24 Jun 2022
5 min read

DTC Brand Growth: How to Scale Predictably and Sustainably as a Direct Sales Brand

Written by Maggie Tharp
on June 24, 2022

 

In a recent Insider Intelligence report, Rockerbox data was used to showcase important information about the ongoing growth of modern DTC ecommerce brands. The report’s contributors carefully analyzed current ecommerce growth trends, particularly through a comparison of established brands versus digitally native brands (DNVBs).

The D2C Brands 2022 report highlights the rapid evolution of ecommerce sales strategies for businesses that want to attain scalable growth, even in the midst of a large and crowded market.

In this post, we’ve pulled valuable insights from the report in an effort to clarify current growth strategies, marketing trends, and major implications for today’s ecommerce businesses.

Takeaway 1: Being a DTC brand is harder than it sounds

One of the major findings in the Insider Intelligence report was that incumbent and traditional ecommerce brands (such as Nike and adidas) are out-pacing digitally native DTC brands on current growth. While some statistics may be swayed by major corporate retailers, the fact remains that direct-to-consumer brands are facing increasing pressure—from investors and consumers alike.

Headwinds on supply chain pressures and quickly rising advertising prices are making growth more challenging than it was five or ten years ago. Additionally, competition is growing as many different businesses branch into DTC and ecommerce, while pulling back from traditional in-store retailers and “middleman” sellers.

Diversification is key to growth and brand sustainability

In a contemporary (and sometimes volatile) market, brands cannot only rely on digital sales alone to attain growth goals. Diversifying into owned retail and wholesale models is a smart choice, even for DNVBs. The Insider Intelligence report underscores the need to pivot and adapt, particularly when earnings trends and forecasts are less than favorable.

Recent data also shows that website traffic is down universally across all direct-to-consumer websites. This trend is driven largely by rising ad rates and customer acquisition costs, which are often outside of a brand’s control. 

Such a downward trend in organic web traffic highlights the importance of:

  • Proper targeting to ensure that the most qualified users are being driven to a site
  • On-site experience and conversion rate optimization to ensure that qualified users are actually converting (or in the conversion process)
  • Retention efforts that increase order frequency and lifetime value (LTV)

Takeaway 2: OTT/CTV is now a core channel in the marketing mix

Over-the-top (OTT) and connected TV (CTV) advertising are more important to the modern marketing playbook than ever before. As brands look to diversify away from traditional advertising channels like Facebook, diverse media and video options create a path for better brand evolution and improved reach.

OTT and CTV advertising can be leveraged for both branding and performance. The combination of OTT and CTV provides instant scale and return on investment. Unlike trying to diversify away from Facebook onto other social media platforms that are difficult to scale and measure, OTT and LTV can sufficiently absorb budget from Facebook.

Create digital assets designed for optimal performance 

When leveraging digital ads through these platforms, it’s critical for ecommerce brands to create assets that are easily distinguishable from other brands. This should be done in tandem with crafting a curated message that is optimized to a targeted (but not overly narrow) audience. The result is the ability to cast a much wider net to capitalize on an emerging ad medium.

Takeaway 3: Measurement plays a role in optimization

Historically, DTC brands have been limited with spending in offline channels due to an inability to accurately measure or quantify results. When done properly, however, optimizations can create real value, growth, and sustainability.

Why? When you not only shift budget away from what is running but also apply insights in real-time, you increase your potential to activate net new media. 

In fact, one of the most significant use cases for Rockerbox clients is to understand not only what isn’t working, but to have the ability to identify areas where an increase in investment would actually be beneficial. 

Real-time data reveals net new sites or platforms where brands aren’t running digital ads but should be as a way to scale or improve performance.

Takeaway 4: General spending trends

One of the biggest factors for DTC brands in an uphill battle for growth has been an environment of business disruptions. 

Some of these changes, such as quickly rising ad costs and supply chain woes, have made it difficult to get products into the hands of consumers. 

Other changes, such as Apple’s iOS 14.5 tracking updates, have contributed to difficulties in targeting key audience segments and monitoring ad results. These adjustments have had an impact on the way that DTC companies spend and invest, particularly on and off Facebook. 

Rockerbox data illuminates general trends when it comes to spending based on brand size. Relevant to a discussion of DTC growth, some of the most significant findings include:

  • The percentage of a brand’s spending on Facebook usually correlates to the brand’s size, spending power, and advertising potential.
  • Larger brands were (and remain) less impacted by iOS tracking updates due to the existence of an already strong marketing mix.
  • A shift to offline channels (OTT, LTV, direct mail) increases spending power and reach by enabling performance at scale, which is not always the case with digital marketing equivalents.
  • Small and midsize brands are more likely to shift back to Facebook spending, since they have less ability to diversify into other channels and mediums. 
  • The emergence and growth of TikTok is a spending trend to watch in the months and years to come, as ad spend has increased from .2% to 2% total.

Optimize with Rockerbox

As the 2022 Insider Intelligence report indicates, ecommerce brands are facing new challenges when it comes to spending, diversification, and innovation. The universal truth remains, however, that it’s difficult to make the right changes without access to reliable and organized data.

Rockerbox is here to clear the air—and to provide first party measurement for digital brands that want to optimize even those channels that are difficult to track. Our solutions will help you measure, strategize, and test more intelligently, so that you can spend where it matters and grow at scale.

Are you ready to overcome modern DTC challenges with centralized marketing data? Rockerbox wants to make your goals a reality. 

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