Average Ad Spend by Direct-to-Consumer Brands Is Up 50% in 2019 – Adweek

When it comes to ad spend, direct-to-consumers brands, known for changing the playbook on how a company operates and connects with consumers, are moving toward a familiar path carved out by their conventional competitors.

According to a new report from advertising intelligence firm MediaRadar, DTC brands’ ad spend across digital, TV and print is up an average of 50% year-over-year, from $700,000 in Q2 2018 to more than $1 million in Q2 2019. Digital alone increased 22% year-over-year, from $115 million in Q3 2018 to $140 million in Q3 2019.

Just as DTC brands are moving toward an omnichannel (read: online and offline) retail strategy, these companies are looking to increase brand awareness and customer acquisition through a strategy that includes tried-and-true channels such as TV and print.

“In the early days, DTC brands did purely transactional direct-response advertising,” said Todd Krizelman, co-founder and CEO of MediaRadar. “All mathematical—but today, as these companies mature, they’re looking more like standard companies.”

The report looked at the time period between Q2 of 2018 and Q2 of 2019, rounding up the top 10 DTC advertisers. In the top five were brands like SmileDirectClub (which went public earlier this year), Poshmark and Untuckit; Hims, Casper, Stitch Fix and ThirdLove also made the list.

SmileDirectClub, DoorDash and 23andMe are each spending more than $10 million across print, digital and TV. But while some of the brands on this list are eyeing an IPO or are already public, Krizelman said it’s not necessarily a cause and effect situation—it’s merely these brands growing so fast that spending more on marketing becomes a necessity.

While print ad spending is up, Krizelman said it’s the smallest under digital and television, though it grew from $135,000 in Q2 2018 to $165,000 in Q2 2019.

However, print gives DTC brands a chance to build top-of-the-funnel awareness, and these companies do it strategically, advertising in places that align with the product. A brand like Untuckit will look at advertising in a magazine like Men’s Health, Krizelman pointed out, 50% of its spending goes to airline magazines.

On the digital side, MediaRadar found that while there’s still growth in advertising spend, it’s slowing down. While there’s plenty of conversation in the industry about TV’s diminishing advertising potential, Krizelman said DTC brands go to broadcast networks for their audiences (and reliable analytics).

“If you’re looking for mass audience delivered quickly, major broadcasters are still able to deliver that,” he said. “Top-of-funnel awareness, time accelerated to market, and broadcasters know their audience by show.”

For example, a broadcaster like NBC doesn’t necessarily entice brands by saying “advertise on our networks,” but rather by focusing on the audiences of its various shows, according to Krizelman. And, it’s also a brand-safe environment and a quality audience to go after.

Looking ahead, while there are hundreds of DTC brands now, a few years down the line only half will exist, Krizelman predicted. The winners are expected to be the brands ramping up their spending across channels now.

“There’s no question that the companies and survivors will be doing more, but where is a bit of a question,” Krizelman said. “A piece of that future is fully here today.”

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