The shift to advertising on traditional channels as well as select decreases in digital marketing spending are two trends in D2C advertising spending since February of this year.
Shift to Traditional Channels
- The overall shift to marketing through traditional media channels was identified as a trend in D2C advertising spending during the pandemic based on consistent reporting of this trend by industry experts (e.g., eMarketer, MediaPost, Marketing Charts) as well as corroborating statistics.
- As early as March 2020 and April 2020, eMarketer reported that “many D2C brands” were moving beyond their historic focus on search and social advertising to redirect available marketing budgets to traditional media outlets, such as TV and out-of-home.
- Subsequent July 2020 analysis by Marketing Charts substantiated this early prediction, by finding that 25% of the top spenders in US out-of-home advertising for the first quarter of 2020 were D2C brands, and that overall US out-of-home advertising revenue grew by 4.8% during the period.
- In parallel, August 2020 reporting by MediaPost found that while D2C brands slightly decreased (2.6%) TV ad spending during the first half of 2020, overall D2C brand TV ad impressions rose 13.7% year over year.
- MediaPost added that TV ad spending by D2C companies compared with other brands indicated that they were a “relatively new” but likely “growing category” for TV advertising.
- Meanwhile, Digiday asserted that D2C brand’s recent shift away from digital advertising to more traditional marketing channels is largely the result of investor “urging” for D2C brands to adjust their customer acquisition strategy.
- Notably, the brands Carvana, Wayfair, Grubhub, Peloton and Noom appear to be at the forefront of this trend, with these five D2C brands generating almost 25% of D2C ad impressions on TV during the first half of the year.
- Details regarding the relative TV ad spending and impressions for these brands are highlighted within the following graphic:
Select Decreases in Digital Advertising
- The pandemic also appeared to slow digital advertising expenditures by D2C brands, according to data published by Digiday, YouGov and Forbes.
- Specifically, Digiday, YouGov and Forbes reported that D2C brands were “pulling back” their advertising spending on digital channels as early as March 2020, due to anticipation that “shoppers will tighten their wallets” throughout the COVID-19 outbreak.
- In particular, D2C ad spending on Facebook and Google was particularly hard hit, with direct to consumer brands cutting associated spending on these digital channels by between 27% and 36%.
- Among the D2C brands leading this trend were prominent fashion icons such as Nike and Spandex, as well as smaller D2C brands such as Fielders Choice Goods and Bambu Earth.
- Meanwhile, more recent June 2020 reporting by Digiday indicates that this trend has not been consistent across all industries.
- Specifically, D2C brands in areas such as wellness, outdoor furniture and home goods increased their overall advertising budgets during the period, and benefited from “cheaper than normal ad rates” on digital channels.