were born in traditional channels and their digitally-led challengers. But the move of DTC brands into TV doesn’t just open up new audiences for these companies. It also moves us closer to the next wave of disruption to sweep the marketing world: the shift from linear TV advertising to addressable, connected video experiences.
DTC brands’ investments in TV will be evaluated against the success these brands have already seen in digital platforms, accelerating the need for new buying and measurement models. In the world of TV, DTC brands’ comfort with attribution-based and programmatic buying models will spur a push in this direction, just as legacy brands demand even more impact and ROI.
Today we talk about connected TV, addressable TV, programmatic TV and OTT as next generation buying platforms—but eventually these will merge together to become the future of TV – a universal platform that is uniquely built around buying audiences, not just ad spots. It represents the next opportunity for DTC brands and their troves of first-party data to find the growth they are truly seeking.
But it’s not all doom and gloom for legacy brands. Both sides have an opportunity to ride this wave, provided they take a page from each other’s playbooks.
What can DTC brands learn from legacy brands?
The fact is that legacy brands wrote the book on brand building, and they have honed the formula for long-term growth. DTC brands that think they know it all still have much to learn and room to grow.
The real strength of legacy brands is how they leverage the power of storytelling. A lot of DTC brands go to market with the story of why they went into business, the benefit of their product or the social impact of their efforts, but those stories won’t resonate forever. Real storytelling is about connecting on a deeper level with consumers.
In addition, DTC brands must recognize that data can only take a brand so far. What really drives a business is consumer action that is spurred by an emotional connection. That emotional connection is something that legacy brands have perfected—and that DTC brands are only starting to figure out.
And what can legacy brands learn from DTC brands?
It’s no surprise that legacy brands are taking a page from DTC brands. After all, if legacy brands hadn’t been neglecting certain market needs and opportunities, DTC brands wouldn’t have emerged in the first place. Particularly as the TV landscape begins to shift beneath them, legacy brands need to ensure they are keeping pace with their DTC counterparts, lest they find themselves playing another game of catch-up.
Quite simply, traditional buying approaches need to change, in TV as well as other channels. This shift is already well underway. Planners and buyers are beginning to adopt new ways of thinking around how they target audiences and personalize messaging to take better advantage of channels and platforms where they’ve historically been bested by DTC competitors. The key here is adding granularity without losing the story lines that they’ve so carefully crafted elsewhere.
As DTC brands confront their first taste of stagnating growth, we’re going to see exciting shifts in how marketing and media dollars are being invested. The TV advertising revolution is coming, led the direct to consumer economy and a new wave of TV spending that demands more consumer-centric models. Ultimately, the brands that survive and thrive in this new economy are going to be the ones that can learn from their counterparts across the aisle.
Kait Boulos is the VP of marketing of Varick.