With three-quarters of their customer base being under the age of 55, direct-to-consumer (D2C) brands have a particular appeal with younger generations. But how are D2C brand reaching these younger customers? Here’s what a recent report [pdf] from the IAB found.
As it turns out, D2C brands are using media across the board to gain the attention of customers. And while online media plays a large part of that, a surprisingly large (41%) portion of their media spend is allocated to offline channels.
Direct mail, which is still considered to be an effective channel to reach target audiences, especially when it is branded and personalized, is used by almost two-thirds (63%) of the 330 D2C brand media professionals surveyed. Another 62% report using print media, and 60% have included out-of-home (OOH) media as part of the offline channels they use to target audiences.
And, while slightly fewer (58% of) respondents say they use TV as one of the media channels to reach customers, that may be given to cost rather than effectiveness concerns. Indeed, if given an unlimited budget, respondents cited TV (including broadcast, network and cable) as one of the top three platforms they would invest in that they are not currently using.
What About Online Channels?
D2C brands’ dedication to investing in offline channels absolutely doesn’t mean they aren’t paying plenty of attention to online channels as well. After all, the majority (59%) of their media spend is allocated to online.
Social media is one channel that D2Cs invest in from the start, with 62% of respondents saying they invested in social at the launch of their brand. For those brands that report having invested in social media at launch, Facebook received the most investment, accounting for about one-third (32% share) of social media budgets on average.
Separate research has found three-fifths (61%) of D2C brands surveyed naming social media as one of the top 3 channels for customer acquisition. The IAB’s report likewise indicates that social banners and display in-feed provide acceptable customer acquisition cost (CAC) for many respondents. These also rank highest among respondents for delivering customers with high lifetime value (LTV).
Of note, also on the list of online channels that ranked relatively high among respondents for acceptable CAC and high LTV is podcasting streaming/downloading. Earlier this year, the IAB and PwC revealed that D2C retail accounted for the largest share of podcast advertising spend in 2018.
Social Tops List of Earned Media
D2C brands rely heavily on earned media, with a full 90% saying that they currently or in the past have relied only on earned media – and another 95% saying they believe earned media is a significant contributor.
As for earned media channels, it’s social at the top again. Close to 7 in 10 (68% of) respondents report that social media (non-Influencers) has been a significant contributor of earned media, followed closely by social media influencers (66%). Other significant contributors to D2C brands’ earned media include online publications (64%), broadcast TV or streaming video (58%), events (57%) and offline publications (56%).
Other Survey Highlights
- More than two-fifths (43%) of D2C brands have allocated a portion of their budget towards emerging media.
- Following the trend of B2C and B2B marketers bringing agency business under their own roof, 7 in 10 D2Cs have invested in bringing analytic expertise in-house.
- The majority (64%) of D2Cs are using attribution models, though more than half (56%) rely simply on a first interaction attribution model; and
- A slight majority (55%) have successfully included their offline media into their attribution model, while another two-fifths (39%) say they are currently working on doing so.
To read more, the full report can be accessed here.
About the Data: Results are based on an online survey of 330 D2C brand media professionals representing all major consumer brand categories.