Sometimes it takes a crisis to question conventional wisdom. Not so long ago, an imaginary line separated brand marketing with a focus on awareness and dedication to subjective "big ideas" from direct response and a laser focus on measurable results such as increasing sales. Many companies practice either one or the other, but not both. If they have done both brand and direct response operations, they usually did it in isolated marketing organizations. Today the story changes.
Across industries, DTC disruptors such as Peloton, Casper Mattress and Warby Parker have gained market share. Large CPG holding companies such as Unilever and P & G then took over DTC companies such as Dollar Shave Club and Billie. However, DTC acquisitions were just the beginning. Even traditional CPG brands are increasingly turning to a direct response as the trends converge, which include greater emphasis on first-party data, better tactics of media mapping, and the need to tie marketing to business results. Above all, however, traditional CPG brands have to react directly because this brings them closer to their customers.
CPG brands can be used directly, but must use common sense
A few years ago, Coca-Cola conducted an experiment on direct reaction with its “Share a Coke” campaign. The idea was good – create a more personal relationship with consumers and inspire shared moments of happiness. But the payoff (your name on a Coke) was more gimmick than game plan. That said, Coca-Cola gave consumers a wow factor, but none of the marketing, sales, or distribution infrastructures the company had created to create the stunt brought them closer to becoming a direct marketing brand.
Of course, the soda wars are nothing, if not symmetrical. Pepsi has also responded directly recently, but instead of personalizing the product, the brand has personalized sales through DTC websites. Yes, Pepsi products are still largely purchased through retailers, venues and restaurants, but amid a pandemic, Pepsi has also created a viable marketing, sales, and distribution infrastructure that serves as a direct channel from the brand to the consumer.
This trend is happening with all CPG brands. However, for the most part, brands have turned to different platforms like Instacart, Pinterest, and Instagram to achieve a DTC pivot. Switching online and minimizing the number of middlemen between the brand and the customer is not exactly the same as “owning” the customer relationship. In the short term, this strategy may be a good hedge against consolidated power in the e-commerce space, but when CPG brands strive for a closer relationship with consumers, they must remember Amazon's teaching – those who fulfill the customer's order. know the customer better than they know themselves.
It's about sales, but it's really about relevance
Brands with first-party data are the havens of marketing, and those without are the have-nots. Instead of building the customer relationships that provide data, many non-customers, including CPG brands, continue to rely on third-party data to improve media exposure and revenue.
This is one of the reasons why PayPal spent $ 4 billion buying a voucher plug-in called Honey. As Business Insider put it: "The business model in which companies are paid to manage transactions is clearly the model of the future." Brands that outsource the key aspects of this model do so at long-term risk because they ignore a fundamental business law : Know your customer.
Direct response brands are many things for many people, but their common denominator is that they know their customers better than everyone else. To gain this knowledge, direct response brands need to be incredibly sales-driven. However, sales-oriented is not an abbreviation for Tunnelblick or a bottom line mentality, despite the opinion of some brand marketers. Indeed, sales is a meme that describes relevance.
In good times, this hyperfocus on relevance influences every decision, from product to marketing to sales. Direct response brands sometimes miss the mark, but they miss small ones and adapt quickly because their DNA is encoded to search for relevance. And it's this hyper-focus on relevance that pays off when a massive disruption like a pandemic creates widespread uncertainty. Consider the early, chaotic months of the pandemic. Brand marketing has been largely criticized for either getting dark or spreading deaf and dumb messages. In contrast, most direct response brands did not go dark or deaf because they knew exactly where to meet consumers, even at a moment when consumer behavior changed hourly.
There is no going back
With all the talk of getting back to normal, there is no reason why CPG brands should reverse their direct marketing advances. Why should the brand give up the data-rich customer relationship? Why should the company forego the flexibility and resilience of an alternative channel for consumers? And why should the consumer forego the convenience and savings of going straight?
The answers should be obvious – there is no going back. However, this does not mean that marketers have yet made a mental reset and that marketing organizations have not had the time to restructure themselves. Nevertheless, CPG brands have taken a look into the future at this moment. They should build on the DTC initiatives they run by using direct response as a marketing engine rather than a sideline. Because the CPG companies that respond directly to the drive are the same brands that can really say that they know their customers better than everyone else.