September 13, 2022
It used to be that a good product coupled with a strong brand and generous advertising budget was enough to deliver moderate success for a direct-to-consumer (DTC) company. The pandemic only helped DTC businesses when customers were forced to shop online as their favorite stores either switched completely to ecommerce or greatly reduced their in-person offering. With companies like Amazon and Meta reporting record-breaking earnings in 2020, there was a moment when a DTC business could rely almost entirely on paid advertising and insatiable consumer demand to grow.
That all changed in 2021, however, when iOS 14 prohibited certain data collection and sharing unless people opted into tracking, which in turn made digital ads significantly less effective. Add to that, that the digital ads market had gotten over-saturated as brick-n-mortar closed and focused on online sales, and ecommerce aggregators artificially increased DTC business valuations. In a matter of months, digital advertising was no longer a viable marketing option for many ecommerce businesses as ROAS dipped to historic lows.
At Mainfactor, we operate dozens of ecommerce businesses and stores and have found the best way to grow our revenue and audience is through a multi-pronged marketing approach. We still spend a healthy amount on ads, but more and more, we are investing in other channels. After decades of ecommerce experience, here are our tips for how to diversify your marketing:
When running a DTC business, managing costs (especially as inflation impacts COGS) is a constant balancing act. While there are a lot of places you can look to reduce expenses, technology should not be one of them. With customers' interests switching nearly as fast as their fingers can scroll, and major platforms constantly “updating their algorithm”, it is crucial that you invest in technology that allows you to know and engage with your customer on your terms. Data and analytics are essential. We advise all our clients and partners to use Shopify for their ecommerce platform and upgrade to a tier beyond Basic so that they can get valuable reporting on customer purchasing behavior. Additionally, we are strong supporters of Klayvio for email and SMS marketing. While on the pricier side for email management, Klayvio helps you get smarter as you go to ensure you are sending relevant messages to the right segments at the ideal times. Both platforms offer robust tools and detailed analytics that might seem like a big expense, but are absolutely worth it.
It is no secret that word of mouth is the best advertising around, especially in the crowded ecommerce market. Spending time getting feedback from customers and rewarding those that are your advocates is always time well spent. Beyond surveys and coupons, we believe that all DTC businesses should offer some sort of affiliate marketing program for customers that want to promote your products and make some money in the process. The ever-growing world of social media influencers is fueled in large part by brands paying for endorsements. Most of that spend is focused only on those who have very large followings, however some of your strongest superfans likely have a smaller social media audience. What is great about affiliate programs is that they allow you to tap into the long-tail of social media. We recommend that you still review and approve every affiliate applicant to ensure that they align with your brand, but we do not limit participants based on their following size. Sometimes the person with less than 1K followers might be your biggest fan and in the process drive sales and create great content.
Speaking of content – it could be said that if you intend on launching a DTC business, you better be ready to also launch a media business. DTC companies initially built their market dominance by removing the middleman, which in turn allowed customers to get the same quality products at a lower price. Today, however, the market is so crowded that price alone will not be enough to stand out. To truly grow a fanbase for your brand, you have to be putting out great, relevant content across all platforms. Thinking through how your audience might differ on TikTok to Pinterest will help guide your messaging plan for each platform. While creating this much content may feel overwhelming, there are some hacks that help with both volume and diversification. Specifically, make sure you are resharing and engaging with everyone who is organically posting about your brand. Consider sending out free products to creators that have expressed interest in your brand as a way to get more organic content. Shopify has also added a new feature called Collabs (formerly Dovetale, acquired earlier this year) that makes it easier to locate creators that are interested in being part of your content team in a more official capacity.
Whether launching a new DTC business or scaling an existing one, time is always a limited resource. We have found that investing time and energy into setting up a strong tech foundation, growing our long-tail advocates and creating great content are tried and true methods to grow your revenues and your audience.
Meredith Franzese is a Co-Founder of Mainfactor. Say hello at meredith (at) mainfactor.com