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Brand Building Insights from IAB Direct Brand Summit

Brand Building Insights from IAB Direct Brand Summit

As IAB CEO Randall Rothenberg noted in his opening remarks, the Direct Brand Summit is the world’s largest gathering of direct brands, with over 1,000 attendees. This second annual meeting was a unique opportunity to experience many points of view from the people who are building and leading the direct brand economy. And while we cannot possibly convey the vast amount of knowledge shared, we have assembled the topics that generated the most discussion.

Debunking Media Buying Myths

Susan Hogan, Senior Vice President of Research & Measurement at IAB, revealed some surprising findings from her in-depth Direct Brands: Media & Customer Acquisition Study. In sharp contrast to the popular belief that direct brands focus their marketing around social, the data actually shows that they are driven the most by customer satisfaction, above even Cost per Acquisition (CAC). Direct brands are leveraging all media, including display, social, video, OOH, and audio, and their offline media spend is bigger than most would think.

Attendees were also surprised to learn that more than a quarter of surveyed brands have brought ad buying in-house, suggesting a growing comfort with sophisticated data-driven, digital buying. Nearly two-thirds are using attribution models, and more than half are including first touch models. Susan noted that “For publishers, agencies, media measurement and research vendors, understanding disruptor decisions and perceptions is critical to brand success—and critical to the choices they make in media, messaging, measurement, insights and delivery partners.”

Understanding Direct Brand Myths & Motivations

IAB also released a second equally revealing report during the Summit called Direct Brands: Founders Benchmark Study. This well-researched study reveals that, in contrast to the most recent wave of high-valuation startups, direct brands are focusing on profitability and customer satisfaction ahead of market share. And in fact, 90% of DTC brands report that they are already profitable.

The findings also indicated that the vast majority of disruptor brands are building institutions to last, with only 15% stating that being acquired is a long-term goal. Similarly, important goals cited include establishing a new category and/or opening brick-and-mortar locations. And the number one long-term goal was going global, as 78% of direct brand sales now occur in the U.S. For more information and insights directly from founders, you can also view our Founder’s Video Stories.

Taking Different Paths to Growth

As direct brands mature, growth is a key concern. Patrizio Spagnoletto, the Senior VP, Growth Marketing at Hulu, spoke about viewing growth from a disruptive point of view, saying that “The goal is not to mature into conventional companies; it is to reinvent the retail experience.”

Company growth and company size is being viewed differently now than just a few years ago. The CEO and Creative Director of Beau Ties, Greg Shugar, talked about how “You used to pretend that you were a big company. But now, size or age is not something to hide.” His advice for finding growth was to “Be opportunistic, have your eyes focused on your industry, and seize your opportunity.”

So, where is that next big growth opportunity? While most direct brands only sell in the U.S., some are now making inroads in countries like Asia and Latin America, paving the way for other direct brands.

Targeting the Core Customer

As is often the case, different approaches work for different companies. Aaron Sanandres, the Co-Founder & CEO of UNTUCKit, spoke to the fact that early on, they did not know who their core customer was, so, as he said, “We tried to come up with a way to speak to everyone in the room.” This approach goes against the rules of conventional marketing, but it worked for them. The company ended up creating their Everybody Welcome campaign, which became one of the first male inclusive campaigns.

Luckily this worked for UNTUCKit. On the other hand, Alexandria Jarrell, the
Co-Founder & CXO of NomNomNow spoke of her company’s realization that “A brand created for everybody is a brand for nobody,” suggesting that there is no one right answer for every direct brand.

There was much talk about using the sales funnel to reach your target. “The funnel is very, very real” said Leslie Emmons Burthey, the VP of Marketing at FabFitFun. “How do we get someone into our universe? What does onboarding and retention look like? I challenge people not to do things just because they are at the top of the funnel. We try to put people at the top of the funnel instead.”

Using Listening to Learn and Bond

Interestingly, one of the words that came up the most during the two-day event was “listening.” Polly Wong, Managing Partner at Belardi Wong, cited listening as “one of the commonalities of successful brands.”

Rothy’s President & COO Kerry Cooper said, “The beauty of the internet is that [our customer] tells you every day what she likes and doesn’t like.” While Vivian Chang, the VP of Growth at Nutranext saw it this way; “The core of bonding is to … respond to what they are asking for. It’s not data, it’s listening.”

Staying Innovative and Staying Ahead

Two things that almost every direct brand has to be concerned about are innovation and imitation. During a breakout session, Nicole Williams, the VP of Brand Marketing for Mack Weldon said, “We like to lean in heavy and figure out how to make products better. We try to evolve and constantly make things better. Our operating principle is fewer but better things.”

Addressing the issue of imitation, the President & COO of Rothy’s, Kerry Cooper, put it this way “How do we deal with copycats? We continually focus on design and innovation because that is the place where we will wow [our customer].”

A direct brand’s best line of defense is speed. As noted in the Founders Benchmark Study, more than three-quarters of direct brand founders say they can get a product to market in six months or less—and a third can do it in as little as two months.

Sharing a Collective Concern about Data

The California Consumer Privacy Act was mentioned more than a few times, and not without a certain amount of trepidation. The concern was focused on the restrictions that will be placed on the collection and use of data. Currently, one of the law’s most powerful provisions will require companies to stop selling people’s data upon request.

Tim Armstrong, among others, voiced concern about how new privacy laws will restrict access to the data that direct brands need to maintain successful relationships. While the CMO of Freshly, Mayur Gupta, summed up the relationship with data in a particularly unique way, stating that “Data is like nuclear science, you can destroy with it, or you can transform with it.”

Connecting to the Direct Brand Ecosystem

IAB events like the Direct Brand Summit bring together senior-level industry professionals, including brands, agencies, media publishers, and technology partners, and are an invaluable way to connect, learn, and grow.

More information on DBS:

Authors

Author
Craig Coleman
Vice President, Marketing
at IAB