By Ashoke Agarrwal
With India’s growing base of online shoppers (185 million in 2021), the market for D2C brands is booming. D2C brands are digital-first brands that use their online platform to sell directly to consumers without the traditional network of wholesalers, distributors and retailers. According to Statista, India currently has over 600 D2C brands with a total market size of USD 66 billion.
D2C marketing, while holding to the core marketing principles, is a discipline with a fast-developing art and science unique to it.
The science of performance marketing and the art of content marketing are the two pillars of D2C marketing.
Customer journeys that lead to sales in both the offline and online worlds are complicated. The difference is that we can easily trace and analyse the online part of the journey. And when the journey ends with an online sale, the online component of the journey takes on critical importance.
‘Media planning’ in performance marketing goes beyond mass media metrics like reach and OTS.
Attribution is one such key parameter.
A paper by Lukas Kakaleick et al., “Multichennel Marketing Attribution Using Markov Chains for E-Commerce”, published in Statistics & Economy Journal in 2021, gives a good overview of the statistical frameworks used for attribution in performance marketing.
Google Analytics currently provides for several heuristics models:
:: Last touch model wherein 100% of the credit for an online purchase is assigned to the channel before the conversion
:: First touch model – 100% allocated to the first channel of interaction
:: Linear – equal amount of credit to all interaction channels
And so on.
Lukas et al., in their paper, propose a third or fourth-order Markov chain model as a more effective model for attribution. Markov chain analysis allows for unearthing the most efficient combination of channels.
Meta and Alphabet also use advanced Deep Learning algos based on Knowledge Graphs to increase clicks.
As Generative AI and GI mature, Alphabet and Meta will also undertake the content marketing function of D2C brands and combine it with the targeting abilities driven by Deep Learning to offer pay-per-conversion campaigns to D2C brands.
Another paper, “Scalable Target Marketing: Distributed Markov Chain Monte Carlo for Baysesian Hierarchical Models.” by Frederico Bumbaca et al., published in the Journal of Marketing Research (JMR) Dec 2020, offers a model that adds to the conceptual framework for performance marketing planning. This technique provides a more effective market segment definition. Better consumer segmentation and channel attribution deliver higher ROIs for D2C brands.
When it comes to the marketing communication side of D2C marketing, many marketers and agencies need to correct the mistake of conflating it with advertising.
Online is where traditional advertising goes to die; for brands to be noticed and acted upon online, they need to join the raging content battle that defines the online world.
Pretty pictures (or videos) and clever words do not work in the cramped space and attention that govern the eye and mind of the online visitor. The only way to grab attention and build brand equity that leads to purchase online is to deliver excellent and relevant content.
A 2018 article by Joan Dolezal titled “A flight to quality? Why content marketing strategy must evolve” is a good primer.
For D2C brands that have mastered the art of putting out relevant, high-quality content, the fact that there is unlimited online content vying for limited attention is an entry barrier that protects them against competition.
Here are some of the dimensions of a D2C ecosystem primed to produce good quality and relevant content:
:: Define your customer segments tightly – demographics, psychographics, U&A. The more you can flesh out the profile of each segment, the better, in other words, build personas. Create and target each persona with a tailor-made content marketing campaign.
:: Recognise that customer journeys are multistage, and online gives you tools to target consumers at various journey stages. Tailor your content for each step of the journey of a given profile.
:: Make use of the experimental capability of online marketing. AB test various modes of content to arrive at the most effective.
:: Search Engine Optimization (SEO) is not just for your website. SEO of your content marketing campaigns is also advantageous.
:: Create an effective distribution plan for your content. A D2C brand can repurpose the same content on social media, e-mail marketing, digital PR, influencer marketing, etc.
As a D2C brand matures, it looks to expand into other channels. One critical decision which comes early in the life of a D2C brand is whether or not they engage with the Big Box e-tailers like Amazon. I wrote a well-received post in 2019 on this issue – “To Amazon or Not To Amazon”.
D2C brands, to succeed, need nurturing of a high order at the strategy and creative levels. Operational synergies are of a lesser order of importance. That is one of the reasons why Thrasio, a US-based integrator of online sellers and brands, recently filed for bankruptcy. A recent ET Prime story has the Thrasio-like B2C aggregators in India – Mensa Brands, Good Glamm Group, GOAT Brand Labs, Upscale, GlobalBees- “stressed and nervous”. The funding winter might be one reason for this state of affairs, but the malaise can also run deeper. Building and running a D2C brand is an act of passion that combines strategic nous with creative mojo. And passion does not sit well with aggregation.