Direct-to-consumer (DTC) brands are known for killing it with performance marketing. They’ve grown up online, and they know how to move customers through the funnel with precision.
But where does brand come in? Do DTCs need to actively build one? Or is the need for a strong brand dead and gone?
We worked with the CMO Club to interview marketing leaders at 14 successful DTC companies to get their take on branding. Here’s what we discovered—and our recommendations for moving forward (check out everything we learned in the full DTC report).
Branding may come with DTC maturity
Some digitally native brands begin thinking about adding brand efforts to their budgets once they’ve established themselves in the market. For example, after working to get a scalable performance marketing machine in place, DTC company Gobi Heat is figuring out how to balance these efforts with branding:
“We are really putting more of an emphasis on the brand building, now that we have that in place and working really well,” explains Kyle Jacobson, CMO at Gobi Heat. “And so that comes from partnering with PR firms and doing some more top-level marketing, as well through display ads and video ads and things like that. Just, really navigating that difference between brand building and profitability...”
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Nate Phillips, CEO and co-founder at NomNomNow agrees that branding is a secondary goal until the brand has proven their business model.
“…for figuring out whether it's worth continuing to invest in, and also for positioning the company for capitalization, nothing beats actually showing acquisition,” Philips says. “I think that filling in ‘brand enhancements’ and consistency and all that sort of stuff is always nice—but definitely secondary while you're still trying to establish the business model and prove consumer demand.”
But not all DTC companies plan to build their brand
This move toward brand building as a DTC company grows is not the rule. Some brands are going in the opposite direction, investing more in performance marketing because the tools and technologies are so reliable. Dave Brotton, VP Marketing at direct-to-consumer brand Purple Wave, explains that modern technologies make it easier to find and communicate with specific audience segments for specific products.
Some brands are going in the opposite direction, investing more in performance marketing because the tools and technologies are so reliable.
“A lot has changed in six years in terms of the technology that’s available to us. I would say today we are, I'll call it 80/20,” says Brotton. “We are 80% promotion on the items that we have on our website, and 20% brand. I would say it was maybe 60/40 when I got here. But with recommendations and targeting and segmentation that you can do now, and electronically with what you can do with targeting people, we're at 80% in terms of trying to push the items that we have on the site.”
Other DTC companies see no need to spend on brand efforts at all, considering how well their performance marketing delivers on objectives.
“What I found in DTC is that long lasting conversations, the connections just aren't that important,” says one of the marketing leaders we interviewed. “In performance marketing, it's really about making the product or the process work for you and being able to acquire people high in the funnel and work them through. … Whenever I've kind of invested more focus on [branding], it hasn't yielded improved performance.”
That said, they admit that most DTC brands need to find the right investments that may or may not deliver immediate ROI versus performance marketing that does. As brands get bigger, it becomes a complexity they have to manage.
Cost and measurability of brand initiatives holds marketers back
Some of our DTC interviewees expressed that it’s too expensive to try to compete with bigger players in the market on branding—and it’s hard to prove any return.
“We have become data, data, data,” explains Brotton at Purple Wave. “And I think because of the speed, we've developed really good data practices and really good turnaround. But where we struggle is in that ability to slow down and tell a story. …for a campaign that really only has about a two-week open time of advertising, it's pretty tough to tell a story unless you're Coca-Cola or Apple and dropping $1 billion for messaging.”
Kristina Smith, Head of Global Digital Marketing at Keen Shoes, says that while her brand has low awareness in the market, they need to invest all of their dollars in wins that will drive measurable business.
“We have a ton of competitors in this space whose pockets are considerably deeper than ours are by a factor of a hundred in some instances,” explains the b. “So, that means that every dollar that we spend, we have to figure out how to squeeze as much from that as we can. If I was spending five times the budget, that would be a different thought process.”
Does DTC understand the value of brand trust?
According to a 2019 Edelman survey published in AdAge, trust is almost as important to consumers as quality and value. They rank it higher than good reviews, corporate reputation and a brand’s environmental impact. And a majority of consumers also say they would prefer to purchase from a familiar, trusted brand overall—66% would stick with their brand of choice rather than a competitor that is more innovative. A full 75% said they’d value trust more than trendiness.
A majority of consumers say they would prefer to purchase from a familiar, trusted brand overall—66% would stick with their brand of choice rather than a competitor that is more innovative.
Yet, only a handful of our DTC brand respondents noted a focus on building trust with their audiences and customers.
“Our core marketing goals were always to establish a trustworthy and familiar brand that focuses on quality,” says Claire Stemen at DTC accessory brand FOUNT. “Early content is extremely personal and focused on the detail work, materials and heart behind the items FOUNT made.”
DTC Purple Wave auctions used heavy equipment for construction, farm, fleet, transportation, and government. These are big-ticket items, and Brotton acknowledges his business runs on trust: “For the person that owns that [item], there's a lot of trust when someone says, ‘Hey, I'm going to let you yahoos market this for three weeks, have an auction and let all the people around the country that are your customers come and bid on this.'”
Other DTC brands focusing exclusively on short-term returns through performance marketing may face increasing competitive challenges in the long term.
The path to balance lies in personalization
While some DTC brands may be struggling to figure out the balance between the performance marketing they excel at and dedicated branding efforts, and others hesitate to invest in branding at all, there’s an obvious place for all to start: Relationship building.
DTC brands can most effectively build relationships with consistent yet personalized communications, delivered throughout the customer’s lifecycle. This requires some focus on brand—but it mostly requires expertise in delivering the right message, at the right time, to the right person, across their channels and device.
DTC brand Swanson Health is doing just that.
“We're trying to build a consistent message that gets deployed and build a consistent theme across all of the different ways to interact with the customer or the ways the customer could consumer our message,” says Corey Bergstrom, President at Swanson Health. But not only are they focused on consistency—Swanson Health is also focused on identifying individual consumers so they can personalize messaging and continually evolve the relationship.
“Given we know our customers, we have the ability to build a more personalized conversation through our touch points rather than a generic one-size-fits-all offer," Bergstrom explains. "We're trying to have conversations that pick up from the prior conversation and create the relationship rather than just be a place for them to purchase."
Using modern technology to deliver a consistent and personalized experience of the brand across all consumer touch points—including offline channels like brick-and-mortar stores—can help DTC companies build their brands without sacrificing the ever-important measurement and clear ROI.
Branding is not dead
It turns out that brand building is not, in fact, dead for DTCs, but DTC brands have mixed opinions on how important it is for continued success. And it can be difficult to navigate the transition from scrappy startup to consistent, reliable brand competing with household brand names. The balance lies in honing the expertise you’ve developed as a performance marketer to create the personalized, cohesive brand experiences your customers expect—online and off.
See what other insights we learned from both DTC and B2C brands in our latest report: Direct to growth: What all brands can gain from the new DTC world.