Author: John Stauffer, SVP, Experience & Commerce at Merkle
As we head into the holidays, brands are finalizing plans for 2023, entering year three since the pandemic began. Perhaps one of the most significant changes has been the cooling off of the once-hot direct-to-consumer (DTC) category. Now, many of those DTC brands struggling to achieve profitable growth find themselves in a sort of “retention renaissance.” They're rediscovering the power of retail and marketplaces for affordable growth and the importance of retention and loyalty to drive higher lifetime value.
In many respects, the DTC playbook written for a distinct category of digitally native disruptive new entrants has become indistinguishable from traditional CPG and retail brands. Show me a profitable direct-to-consumer brand, and I'll show you a business deploying some mix of wholesale, retail, affiliate, commerce, retail, and marketplace strategy.
Yet, as the market cools, we're seeing a long-overdue integration of commerce work and brand strategy on the part of many clients. Below are a few observations on the convergence of commerce and creative cultures and some approaches to the work from both sides.
On one side of the convergence is commerce extending into the brand and creative teams.
Commerce partners typically help to build and maintain all the integrated systems critical to any sizable commerce operation. Things like order management systems (OMS), product information management systems (PIM), working with third-party logistics partners (3PLs) and making user-experience improvements to the site. The list goes on. Typically, under the direction of CTO's or VP of Commerce roles.
The work is mostly about technology and activation. How do we get people to buy more stuff? How do we increase conversion rates and average order values? How do we make it as easy as possible for people to find what they want and buy it? And how do we maintain a complex system of integrated technologies?
Increasingly, those CTO/CIO-oriented buyers are grappling with the fact that those commerce touchpoints are brand experiences. It’s brand building delivered through the commerce stack as opposed to a media strategy.
Brand teams, and their ad agencies, increasingly feel the impact of decisions a CTO makes concerning the commerce stack. This can be both good and bad. Anyone who manages the day-to-day operations of a commerce platform knows how even something as mundane as fulfillment (e.g., "where's my order?") becomes indistinguishable from traditional "brand creative" from the customer's perspective. In fact, for many new brands entering the market, last-mile delivery is often the first mile in establishing a brand and building a relationship.
The other side of this convergence is brand work extending into commerce.
Conversely, we see clients with well-defined, winning brand platforms looking for an edge in commerce. But, as is well-documented by Forrester, there's a sea of sameness despite brands' having otherwise very distinct and valuable brand platforms. As software eats the world, brands are “desperate for differentiation.” Too often in commerce, brands fall into the trap of templated, clinical experiences at the point of transaction. Every product description page and checkout page looks identical in marketplaces and owned DTC platforms.
This sameness has given rise to the need for what we might call "commerce planning," a twist on traditional agency's Brand Planning teams. Commerce planning requires clients to consider how their brand platform manifests itself in commerce. This work includes things like customer research, creative brief writing, idea generation, and content creation – all in the service of commerce and experiences. No ads.
The implications for integrated brand and commerce teams
While no two brands are alike, there are some new common behaviors we see emerging from leading brands thriving at the intersection of brand building and commerce:
· Commerce is an inbound source of insight. Brand teams know how to use customer research to understand how commerce experiences can be improved and how they fit into customers' daily lives.
· Commerce is baked into brand briefs. The rise of microservices and headless experiences means brand planners can write commerce-oriented briefs that focus on a far more flexible set of desired behaviors like browsing, shopping, sharing, discovery not just cart features and payment functionality.
· Content is prioritized. Commerce teams focus on making sure content is as well written, designed, and produced as any other brand work. As brand-savvy marketers get closer to commerce, the bar gets higher for what gets approved in commerce.
· Loyalty and CRM teams work together to ensure the first purchase is not the last. Customer Lifetime Value often emerges as the shared KPI for these two camps.
With these common behaviors in practice, creative teams can better maintain a brand position at the point of sale, generating ideas for commerce experiences that are as creative as any other brand work, not clinical checkout flows. I suspect we'll see more in the intersection of creativity and commerce as brands work to drive higher lifetime value with existing customers they've worked so hard to acquire.