DTC brands can gain competitive advantage through online paid media

As living costs rise in the UK, the concern for personal finances is increasing. We can see the effects of this in the GfK’s Consumer Confidence Index which demonstrates a continued decrease in consumer confidence. At the same time, while DTC brands rely heavily on digital advertising, continued privacy changes are set to make audience targeting and performance measurement challenging.

During the pandemic, many brands saw record levels of revenue and invested significantly in infrastructure and facilities, as well as marketing and product to prepare for a positive trajectory.

But the proportion of retail sales online fell to 26% in March 2022, the lowest it has been since February 2020. This demonstrates that while the pandemic has sped up the shift to online sales, the halo effect is not strong enough to withstand rising living costs.

Unfortunately, standalone brands are competing with national retailers who have significant economies of scale enabling them to weather the storm. Despite less consumer spending, retailers are choosing to chase lockdown levels of online revenue growth, driving up advertising auction costs and squeezing advertisers out.

To remain competitive, DTC brands need to be proactive, data-savvy and innovative. Here are seven steps for brands to protect their revenue by shifting to paid advertising:

1. Prioritize the product experience

DTC brands, consider the full marketability of your product and invest in predicting consumer purchasing trends.

Note, that a brand’s delivery and returns policy is part of the product experience. Brands will see conversion rate increase if they are competitive here.

Google is aware of the importance, see its recently-launched Google Shopping Experience Scorecard in the US. The program scores businesses on their delivery and returns, rewarding advertisers with a “boost in rankings” upon receiving a high score.

The customer is also buying into the experience with an online purchase; brands should consider investing in conversion rate optimisation to improve their site experience.

2. Engage with automation, critically

Ad platforms offer increasingly automated solutions - which can be damaging. Google's new Performance Max campaign type (PMAX) runs auto-generated display and video ads based upon advertiser or Google-supplied assets.

The ads generated by PMAX can represent a brand poorly if it's not implemented appropriately - dangerous for those positioning themselves as premium brands. Auto-generated ad creatives can lead a brand to feel cheap and desperate, which can be off-putting for consumers. To maximize performance, brands should create purposeful creatives for PMAX and keep abreast of changes, as campaign types will evolve.

3. Live and breathe video creatives

The future of paid media management will largely depend on one's ability to design, test and manage video assets. D2C brands that prioritize asset creation in their strategy will dominate over slow, reactive competitors. Ad creatives should be purposefully created for the platform they’re showing on to target users effectively.

For brands aiming to target TikTok users, ad creatives need to be scroll-stopping and native to blend in, and stand out.

To find content that performs, advertisers need to continuously create and test fresh ideas, beyond simple edits - which might involve utilizing user-generated content if the ad demonstrates the quality or use of a product.

4. Your product data is an asset

The most important asset for a product-led strategy is the product data. Feed optimization is integral for high-performing campaigns. Brands will need to ensure that their data feed is accurate, clean and meets the guidelines set by advertising platforms. In particular, make sure that products have the correct GTIN identifiers set for best visibility vs any partner retailers.

There are also significant gains to be realized by improving the accuracy of meeting a user’s search query - through optimizing product titles, descriptions and imagery. Split-test changes in these attributes across your wider catalog for the best results.

5. Invest in brand ad sequencing and measurement

Previously, DTC brands could generate significant recognition by presenting a semi-compelling video to broad prospecting audiences. But with reduced consumer spending, audience sizes are smaller and those consumers willing to spend are in higher demand. It’s more important than ever to stand out, and ad sequencing gives brands the best opportunity for recognition.

An Ipsos/Google ad sequencing study found that multi-touch, multi-ad, awareness campaigns significantly outperformed serving users the same ad multiple times, with one methodology seeing a 134% increase in purchase intent, comparatively.

To measure performance, brands can consider in-platform brand lift studies for assessing recall, social listening or survey data to understand consumer sentiment and multi-cell geographical testing for understanding incremental uplift.

6. Own and use first-party data

For all the right reasons, privacy-related changes to measurement will have a huge impact on paid media performance. A key way for brands to protect themselves is to invest in the collection and measurement of first-party data.

Building out their customer database, using micro-conversions such as email list sign-ups or competition entries, and using CRM integrations to gather the data effectively will provide a wealth of data. This can then be interpreted and uploaded into advertising platforms in order to create more effective ads. Brands should look to integrate with a customer data platform (CDP), such as Klaviyo, Segment, AudienceStream or Emarsys. CDPs combine features of a CRM, analytics tools, and marketing automation to run and measure campaigns based on this data, and offer plenty of ad tech integrations too.

7. Find experts, and trust them

The privacy changes will lead to a reduction in data, and brands need to truly understand the impact of this. They won’t always have the conclusive insights they’ve previously been using to make investment decisions.

In this landscape, paid media specialists will need to be convincing as well as data-led and brands will need these experts to guide them through the challenges ahead.