DTC brands continue to hold promise for traditional media sellers. Last year, we highlighted a Digiday report that discussed the challenges DTC companies faced in connecting with the core audience members. Now, Digiday has analyzed Video Advertising Bureau data and points to the new opportunity for TV media sellers in the DTC channel.
Today’s start-up businesses are finding it easier than at any point in modern history to directly connect with their target audience. All they need is a great concept or product and some social media savvy. Before they know it, demand is up, sales are growing and hopefully they’re earning enough on each sale to clear a profit.
The Challenges of Scaling
Sooner or later, these businesses need to scale up. If they’re selling products that are infrequently purchased, they need to reach a broader audience. Stories on Facebook and word-of-mouth from loyal customers won’t be enough. To grow, these businesses are buying more TV advertising.
The Promise of TV Advertising
The Video Advertising Bureau reports that about $2 billion in TV ads were purchased by 120 DTC brands between January and November last year. Many of these companies have large ad budgets. The biking and fitness app company, Peloton, now spends over $140 million a year. Danielle DeLauro, Executive VP at the VAB, reports that, “The decision to buy more TV comes from the natural maturation of DTC companies which feel they have outgrown the reach they have on social channels as well as a result of the rising CPMs on Facebook and Instagram.”
Online advertising long had the reputation of being highly affordable compared to traditional media. But the costs of online advertising are increasing. That trend is driving some companies, such as ThirdLove, to plan on allocating up to 20% of their planned media spend to TV.
Traditional versus OTT TV
However, not all of the spending is going to traditional TV. Brands are eager for the kind of data they’ve been getting when they buy online ads. They want to know about “site conversions, brand perception and sales lift.” Addressable TV (OTT), which is twice as expensive as traditional TV, can yield some of this data when ad displays on a connected TV. For now, it’s still challenging to know exactly who’s watching that TV, but marketers are tracking website visits after these ads run.
The companies in this study are primarily buying national TV and may start with an ad buy of $1 million and try to stretch it over a calendar quarter. If you’re targeting smaller DTC companies, try to sell them a TV ad campaign in the local market. Show them the specific audiences that watch local TV programming. You can find the information in AudienceSCAN profiles available at AdMall from SalesFuel.