Digitally native brands that were created to cut out middlemen and connect directly with consumers through social media and other onlines channels, have been challenged by increases in Facebook ad prices, rising production and shipping costs and a tough consumer economy.
After taking off in recent years, these challenger brands are facing a tough market looking ahead to 2023. Building loyalty among consumers will help.
“Growth hacking tactics that DTC brands have relied on for years are no longer nearly as effective as they once were, so brands will go old school and invest in building meaningful connections to their customers through community, content and elevated in-person experiences,” says Ryan Eckel, brand president at Tracksmith. “These brands will realize that digital touchpoints with their customers aren’t enough, so we’ll see exciting innovations in physical retail and experiential marketing.”
Higher priced digital ads will likely continue into 2023, forcing DTCs to get creative with how they manage their marketing budgets.
“The iOS attribution apocalypse feels like ages ago, and most digital marketers have acclimated to the new normal of higher customer acquisition costs and an uncomfortably large data gap,” says Jamie Wardlow, vice president of marketing at Lume Cube. “For better or worse, with CPA pain tolerance at an all-time high, 2022 was a year for exploring new media or platforms for most marketers. 2023 will be a new war of attrition as most brands fight the urge to dial back spending and look to unlock more marketing efficiency through better creative insight and testing strategies. Good luck out there.”
For Drinks.com, a brand that lets consumers order alcoholic beverages online, has been navigating this market with a focus on customer loyalty.
“2023 will bring us much more of the uncertainty we’ve seen over the last couple of years. We are increasingly unable to rely on channels that have helped DTC in the past, such as social media, search ads, and other platforms for acquisition tactics,” says Brandon Amoroso, president and founder of Electriq, a DRINKS company. “But with uncertainty, there is opportunity. DTC brands that succeed and weather the storm will be hyper-focused on customer experience, building customer loyalty, and creating and cultivating direct relationships through SMS, email, and other owned channels, rather than through an intermediary like Meta or Twitter.”
In an economic downturn, digital marketing – which DTCs tend to be especially good at – are the best ways to drive ROI.
“As the market continues to shift away from traditional advertising, especially for DTC brands, I expect to see many companies looking for ways to force digital marketing to work for them the way that those traditional channels did for brick-and-mortar brands for decades,” says Caroline Duggan, chief brand officer of Lumineux. “Those who are more fluid will seek out ways to move with consumer sentiment, leaning into third-party endorsement strategies combined with a return-to-form for copywriting that I find particularly thrilling. The copy I see delivering for brands requires storytelling à la David Abbot. Clean, clever and thoughtful wins the race in our current atmosphere, and those willing to rise above the lazy and (I’d say) scared-to-death communication of years past will find themselves forging meaningful, lifelong relationships with consumers. And what could be better than that?”
