The rise of direct-to-consumer and challenger brands in the marketplace over the past several years has driven a dramatic paradigm shift. This new wave of products, services and subscription models has captured the mind and spirit of U.S. consumers, particularly in the coveted Millennial and Gen-Z audiences. It has also obliterated the traditional rules of marketing. To succeed moving forward, every marketer has to understand how the game has changed in order to win. Challenger brands that want to climb to the top, and stay there, have to be smart and strategic about how they engage consumers.
Why is this happening now?
Over the past several years, the U.S. cultural and political landscape has been marked by upheaval: Widening income gaps, the #MeToo movement, massive personal data breaches, shattered norms, unusual political allegiances, election meddling. and non-linear warfare, to name a few. Consumer behavior has always correlated closely with larger social trends, and this moment is no exception. The current social upheaval is reflected in the marketplace through the increasingly rapid introduction of startup disruptors, like Uber, AirBnB, Casper, and Peloton. It’s no coincidence that when the cultural zeitgeist is one of disruption and perpetual change, “disruption” is what every business strives for. Perpetual change is our new normal.
Driving these changes in the marketplace are technological advancements and tools that fuel agile, upstart challengers, which seek to steal market share from legacy leaders. Interestingly, many challenger brands have direct-to-consumer (DTC) business models. They are also borrowing tactics from the Direct Response advertising and marketing playbook. Testing creative messaging, offering configurations and call-to-actions along with triggering an impulse buy, and measuring everything as precisely as possible are all hallmarks of Direct Response—newly re-christened as Performance Marketing.
From a digital platform perspective, the tools and services to support challenger brands with DTC models are all there. However, scaling up past digital is the true test of whether these brands will have a significant and lasting place in the market. As the costs of advertising on Facebook and Instagram increase and the competitive bidding in AdWords becomes untenable, the target cost-per-actions needed for businesses to scale (and perhaps close another round of funding) begin to drift out of reach.
While there are other channels—such as social media influencers and out-of-home—they can make it tricky to show accurate ROI. The fact is that if a challenger brand wants to scale effectively beyond digital, TV is the answer. Why? Because the array of strategic options with linear, connected and addressable TV is continually being refined. Moreover, the attribution and analytics to track TV performance to provable ROI is more advanced than ever.
How to scale and win
The key to winning—meaning to scale beyond digital—is simple, but it requires the right ingredients and the right partner. Here are four steps that direct-to-consumer challenger brands can take to effectively scale to win.
1. First, brands need to craft compelling creative messaging that will elicit the desired response from their audience. Generally, this entails balancing an emotional component, to hook them, and a rational component, to drive responsiveness. A/B testing tools that offer configurations and call-to-actions can help brands uncover the best performer within their creative options.
2. Secondly, a brand’s audience segmentation and media strategy must be spot on. Brands can learn quite a bit about their audience through digital channels and there are formulas to apply those learnings and the profiles in a CRM to TV. Additionally, TV can provide more “spillover” than digital, so there’s an opportunity to test out an audience’s sweet spot.
3. Third, media buying must be optimized weekly. With accurate attribution, analytics and reporting, media buyers have the information at their fingertips to heavy up on the best performing stations and day parts while balancing clearance to meet business objectives.
4. Lastly, and most importantly, brands have to measure everything. TV post-logs, BVS detections, Google Analytics, Omniture, Adjust, Appsflyer, Liveramp and other data sources should be fed into custom attribution engines with fully refined algorithms to deliver results, insights and directional data to make better decisions, which drive even better results.
All of these steps must be iterative in nature. Winning in today’s landscape requires an agile model that seeks to continuously improve results in order to achieve sustainable scalability. Just like any advertising investment, there is risk involved. There is risk involved in starting a business, raising money, and taking on the role of marketer. Now, brands have to decide if they want to scale up and capture market share or be content with where they are now. Direct-to-consumer and challenger brands have endless opportunities ahead of them, if they know how to take advantage of them.