Stay Relevant by Staying Connected—Imperatives for the New Brand Economy
What do the successes of direct-to-consumer companies such as Dollar Shave Club and Warby Parker have to show the larger advertising, marketing and media ecosystem? The way of the future, according to the IAB.
At its annual leadership meeting, the industry group released a study suggesting that digitally savvy online brands are effecting a marked shift in the way the consumer economy operates. By using technology to get closer to customers, these “direct” brands aren’t just grabbing market share from category leaders, they’re rewriting the rules for customer engagement.
Welcome to the brave new world of what the IAB calls the Brand Economy, where a men’s razor site that uses agile supply chains and innovative marketing techniques can erode Gillette’s market share by 16% in five years’ time; earn a $1 billion acquisition from Unilever; and serve as the catalyst—along with other direct companies—for a new way of relating to customers.
“We’ve entered a new era of brand creation,” said IAB CEO Randall Rothenberg in his February address to members that urged brands to become direct or become irrelevant. But what does going “direct” mean? It’s all about engagement and relationship building. We offer three takeaways from his address and the study on how brands can do that in the new Brand Economy.
Same As It Ever Was: Imperative No. 1, Tell a good story
No matter how much the industry changes, some constants remain. Story matters. Dollar Shave Club (DSC) built a loyal following on this one video. The narrative—funny and irreverent— addressed a longstanding problem in the men’s grooming space and by tapping into that, the company managed to create a two-way relationship with its customer.
All brands—direct or indirect—are subject to commoditization; and differentiation by quality or price can be difficult. Thus, differentiating by lifestyle—by story—is critical for building engagement with customers. “Storytelling is why we’ve been able to grow so fast,” said Michael Dubin, CEO of Dollar Shave Club to Inc. Magazine.
Imperative No. 2, Use all channels
Conventional wisdom would say that the success of online companies would mean gravitating to an online heavy marketing model. But Dollar Shave Club took to TV ads one year after its online video went viral. Why? Because of the reliability and reach of TV. As noted by Stratechery, the spend on traditional advertising has remained consistent for 100 years, and TV’s share of it has stayed at 40% for the last 20 years. That’s reason enough for Michael Dubin to explain the foray into TV as an opportunity to “tell this other story and have fun with it.” Or, in other words, use every channel possible for telling the Dollar Shave Club story.
Imperative No. 3, Brand safety is not just a reputational issue anymore, but a key component of growth
The IAB notes that in the Brand Economy, where a two-way relationship with customers is more important than ever, failing to ensure brand safety means failing to earn customers’ trust which means failing to get their data.
“Data is to the 21st century what capital was to the 20th. If you don’t have customer data, you don’t have a company,” says Rothenberg.
New ways of reaching and engaging customers are critical but some rules of the road like balancing the marketing mix between new and traditional, telling a great story, and maintaining customers’ trust will always get you where you’re going, surely and safely.