Catchy ad campaigns for new direct-to-consumer (DTC) brands are everywhere – whether it’s a razor that promises to drastically shave your costs along with your beard or a sustainably produced mattress that won’t break either the bank or your back.
But while few would dispute the advantages of DTC (for example, the ability to maintain control over every aspect of your product, from manufacturing to distribution) it’s challenging to be a DTC brand right now. Not only is venture capital becoming harder to attract, new customer acquisition is getting increasingly expensive, and brands are discovering that some of their earlier strategies are simply not all that effective because of their lack of hard metrics and accountability.
Previously, DTC marketers might have discounted a television audience as too broad or untargeted, but now, savvier brands are waking up to the fact that thanks to addressable, television can help them target select consumers at scale, grow, and improve their overall health.
Addressable TV, as they’re finding out, is key to building solid one-to-one connections with potential lifelong customers.
Challenge: Social Video Inventory Constriction
DTC brands have long depended on social video to provide the scale and reach they need, but as the space evolves, digital ad costs are rising, brands are going up against each other for the same audience, and it’s becoming harder and harder to gain the attention they need to thrive.
Professionally produced television content, where advertising is considered integral to the programming, can be an antidote for the crowded (and sometimes chaotic) environment of short-form digital video and social ads. It allows marketers to increase impact because they’re delivering their message just as people are most immersed in content, and it does so in a fully brand-safe way.
Challenge: High Costs for New Customer Acquisition
Some experts have recently begun referring to current customer acquisition costs (CACs) as “unsustainable,” due to a variety of factors, including market saturation—a natural result of combining low barrier to entry with good return on investment in past years. Depending on the industry, acquiring a new customer can cost up to 25 times more than retaining current ones, according to some sources, and those costs are only expected to rise in the coming days.
Addressable TV, however, offers brands the opportunity to efficiently reach high-value audiences at scale, with markedly lower CACs. Additionally, addressable TV delivers higher ROI in reaching the specified audience, and its ability to close the loop on television effectiveness delivers immeasurable incremental value.
Challenge: Making the Most of DTC Data
DTC brands, especially those that can be characterized as digitally native, own not only the entire business process from concept to distribution, but troves of valuable and continuously replenished first-party data. “Ownership of the data gives these brands much more knowledge about consumer needs and desires and greater ability to reach consumers quickly,” Randall Rothenberg, CEO of the IAB, told PR Week. “They are more flexible in bringing products to market.”
That data can also help them connect ad exposure to outcomes, and through addressable TV, they can be assured that they are comparing apples to apples—an important consideration since they can’t afford to know that half of their ad budget is working but not which half, as famed retailer John Wanamaker once quipped.
DTC marketers need to ascertain how their campaigns are performing, and addressable advertising makes that clearer than ever, from measuring a campaign’s effect on driving consumer purchase activities to summarizing impact on such KPIs as lift in penetration, share shift, web and foot traffic, and return on advertising spend (ROAS).
The Bottom Line
There’s ample proof that addressable TV is a smart option for DTC brands. A recent VAB report looked at more than 100 companies who collectively spent $3.8 billion in TV advertising over the course of a single year and found that their campaigns had resulted in successes throughout the purchase funnel – from sharply elevated website traffic after a TV campaign launch to impressive lifts in sales during sustained TV campaigns.
As consumers change, brands are changing with them, and TV is keeping pace. One thing remains the same, however. TV will always provide the sight, sound, and entertainment value viewers demand.
Find out more about Cadent Addressable.