More companies are seeing the wisdom in starting their operations online before they set up bricks and mortar locations. In today's crowded marketplace, these businesses need to reach consumers with messages about the products and services they offer. The VAB estimates that, in total, these direct-to-consumer brands spent over $3.8 billion on TV advertising last year.
Growth in DTC Brands
The VAB’s new report Direct Outcomes: Analyzing the ‘Big Bets’ DTC Brands are Making on TV, defines a DTC brand "as a company selling its product directly to customers without third-party retailers, wholesalers or other middlemen.” Examples of these brands range from Peleton to Casper. Consumers show no signs of tiring from the online shopping trend that now accounts for 14.3% of retail sales. In the next five years, we can expect sales in this channel to grow. Nearly two out of three shoppers believe they’ll make about 20% of their purchases online.
DTC companies get that they need to advertise regularly. They’ve also discovered that TV ads directly drive website traffic. And that’s traffic they need in order to grow sales.
Emerging DTC Brands and TV Advertising
While some DTC brands have been around for a while, new entrants are setting up shop regularly. In their early growth stages, these businesses are likely to spend more than average on advertising to drive consumer awareness. Last year, the 63 businesses the VAB labels as ‘emerging’ bought $1.4 billion in TV ads. This spending level was nearly 100% higher than the year before. During the same time period, researchers measured a 183% increase in search queries and a 213% increase in online video views. Examples of emerging brands included in the VAB study include Chewy.com and PillPack.
Expanding DTC Brands
TV advertising by ‘expanding’ DTC brands continues to increase as well. Last year, spending by the 62 brands included in the VAB study increased by 29% over 2017 and reached $2.35 billion. Consumers definitely took notice of the ad purchased by Warby Parker and 23andMe. Researchers measured a 24% increase in search queries and a 95% increase in online video ad views after TV ads ran.
The VAB notes that TV advertising in specific verticals has jumped since DTC brands have entered the marketplace. 2018 spending in the following verticals by DTC brands amounted to:
- Personal Finance $286 million
- Mattresses $266 million
- Real Estate Services $194.5 million
To help your DTC brands increase revenue, share AudienceSCAN profiles of online shoppers with them. The profiles are available at AdMall from SalesFuel and explain which forms of advertising influence these shoppers.