Over the past few years, we have witnessed a record rise of direct brands – companies that create value through low-barrier, capital-flexible, leased or rented supply chains, with value creation accomplished primarily through the direct relationships between the company and its end consumers. Direct brand startups have innovated not only in the way they create and distribute their products, but also in their performance-oriented approach to marketing, tailored to individuals, based on first-party data and optimized for lifetime value, all of which illustrate the reshaping of a market, and a hyper-focused, direct-to-consumer approach.
These new approaches are not only applicable for direct brands. Larger, more traditional brands are also experimenting with innovative, direct brand inspired tactics based on these new models, pivoting for instance from “mass reach” to “precision reach” techniques, and in some cases acquiring direct brand startups to inject new thinking and capabilities into the organization.
Media companies are taking notice too. The way they prefer to do business with partners, has huge implications for any sales organization. Media organizations who don’t take steps now to learn how to serve these companies will not only miss out on a growth opportunity, but over the long term they may find themselves losing relevance as a valued source of inventory and audience. Because at the end of the day, we are all chasing the consumers, many of whom prefer direct brands because they can communicate directly with them, they represent their values and most importantly, they know how they prefer to buy. As Bryson Gordon from Viacom succinctly stated, “The old model of selling is not in synch with the new model of marketing.”
As anyone in digital media knows, change is the only constant. And while the last cataclysmic shift that arrived with automated buying and selling now seems like a given, it wasn’t so long ago that many were caught off guard by the rise of programmatic. With the direct brand economy, we are seeing a larger, more fundamental shift that’s impacting the media industry. The marketing strategies, lean organizational structures and do-it-yourself (DIY) mindset that direct brands bring to their business is fundamentally different from their incumbent brethren, and yet the way media organizations think about these companies and their role as purveyors of audience, attention, inventory and context have remained largely the same. Yes, they have modified their approach to breaking down online / offline silos and introduced more automated and scalable programmatic capabilities, but these solutions have–up until now–been built to serve large, indirect brands and the intermediaries that buy their media. With direct brands, the media buyer IS the brand, and in some cases it is the CEO, or the CFO, monitoring and optimizing the cost of acquisition in real-time from their smartphone.
The objective of this white paper is two-fold. First, we want to paint the picture of what makes direct brands different, their marketing tactics, and their expectations for performance and growth. Second, we want to provide suggestions for media organizations to better address the wants and needs of direct brands while growing their own business as well. A few high-level suggestions and takeaways are listed below. To see the full set of insights in the report CLICK HERE.
– Paul Turner, LiveRamp
– Gina Gorman, Rocksbox
– Josh Palau, Bayer
– John Denny, CAVU Venture Partners
Our hope in offering this guide, is that publishers and tech enablers of all stripes will be better equipped for success and publishers will be better positioned to support them and thrive as the media and marketing industry continues to evolve.
We invite you to join the conversation by becoming a member of IAB and participating in our committees and working groups! For more information contact: [email protected]
IAB is grateful to the many members who shared with us their knowledge and expertise – see the full list in the whitepaper: