This post is sponsored by Pathmatics.
Direct-to-consumer brands are making noise in the advertising space, growing from a challenger to a real force. DTC brands know their customers, have data and embrace creative strategies to build relationships. As the space has matured, brands have figured out how to use business-to-business targeting techniques to effectively build relationships with their customers.
William Merchan, CMO at Pathmatics, sat down to talk about how direct-to-consumer brands are disrupting the industry, DTC brands' focus on social and other marketing channels, as well as how these brands have embraced such creative strategies as emojis and hashtags.
What are some of the most important recent trends you've seen among direct-to-consumer brands disruption and how do these differ from some of their more established competitors?
Given where we are in the timelines, funding and adoption of the DTC leaders it's been interesting to see how they have gone from challengers to establishing and expanding their portfolio of brands. I think one of the lessons any marketer can learn from how DTC brands have seen success is how they've taken B2B targeting techniques and applied them to a consumer business. While the use of influencers and their PR gets a lot of media attention, you quickly cap out on how much growth you can drive through those efforts. We've seen as the DTC brands have grown, they behave more like a leading B2B brand than a B2C brand. As an example, DoorDash launched their subscription business this year and has shifted from a Facebook focused investment strategy (90%+) to a more balanced approach (including other channels). Last month, 70% in Facebook.
What does DTC brands' focus on social channels look like? And why do you think they're so focused on social?
Social continues to be the best channel for any brand that is looking to drive targeting and performance at scale. This holds for DTC and any other brand as well. Social is a focus for many of the DTC brands because the measurement, targeting and optimization options available on Facebook don't really have a parallel in the broader display market. I think the challenge for most DTC brands in the near future is what do you do once you've tapped out on the incremental growth that Facebook can provide?
What channels are DTC brands using beyond social?
We see them investing in mass reach sites like Yahoo as well as more focused content rich sites like YouTube, Hulu and Reddit. Most of the budgets going into channels outside of Social are still what I would call experimental. There are some exceptions to this where we've seen a brand like Allbirds who has now shifted investment away from Facebook to the point where over 60% of their investment is now going into other channels.
Why do you think DTC brands haven't taken up programmatic advertising when so many bigger brands are investing heavily in programmatic?
The reasons we've heard from DTC brands on why they are still only dipping their toes into programmatic is that for them this is new territory. Most of their teams have been solely focused on Facebook as their primary marketing channel and it's been a bit of a struggle to take the approaches they've had for planning, buying and optimizing from Facebook into other channels. I think the lack of transparency and measureability have hindered the movement of meaningful budgets as well.
Can you talk about the kind of creative strategies DTC brands are using? What does their use of emojis and hashtags look like compared with more traditional brands?
This has been a really interesting growing trend with DTC brands where they use emojis and hashtags very consistently in campaigns and creatives. Everlane has been running a campaign with the #DamnGoodDenim hashtag, which gives their brand a little edge relative to the more traditional brands. They've successfully used this approach for over 2 years now. I'm sure we will see more traditional brands jump on the Emoji and Hashtag bandwagon soon.
Pathmatics CMO William Merchan is a data science, marketing analytics, advertising technology and startup veteran having built products and grown teams at DataScience.com, MarketShare and Yahoo!. Most recently, under William’s leadership, DataScience.com successfully launched and scaled an enterprise data science platform resulting in the sale to Oracle in May of 2018. At MarketShare he served as SVP of Strategic Alliances and GM of Dynamic Pricing, where he oversaw global business development and partner relationships, and successfully led the company to a $450 million acquisition by Neustar. William holds a BS in Business from the University of California Berkeley and an MBA from the Kellogg School of Management at Northwestern.