It’s not an easy time to be a DTC or ecommerce brand. With a weakening economy, shifting consumer spending, rising ad rates, and venture capital getting harder to come by, digital-first ecommerce brands are putting a closer eye on their budgets, specifically on marketing.
In this blog, we’ll discuss our predictions for the near future of consumer spending and DTC advertising and share tips for marketing during a downturn.
Prediction #1: Consumer Spending Will Drop
With a recession on the horizon, we haven’t yet seen consumer spending on DTC products fall, but anticipate that it will as consumers have less extra money for non-essential items. We expect to see this shift make it both harder to acquire and harder to retain customers. Instead of trying to race to the bottom and compete on price with other brands, we predict brands will need to focus on value-first messaging to attract consumers.
Prediction #2: OTT CPMs Will Decrease
As marketers get more selective with the channels they invest in, we expect to see a reduction in ad spend, which in turn should reduce demand and lead to a relief in ad costs, specifically for OTT (Over-the-Top — refers to internet streaming services such as Netflix, Hulu, etc.).
OTT CPMs (Cost-per-mille/thousand impressions) previously saw a steady increase since the beginning of the pandemic as more people were staying home and spending more time on streaming services. With this increase, more brands started investing in OTT advertising. Now that we’re faced with a potential recession, we expect to see more consumers scale back on streaming service subscriptions. This means that while it will be harder to acquire customers through OTT, the rates may come down as well.
Tips for Approaching Marketing in an Economic Downturn
Despite our prediction of a drop in spending, there’s no reason to panic. Start looking at different types of marketing strategies now. Marketing in a recession might be more difficult, but it’s not impossible if you have the right visibility into what’s working and you don’t forget the fundamentals of good marketing. Here are some of our best tips for getting through the downturn.
1. Don’t underestimate measurement
While measurement tools might seem like an unnecessary expense when budgets are tight, you can’t expect to spend smarter without knowing which channels are truly delivering a return. Investing in a tool like Rockerbox can help you reduce inefficient spend and focus on the right channels.
2. Don’t cut top of funnel
Modern consumers interact with a wide array of marketing channels before they eventually purchase, which is why you can’t afford to cut marketing that’s more focused on building awareness even if it doesn’t directly tie back to making a purchase. For example, that awareness-building OTT ad might not drive purchases by itself, but it may make people aware of you and more likely convert when they later see a display ad or follow you on social media.
3. Analyze your existing channels
Some channels convert more quickly than others, and with the right measurement tool, you can assess the impact of all your channels and focus on those that push customers to purchase the fastest.
4. Explore Google Search/Shopping
Fundamental channels like Google Search/Shopping may fall by the wayside when you’re in growth mode, but they are effective standbys that can help you consistently get in front of the right people when they’re ready to buy.
5. Aim for repeat purchases
Don’t forget about your existing customers. It’s less expensive to sell to an existing customer than to bring in a new one, so focus on how you can use retargeting and well-timed emails to get customers to purchase from you again.
6. Do more with organic content
Prioritizing organic content on your blog and social platform can be an underutilized method to bring in new users who come to you first for information or entertainment and then decide to buy. Focusing on these areas can be less expensive and provide more payoff than some advertising options.
7. Bring people into the funnel with lower-priced products
High-ticket items are a harder sell than less-expensive products in your product line. Try bringing in customers with cheaper items or bundles, then once they’re in your funnel, you can focus on repeat purchases.
Smart marketing is almost impossible if you don’t have the right measurement platform. Rockerbox helps DTC brands just like yours centralize all their marketing performance so they can pinpoint inefficiencies and focus on what’s working.
Sign up for a demo today so you can feel confident in your marketing strategy despite any economic upheaval.