In this edition of Weekly Focus Europe: IAB Report Illustrates How DTC Disruptors Are Transforming Marketing Landscape; and Hitwise Digital Retail Insight Report: Online Retail Sales Emerge from December Gloom

IAB Report Illustrates How DTC Disruptors Are Transforming Marketing Landscape

IAB, the national trade association for the digital media and marketing industries, released on Monday (11 February) a comprehensive research report entitled 'How to Build a 21st Century Brand: 2019', an in-depth analysis of how direct brands are driving tremendous transformation in the way consumer goods and services are created, marketed, and sold. It points a way forward for stakeholders across the digital ecosystem with insights and guidance for flourishing in the shifting consumer economy – where upstart brands such as Allbirds, BaubleBar, Brooklinen, Dagne Dover, Dirty Lemon, Kopari, Madison Reed, Peloton, and Plated are grabbing market share away from household-name retailers.

The new study, presented at the 2019 IAB Annual Leadership Meeting, showcases the latest developments throughout the consumer marketing landscape, a deeper dive into the initial milestone work IAB CEO Randall Rothenberg presented at last year’s conference. The direct-brand economy is strengthening while: physical retail continues to decline; growth in e-tail business accelerates; and consumer e-tail spend vastly outpaces brick-and-mortar in categories as varied as beauty, groceries, and wellness. All of this is happening in tandem with a slowing CPG marketplace, in which e-commerce is driving 82% of all CPG growth.

Within this extensive research is a new direct-brand roadmap that uncovers lessons for incumbent brands, up-and-coming direct brands, publishers, and the entire support system enabling this growth, from technology to suppliers:

• There is a playbook emerging that takes brands from customer acquisition cost (CAC) to lifetime value (LTV)
• Disruptor brands are acquiring individual customers at scale, overwhelmingly through mobile channels
• Storytelling lowers acquisition costs
• Community turns customer acquisition cost (CAC) to lifetime value (LTV)
• For disruptors, branding must perform... and vice versa
• Direct brands are becoming media promiscuous, moving beyond social media marketing, spending on channels such as over-the-top (OTT) and addressable television
• Omnichannel shopping is the new normal, from online to brick-and-mortar to pop-up shops
• Fast is the new fashion in every category, with new product launches happening in just 4-7 months
• Two-day delivery is the cost-of-entry standard for customer service – and two hours is next
• Delivery of one product should empower the discovery of others

IAB CEO Randall Rothenberg comments: "The digital media and marketing industries are now in the business of brand creation, brand sales, and brand replenishment – and no longer in the business of banner ads and video spots. Thousands of smaller brands are storming the barriers that once protected the giants and they are changing the craft of marketing and selling. Today, advertising is just one part of an evolvingly complex marketing mix that relies increasingly on first-party data, owned media, self-managed pop-up shops and stores, a feedback loop for rapid and responsive product development and, in terms of 'traditional' media, largely mobile and addressable television."

'How to Build a 21st Century Brand: 2019', expands upon a complementary study published on Sunday (10 February), the 'IAB 250 Direct Brands to Watch'. That report identifies the direct-to-consumer brands to watch in the U.S. The number, variety, and diversity of young businesses on the list demonstrate just what a powerful force this trend has become.

"After more than 100 years, the consumer brand economy is moving away from an 'indirect brands' model", added Rothenberg. "These indirect brands that you all know by their household names long dominated through owned and operated, high-barrier, capital-intensive supply chains. Revenue resulted only after a series of third-party handoffs from brand to publisher to retailer. In contrast, the new 'direct brands' model that builds value through low-barrier, capital-flexible, leased or rented supply chains, and revenue results from the direct relationships between the company and its end consumers. Any brand that wants to survive must prepare for this new reality."

'How to Build a 21st Century Brand: 2019' is sponsored by the Direct Brand Initiative Strategic Partners, Google, Hulu, Pinterest, and Spotify.

Click here to read the full report.

Hitwise Digital Retail Insight Report: Online retail sales emerge from December gloom

Hitwise Digital Retail Insight report figures reveal that online retail visits in January grew by 1.8% following the shockingly slow Christmas period. December online retail visits hit a 10-year low, declining by 0.6%

The UK retail industry is facing increasing challenges. Capgemini and IMRG predict that online retail growth will fall to 9% year-on-year in 2019. Successful customer retention has become an even more pressing need for retailers, as research uncovered that boosting customer retention rates by 5% can lead to an increase of between 25-90% in profit.

Roni Cohen, director of data science, Optimove, comments: “Many companies focus on acquiring customers, but only 40% of companies focus on keeping those customers. It’s vital that retailers start viewing the customer experience as the most important and critical aspect of their success. In light of increasing competition and falling sales, customer loyalty is much harder to earn. Online shopping has given the modern consumer the convenience and ease of use that they desire, particularly during busy periods. However, the best way to retain this customer base is to tap into personalisation, making the most of customer data to tailor the customer experience for each individual.

Roni Cohen, Director of Data Science, Optimove

“One-time buyers still make up 63% of transactions made online, so there is still a large swathe of market to seize. Retailers must provide their customers real value and communicate in an emotionally intelligent way – this can be achieved by moving away from general demographic assumptions and towards segmentation based on customer behaviour analysis.

“Tapping into AI and machine learning enables businesses to build effective campaigns and strategies that will target customers at the right time, through the right channel, and with the right offer for a fully personalised experience.”