There’s a new kid on the block. Specifically, more small businesses are choosing to target their audiences directly and exclusively through e‑commerce. A new IAB study refers to these companies as "direct brands." Here’s what you need to know about selling to them.
IAB analysts recently named 250 companies to its “direct brands to watch” list. These companies include Warby Parker and Dollar Shave Club. The business model they use is disrupting the established supply chain than involved manufacturers, distributors and retailers. Direct brands are all about maintaining a direct consumer relationship. At the same time, they deliver a unique product or service. Consumers are noticing these brands and they’re spending more money with them. In fact, 10% of retail sales are now digital. And, a good portion of these sales are made between the brand and the consumer.
This marketplace change has big implications for advertising. Analysts point out that a two-way relationship, rather than a marketing push, is what will create long-term value. These companies don’t typically make big buys in mass media outlets. They don’t have big enough budgets. And, they have to do something different from traditional marketing to speak to the digitally connected consumer.
Media publishers can help these direct brands succeed. To begin, direct brands face an uphill battle in getting their products noticed. They can launch their online presence with a good story that appeals to the target market. For example, Warby Parker donates a pair of glasses to needy consumers in other countries for every pair a customer buys in the U.S.
Direct brands will buy digital advertising, but they’ll be asking media sellers tough questions. They can’t afford any reputation hits. When their ads appear online, they must appear to be safe, or consumers won’t go near them. You can assure these prospects that when they buy digital space with you, their ads will show only next to quality content.
These brands are also obsessed with data. Information about their customers is what they use to keep sales growing. When you propose ad campaigns, show the brands how information is collected and analyzed to ensure the success of future campaigns.
Direct brands start out small. As IAB analysts note, most of the top direct brands have revenue of less than $1 billion. These companies have plans to grow. And, there are probably direct brands launching this year in your market. Talk with them about your services and be prepared to be flexible on price at first. That flexibility will pay off in the long run as the clients grow more successful and need more help from you.