Direct-to-consumer brands were weaned on social networks, an environment where barriers to entry are low, scale is inbuilt and addressability is the norm — the perfect habitat for laser-focused companies with smartly-designed products and direct distribution strategies. But many DTCs have reached (or are fast approaching) the point of diminishing returns within these channels, forcing them to consider new options for incremental growth. This pursuit will challenge social-native brands to move beyond the walled gardens in which they’ve been incubated into unfamiliar realms where scalability and addressability are far from guaranteed, testing the fundamental durability of their business model.
The Consumer-Direct Conundrum
Let’s be clear: Consumer-direct is not confined to a single product category, product distribution or funding model. What connects brands as diverse as Warby Parker, Harry’s and Allbirds is an aggressive Marketing playbook focused on deploying people-based advertising in addressable channels.
Even the phrase “consumer-direct” is a bit of a misnomer, in that it implies one-to-one relationships with shoppers. Yes, these brands have eliminated certain retail middlemen in their dealings with customers, but to date they’ve found success mostly by co-opting the identity capabilities of Google and Facebook.
The most attractive aspect of advertising on these platforms (or any walled garden) is that Google and Facebook have amassed unparalleled troves of data on their end users; Identity Resolution is real-time and persistent, delivering the performance and accuracy that DTC marketers crave. The catch is that this data is proprietary — locked in a black box, and restricted to the platforms themselves.
The Level Playing Field
As consumer-direct brands look to grow beyond the walled gardens, they will be hard pressed to achieve similar outcomes and forge alternative people-based Marketing paths if they’re unable to extract their identity insights.
Making that happen will require a mechanism for fully owning and managing the identity asset that DTCs currently leverage within Google and Facebook — i.e., acquiring the same real-time identity graph capabilities endemic to the closed platforms, but in a way that brands themselves control, verify and make actionable across all activation endpoints.
There’s an opportunity here for legacy brands, too. Although many were knocked off their footing by consumer-direct’s collective onslaught via search and social, the future belongs to all companies — whether disruptors or incumbents — that translate social’s capacity for direct engagement into their own CRM files in a way that enables them to fully control their customer relationships (and to comply with existing and forthcoming data privacy regulations).
While many marketers rightly seek to replicate the DTC segment’s mastery of the platforms, it’s the way they’ll grow beyond the platforms that interests me the most, and that stands to make the biggest impact on how all brands interact with consumers moving forward. Given that large advertisers like Procter and Gamble have long been vocal about the data portability and transparency issues that walled gardens present, look for CPG giants and others across a multitude of verticals to follow the DTC category’s lead and make real-time, continuous and portable identity the cornerstone of their advertising efforts. It’s the path out of the walled gardens into a whole new world of customer engagement.
Read more: Not All Product Recommendations Are Created Equal
