How DTCs are Outperforming Traditional Brands

DTCs beating traditional brands

Off the back of research by Rakuten Marketing, showing that British DTC brands are beating their traditional competitors when it comes to conversions, we speak to Abi Jacks, senior director, marketing, EU, Rakuten Marketing, and Doug Ker, CEO, Meli Melo, a luxury fashion DTC, to understand further how affiliate marketing is driving this, and the role of social and influencers. 

DTC Daily: Why is affiliate marketing a good fit for DTC brands?

Abi Jacks: Some DTC brands no doubt owe a part of their fast growth to affiliate marketing – and whilst the targeting available through social platforms from a brand itself is second-to-none, these tools are expensive and may not be something newer DTC brands are willing/able to invest in. There can also be shortcomings when it comes to using closed platforms such as Facebook where walled gardens may make it difficult for DTC brands to fully utilise and evaluate their data in order to better understand their audience’s behaviour. 

Whilst social platforms are still a key part of the mix, partnering with affiliates, especially at a brand-awareness focused level, can offer an alternative solution to reaching core segments of their audience. For example, 17% of people say that cashback sites have raised their awareness of direct to consumer brands. The same amount also say voucher or discount code sites have raised their awareness.

DTC brands especially might find success with micro-influencers. Our research found that 11% of British consumers backed micro-influencers – those with up to 30,000 followers – as an effective means of raising their interest and awareness of DTC brands with a smaller but more engaged and relevant audience. This strategy might especially be useful on Instagram where influencer marketing is so saturated – brands need to zone in to get consumer attention. 

How have you used affiliate marketing?

Doug Kerr: Affiliate marketing is a key part of our wider marketing strategy – it drives strong brand awareness for Meli Melo across multiple regions but its effectiveness is directly linked to how we implement it. We prioritise careful deliberation around selecting our affiliate partners, but when this is done, we believe affiliate marketing can be very effective for new customer acquisition and revenue sales. 

Affiliate marketing is also efficient because it’s scalable and it allows us to track ROI by the channel and even down to partner level which is incredibly useful. 

Why do you find influencers such a useful tool? 

Doug Kerr: Working with influencers can be extremely rewarding but we are selective about how we engage with them. We prefer working organically with individual influencers versus mass paid programmes, the latter of which is too expensive for us at the moment as we’re currently fundraising as a business. This can make it tricky for us to stand out as many well-funded larger brands are spending a lot on influencer marketing right now, so the space is competitive. 

Why is Facebook such a valuable tool for DTC brands? How does its value proposition vary from Instagram’s or YouTube’s? 

Abi Jacks: We recently conducted some research which found that 44% of UK consumers place Facebook as a platform that has raised their awareness of DTC brands with YouTube (31%) and Instagram (28%) not far behind. 

This is crucial to DTC brands, specifically because awareness and sales are so closely tied together. For example, 28% of UK respondents who recognise Birchbox have also bought from the company, 27% have bought from SimplyCook and 24% from Made.com. These are huge percentages, and show the importance of brand awareness via social media tools like Facebook for DTC brands in turning over profit. 

Doug Kerr: Facebook is specifically useful due to its prospecting and retargeting tools – it’s expensive but it can be a key element of the funnel. We also love Instagram and YouTube. Whilst we use Instagram in a similar way as we do to Facebook, YouTube can be great when we have the right assets for the platform and it can be a hugely powerful way of getting traction. Pinterest is also a platform we’ve started to use and are finding huge growth on. 

Social platforms are incredibly important but brands should not see them as the be-all and end-all. For newer DTC brands especially, advertising on social platforms is becoming more expensive so investing time in looking at what other channels can reach their audience and finding a balance here will be key.

Advertising on social platforms is becoming more expensive. What other channels will DTC brands look to reach their audience? 

Abi Jacks: Social media can be a great ROI-driver for DTC brands but we would always suggest using a mix as that provides more opportunity and visibility of a brand across the consumer journey. 

A great example is consumer advice publisher MoneySavingExpert. While the site may not be the final point-of-sale for many consumers (although recent research suggests it is for up to one in ten), it plays a crucial role in establishing consumer trust for a brand they might not have heard of. 

DTC brands must not rely too much on any one approach and instead try a blend to see what works best for them. And with that blend comes the need to measure ROI across the entire path to purchase. If you restrict yourself to a single format and focus on say just first or last click metrics, you will miss where your ad could have influenced the sale but then converted elsewhere.