Direct-to-consumer brands are forced to find new acquisition channels. While advertising prices are dropping, the challenge is to communicate with shoppers in an authentic way.
This post was originally published on Forbes.com.
Even before the pandemic arrived, acquisition channels and costs were on the top of mind for a lot of direct-to-consumer brands. Since they can’t rely on exposure through big retail chains and online marketplaces, they have to find their own ways to reach customers while staying cost-effective. A lot has changed in the world over the last few months and one of those is the marketing space for brands.
The cost of digital advertising on Google, Facebook and Instagram have been steadily growing in recent years. According to Adobe Digital Insights, spend on paid digital marketing increased by 42 percent in the past two years (before the pandemic), while the click-through rate only went up by 11 percent. Many direct-to-consumer brands, that launched as digital-first or even digital-only, started looking at brick-and-mortar retail as a way out. Pop-up stores became a great venue to connect with customers, showcase products up close and acquire new clients. With the arrival of the pandemic, the playbook of direct-to-consumer brands needed to change and companies have been forced to re-think and re-invent their outreach.
Industries, like travel and entertainment, are among the hardest hit by the health crisis, and their lowered spending on marketing has already led to a significant drop in advertising prices. For example, TV advertising has been reportedly sold at as much as 90% off rate-card pricing, as reported by Philip Ingelbrecht, CEO of an advertising company, Tatari.
This has been the case for digital advertising too. Rick Heitzmann, from FirstMark Capital, told CNBC that “ad rates are down 30% to 35% across much of his portfolio, depending on the sector”. He goes on to explain, “whether it’s Facebook or TV, as people are spending more time at home and more time in front of screens, they’re generating a large amount of inventory, and at the same time large sections of the economy have ceased advertising [...] the clearing price is lower than it’s been in six to eight years.”
The social media marketing company Socialbakers, says that “CPCs on Facebook plunged by more than half from December to the end of March” and the ad prices on Twitter have gone down 20% to 40%, according to analysts at Bernstein. This is a golden opportunity for many direct-to-consumer brands who are now back to spending more on channels that were previously more expensive .
It is not just “traditional” social media like Facebook and Twitter, some brands are shifting their attention to other, perhaps less conventional, media platforms like LinkedIn. One of those brands is US-based Cuts Clothing.
When I asked Steven Borrelli, the company’s CEO, about their interest in that particular platform, he said: “LinkedIn allows us to support people outside of our immediate customer base on a platform that isn't about sales which is extremely unique compared to other social platforms that we use.”
Glossier, a direct-to-consumer beauty brand, turned to Instagram by sharing everything from videos of cute cats to producing the IG Live stream “Take care”, where they demonstrated facial massages and acupuncture techniques. This kind of content marketing, that is less focused on selling and branding, and more centred around sharing information is a great way to bring new audience to your channel. While those visitors are there, they may see and engage with related content, like video tutorials of how to apply makeup and promo videos of Glossier’s new hand cream.
With millions of customers working from home and suddenly having more time on their hands, email marketing has seen resurgence. At the start of the pandemic, many brands rushed to send out their “How we are handling COVID-19”-emails, which ended up backfiring for some and only drew negative attention to how insincere those brands sounded.
But as many marketers already know, email can be a viable and rewarding channel if approached correctly. The most obvious and straightforward way is to announce promotions and special offers. This worked well for LABFRESH, a Dutch direct-to-consumer fashion brand, as their recent “Buy 2 get 3” weekend campaign set a new all-time sales record, Kasper Brandi Petersen, the founder of the company told me.
A different approach is to leverage email campaigns as a way to build a stronger relationship with your customers, telling them your story and showing the values that matter to your company. Lunya, a direct-to-consumer sleepwear brand, sent emails to subscribers featuring interviews with team members. In one of the interviews, founder Ashley Merrill opens up about her life at home running the business and caring for her young children – all while wearing her Lunya pyjamas.
No matter what channel is used, the key is to find the right way to communicate with customers, especially during an ongoing pandemic and subsequent economic crisis. Striking the right balance between acknowledging the hardships people go through and focusing on the positives is a hard task.
Kasper Brandi Petersen told me about LABFRESH’s approach: “We have deliberately chosen to stay away from the suffering tone. Yes, it’s tough as a startup, but I don’t think the right way to get help in this case would be to yell from a roof top about how much you need it.” Instead the company took it as an opportunity to focus on their product and categories that are more relevant today. They recently launched soft sweatshirts. “Our apparels are stain and odour repellent so you can literally wear our t-shirts for a full week without washing” – told Brandi Petersen – which is perfectly suited for the ongoing sheltering in place and working from home.
Showing vulnerability and managing expectations is a sign of maturity, not just in people, but for brands too. Borrelli emphasized this when I asked about, how Cuts Clothing has been communicating to their customers. “We're constantly looking to add value beyond our product, we want to inspire people and in order to do that we must be transparent with how COVID-19 and this unprecedented time in general is affecting us as individuals as well as the overall business.", he told me.
This pandemic can create a unique opportunity for brands to be more authentic, vulnerable and foster a stronger relationship with its customers. After all, our love for direct-to-consumer brands is rooted in our passion for their stories and what they stand for. Strong communities are built in times like this, so it’s never been more important for brands to stay true to theirselves.