There's a rising supply of direct-to-consumer brands eager to hand over money to agencies to help them with their Facebook marketing. In the latest edition of our Confessions series, in which we offer anonymity in exchange for candor, we speak to a former marketer who cycled through several agencies -- ultimately landing at one that focused mostly on direct-to-consumer brands -- before going freelance.
There are so many DTC cookware brands it's hard to keep them straight. Now, these players are growing and trying to stay alive by expanding product lines and inking retail partnerships. The latest example is Material, which is now partnering with the furniture brand West Elm.
Typically, the path to opening a permanent physical store for older DTC brands like Casper and Glossier looked like this: open a few pop-up stores in the cities where most of your customers are, make sure that they're stacked with highly Instagrammable displays and events, and use those pop-ups as a training ground for opening up your own physical retail stores. But even pop-ups that only run for a few months can be expensive. So, many younger brands are trying to strike partnerships with other DTC brands to display product in their stores for a limited period of time, or partner with companies outside of retail to display product or host events
More direct-to-consumer brands are experimenting with partnership marketing, in order to further diversify their marketing spend away from Facebook and Google. Although there are inexpensive ways to test out partnership marketing, it can take a lot of trial and error to figure out which brands are actually effective to partner with.
Direct-to-consumer brands like to trumpet the fact that they have more access to customer data than traditional brands. Now, as they grow and add more products, they're also looking to launch loyalty programs that give them better insight into how their customers behave compared to traditional loyalty programs. Mizzen+Main, which sells mens dress shirts and pants, is launching a new loyalty program on Tuesday that it hopes will give the company more insight into when exactly its customers are looking to shop.
When handbag brand Dagne Dover launched in 2012, its products were only available for sale through its own website. But today, shoppers can find Dagne Dover bags for sale on Nordstrom's website, in Stitch Fix boxes, in select Apple stores, as well as some Equinox gyms. While Dagne Dover started as a direct-to-consumer brand, wholesale now accounts for just under 20% of its revenue. Founder and CEO Melissa Mash wants to keep it that way.
As shoppers' email inboxes and Instagram stories have become cluttered with ads from direct-to-consumer brands urging them to get 20% off their new rug or sleepwear collection, newer brands are in search of new places to talk to customers where they aren't yet sick of hearing from brands. One method of communication that's starting to become more popular: text messaging.
The RealReal's latest earnings results showed the company still in the red, but growing revenue. Wall Street considered it an overall success. Most companies in the resale space are trying to grow quickly, and have yet to turn a profit. Despite that, investors continue to be interested in the space.
Direct-to-consumer brands are starting to invest more in traditional advertising channels, like billboards, television and direct mail as consumers' inboxes or Instagram feeds are getting clogged with ads from competitors. Brands who spoke with Modern Retail say that direct mail is proving to be a small, but useful part of their marketing mix to reach a select group of high-intent customers.
Over the past year, weighted blanket brand Gravity Products has started to partner more with brands on product collaborations in order to lessen its reliance on selling directly to consumers. Today, Gravity announced that it's partnering with DTC mattress brand Purple on a product collaboration. CEO Mike Grillo said that partnerships now make up nearly 18% of Gravity's revenue, up from 2% last year.
Some direct-to-consumer companies are slowly building out corporate gifting programs, as they look for more ways beyond paid advertising to reach large groups of potential new customers. Bombas piloted a corporate gifting program for the first time last year. Today, it has a team of three that manages corporate sales, two members of which were just hired in June, according to chief marketing officer Kate Huyett.
Brooklinen announced a new marketplace called Spaces. It partnered with other DTC brands to sell adjacent but not competitive goods on the bedding company's website. It's indicative of a growing business trend where brands are banding together to try and maintain growth.
As buy now, pay later financing models start to gain more traction among younger customers, the businesses powering these transactions are also looking for more ways to keep customers shopping within their network of retailers. Affirm, founded in 2013 is one such business, and last week launched a redesigned mobile app that's designed to encourage customers to turn to Affirm to finance more of their purchases.
Brands, especially venture-backed ones, live and die by a few metrics. Customer lifetime value and retention rates are especially critical in proving to investors that their company is worthy of being valued at five times or ten times revenue.
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