By Adam Seaborn, Director of Sales and Media Operations, Kingstar Media
Every Direct to Consumer (DTC) brand reaches a point in their growth cycle where paid advertising becomes an indispensable part of their strategy. Traditionally, these brands first focus on low cost and highly measurable paid media campaigns on Google, Facebook and Amazon. The ability to spend only a few hundred dollars and reach an enormous but also extremely targeted audience is obviously appealing. Moreover, the built in attribution tools on digital channels allow early stage start-ups to verify their thinking and direct ad dollars toward profitable campaigns in almost real time.
However, as paid media budgets grow and companies go from early stage start up to emerging challenger brands, they will eventually have to expand their media mix to include more “traditional” channels. Many DTC brands are hesitant to test offline channels like Radio, Outdoor or Television for fear of high minimum costs, inability to quickly measure and the perception that these media channels are “outdated”, “skew older” or are “prohibitively expensive”. While the offline media world has its drawbacks there is no doubting the ability to catapult an “online only” company into the stratosphere. No one channel exemplifies this like TV.
Before highlighting how TV can drive web or app traffic for a digitally native brand, first consider the key metrics every company should be tracking: Customer Acquisition Cost (CAC), Conversion Rate, Average Order Value (AOV), and Return on Ad Spend (ROAS). Each one of these plays an important role in the marketing funnel and conversely should be addressed by different channel in the media mix. As a brand your ability to drive value comes simply from increasing AOV and conversion rate or decreasing customer acquisition and media costs.
TV has the reputation of being a highly untargeted, legacy media platform that is expensive, largely unmeasured, and sometimes a “vanity purchase” by CMOs who want to see their brand’s name on the big screen. This is simply untrue and TV has proven to not only improve brand awareness, brand authority and recognition, but play an important role in lowering CAC and improving ROAS. In fact, hundreds of DTC brands are using TV to increase top of the funnel site visits and app downloads. DRMetrix, the DTC television industry’s leading research companies estimates that online and mobile based companies have increase their TV ad expenditures on average of 26% each year since 2016 with no sign of slowing down. Indeed, in 2019 alone an estimate $2.3Billion was spent by the top 50 DTC brands on TV in the united states.
Brands in almost every category from automotive (CarGuru’s), health & wellness (Noom), food delivery (Hello Fresh) to fashion (Mack Weldon) have flocked to TV. These brands all have a few things in common; they were born on the internet, they are hyper focused on data and measurement and have year after year increased investment in TV to drive top of the funnel growth and lower acquisition costs.
So why is TV so powerful in delivery growth and helping improve ROAS? Simply there is no more cost-effective way at scale to reach millions of potential customers. Contrary to popular belief, TV offers some of the lowest CPM’s in marketing and the ability to reach engaged customers in their homes. TV should be treated as your first point of contact with a prospect, an opportunity to introduce them to the brand, provide them with an offer and allow your digital marketing infrastructure lower down the funnel to re-target, up-sell and close the deal. Very few customers will see an TV spot and click purchase minutes later, but many will Google your brand, visit your site or social media presence and provide you with invaluable data for re-targeting. This is the power of TV, the opportunity to create huge amounts of traffic and improve your digital media’s ability to narrow in on interested parties.
- Customer Acquisition Cost (CAC)
- Average Order Value (AOV)
- Return on Ad Spend (ROAS)
- Direct-to-consumer (DTC)
Top 50 DTC spenders on US TV in 2019
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