The Shift in Priorities for D2C advertisers
With many brands feeling the pinch of a tightening economy they have been forced to shrink marketing budgets and shift priorities. In addition to a reduction in advertising spend many are adapting their marketing strategies. For some, this means focusing on their most valued group of current customers, improving LTV and customer loyalty. For others, they are leaning away from top-of-funnel brand building and moving into performance tactics to allow a nimble approach to spend based on results. Even established brands such as Nike are recognizing the significance of a D2C/ performance approach and have grown this side of their business from 16% revenue to 25%. Similarly Adidas shared plans for D2C to become 50% of its business by 2025.1
When we look at performance tactics, online advertising is a predictable choice for D2C advertisers. That being said, as they look to go beyond the “hand raisers” and drive new cohorts of consumers, marketers are expanding their toolset to include CTV. In a similar way that linear TV can be leveraged as a performance tactic, marketers can ramp up and down spend based on the current economic environment, and subject to their customer acquisition KPI’s.
As we look at how this shakes out from a spending perspective, through May this year DTC advertisers spent 53% of their budget on digital formats and 45% on TV.1 This omnichannel approach would seem a necessary move to reach a broader demographic of audience and meet performance goals.
Looking at the devices used, the majority of viewers are watching premium (non-skippable) streaming content on the same big screen they use to watch linear TV. Certainly, D2C apparel and beauty brands, have used video as an essential weapon in their online and social arsenal, allowing consumers to immerse themselves in their brand. With its ability to target (and retarget consumers), CTV is a natural addition to ensure quality of acquisition, and using traditional linear TV’s mass reach, marketers get to enter the consumer’s living room. It acts as a solve for many major concerns – high-value customers, customer retention, and a data-driven approach that allows for budgets to be adjusted on a weekly basis.
With the combination of established brands wishing to own a direct relationship with consumers and new brands looking to profitably acquire customers and market share, it is anticipated that this omnichannel approach will continue to drive advertising spends with new performance channels such as CTV playing a pivotal role.
- Media Radar: July ‘23
Nicky de la Salle is the Vice President of Growth at DirectAvenue. With more than 20 years of experience, including a decade at a “Big 6” global agency, in performance marketing and growth strategy, she is a proven senior leader with specializations in omni-channel marketing, eCommerce and digital marketing channels. Nicky has driven the performance marketing vision for Fortune 500, Entrepreneurs and Tech-Disrupters alike both in the US and internationally.
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