How traditional Australian brands can change business model during coronavirus

Brands need to employ a nimble test and learn approach to marketing and innovation in product development.

Traditional Australian brands should focus on four key areas, according to the IAB, to adapt to the direct brand model to address the rapidly changing market condition during the coronavirus pandemic (Covid-19).

Brands need to understand the opportunity of direct-to-consumer, including the value of using new channels and routes to market that offer first-party data relationships, return to a clear brand purpose and position the brand as a master of a category to demonstrate authority.

Finally, they need to employ a nimble test and learn approach to marketing and innovation in product development.

This is according to a report called Direct Brands Australia that was commissioned by IAB Australia to help the local industry understand the implications of the rise of direct brands.

The report also refuted the idea that direct brand shoppers are just millennials, with nearly two-thirds of those who have purchased from a direct brand aged over 40.

It also found that almost 80% of all direct brand shoppers always research before making a brand purchase for the first time, versus 66% for people who do not purchase from direct brands.

“Direct brands are redefining what it means to be a customer-centric, data-driven business. Even though this research was conducted pre-Covid-19, the findings are more important than ever for marketers,” said Gai Le Roy, the chief executive of IAB Australia.

“These direct brand organisations are engaging resilient and well-rounded marketers who are hands-on with the promotional components, as well as driving product, pricing and distribution strategies. While direct brands will find themselves in a learning phase as they mature, the success of sustainable direct brands offers important lessons for the wider retail and advertising industries.”

The report also noted the convergence of commerce, data and content, popularised by direct brands and e-tailers, is also surfacing the opportunity for direct brands to potentially disrupt traditional media companies.

The IAB felt this could result in a few savvy, highly successful multi-disciplined direct brand companies becoming the new media gatekeepers, using their own first-party user data and selling ads on their own content.

Read the full report here.

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