"Meet me in the middle" stands for more than a middle school children’s game or a pop song by Zedd, Maren Morris and Grey – it now conjures visions of digitally exclusive brands.
Direct-to-consumer (DTC) brands, "remove the middleman" by allowing consumers to access products directly from the company rather than via brick-and-mortar retailers such as Macy’s, Target, Walmart or Sephora.
DTC in theory makes products more affordable for the customer as well as more profitable for the brand. The model removes the need for third-party retail distributors and wholesalers that add a layer of cost to product prices.
The brands conduct the bulk of their business online through websites and social media, although they are starting to invest in pop-up stores and brick-and-mortar locations in major cities.
Lauren Pica, head of U.S. marketing for recommendation site Outbrain, explains, "DTC brands streamline the buying process from start to finish, owning everything from manufacturing to marketing to distribution."
Over the years, there have been many changes in how these brands operate. Interactive Advertising Bureau CEO Randall Rothenberg says, "In order for a company to get into the marketplace and survive and thrive, it [previously] had to own or significantly control most of the major functions within its supply chain," including raw materials, logistics and manufacturing, as well as distribution.
"Increasingly, that’s not the case. Value is created through a company's ability to access and leverage a promiscuously available supply chain. You can rent or lease all the things you [previously] needed to own off the shelf."
Rothenberg adds that DTC brands have to find creative ways to connect with consumers via "continuously replenished first-party data."
"Ownership of the data gives these brands much more knowledge about consumer needs and desires and greater ability to reach consumers quickly," he says. "They are more flexible in bringing products to market."
DTC brands collect first-party data by customizing profiles, so they don’t have to guess the needs of their consumers and can better track patterns in consumer behavior.
Based on the results, brands place a strong emphasis on storytelling, personalizing products for customers and authenticity and trust. Some offer new products, others simply rebrand existing ones.
By using an algorithm, Bright Cellars can send subscribers wine suggestions every month. (Credit: Bright Cellars)
Bright Cellars, a monthly subscription service that matches consumers with different kinds of wine, connects with its audience through a quiz curated for its site visitors.
It features odd, but interesting questions such as "What is the one chocolate you could eat for the rest of your life?" coupled with images to accompany the answer choices. Upon completion of the quiz, the consumer is redirected to a page that says "customize your experience" with fill-in boxes for personal information used to create a profile.
Bright Cellars CEO and cofounder Richard Yau says the brand uses an algorithm to match its consumers to wine recommendations based on responses. If they choose to subscribe, they continue to receive suggestions based on feedback from the previous month.
The brand targets people who want to learn more about wine and find a drink they love. Messaging is tailored toward that demographic, and personalization seals the deal, making the consumer feel the brand values them as an individual.
"These brands are very simple," says Becky Honeyman, managing partner at PR firm SourceCode Communications, which works with DTC brands such as Casper.
"It’s not innovation in terms of product," she adds, highlighting the fact Casper has rebranded mattresses. "They’re incredibly innovative in terms of storytelling."
Brands understand that DTC consumers, especially millennials and Gen Z, live their lives online, so they market accordingly. They highlight their origin story or cause on social media platforms such as Instagram, Pinterest or Facebook, using attractive imagery, punchy messaging or short video footage.
Dara Busch, EVP of the consumer practice at 5W Public Relations, which works with Brooklyn Bedding, Coddle, Nations Photo Lab and Delta Children, says: "Consumer engagement is really high on places such as Instagram. [DTC brands] provide interesting content, work on increasing their SEO and Google optimization and invest in an online approach."
Influencers such as Vilma Piironen can really build brand awareness by sharing posts on their social media channels. (Credit: Vilma Piironen)
Influencers are also used by brands to build awareness, sharing products on their social media platforms and providing sponsored testimony.
Storytelling techniques aim to connect personally with the consumer and persuade them their product or service will add value to their lives. Brands also focus much of their resources on improving consumer experience once they click onto their webpage.
This strategy has been successful in helping brands such as Warby Parker, Dollar Shave Club and Bonobos rise to new heights, but DTC brands are also returning to traditional media to expand their reach.
Billboards, mailers and TV are not dead yet for DTC, and more use of outdoor campaigns and brick-and-mortar stores results in an increasingly hybrid model of business.
As part of its strategy to scale business and expand reach, teeth-straightening brand SmileDirectClub deployed outdoor campaigns to complement digital efforts.
CVS will create 300 SmileDirect locations inside its stores across the country, with 200 more opening by the end of the year, according to SmileDirect’s chief global brand officer Josh Chapman.
Even direct mail is being deployed to attract younger consumers, who "crave getting something physical."
"Direct mail, just like the smile shops we invented, took off," he says. "People love having personalized attention and something tangible in their hands that feels premium and spoke to them and what they were going through."
The brand also has six SmileBuses that travel across the country providing easy access to consultations and care, with local schedules available on Twitter.
It also buys digital advertisements on social channels such as Pinterest and Instagram, and on TV, largely because, as Chapman explains, it still builds awareness and reaches older demographics.
"We individualize the journey from a customer’s perspective based on who they are," explains Chapman. "We have different personas and each gets a different mix of media based on what they're interested in and where they are in that journey."
Rothy’s, a women’s shoe brand that creates footwear out of recycled plastic, places less emphasis on celebrity influencers, more on word of mouth.
"People will do the work for you," says Rothy’s senior PR manager Anna Doré. "Our customers are our biggest advocates and evangelists because they love the shoe."
When women talk about the brand, Rothy’s develops a network of self-appointed civilian influencers.
"Endorsements and reviews do a lot of work for us," adds Doré, citing a podcast host talking about how she’s had a great experience and loves wearing them or a recent example of an editor writing about her experience walking in Rothy’s sneakers for 100 miles. "Women read those and relate to them because they’ve already heard them in their personal lives from friends and others."
Public figures and influencers supplement the effort anyway, with Rothy’s "huge moment" coming from a subtle endorsement of the shoe by the Duchess of Sussex herself, Meghan Markle.
It’s important for me to set a good example for my son and teach him how to be a man. What do you think it means to be masculine? Check out https://t.co/mFWC0NTVBf for more. #EvolveTheDefinition #BonobosPartner @bonobos pic.twitter.com/JaPVJPszFW— DeAndre Jordan (@DeAndre) July 19, 2018
In the case of Bonobos, its Fit for All Men campaign sought to "evolve the definition of ‘masculine.’"
"We interviewed 172 different people, all of them identified as ‘masculine,’" explains Amia Lazarus, head of strategy and entertainment consulting at Observatory, Bonobos’ agency. The number 172 represents the amount of size combinations in Bonobos’ product range.
"We Googled the word ‘masculine’ and it felt like an antiquated definition," she continues. "We asked them their thoughts on this definition and how they would evolve it based on who they were, whether they were born a man, transitioned to being a man or were a female that identified as masculine."
The agency converted the responses into a short film called #EvolvetheDefinition, which aired last summer. The film took over the YouTube masthead and was aired during the ESPYs on ABC, an awards ceremony celebrating the achievements of men and women in sports.
The campaign started a discussion on the limitations of the word masculine and its definition, which trended on Twitter and perpetuated the "evolve the definition" conversation.
According to a report by CommerceNext, an e-commerce research company that hosts annual summits on customer acquisition, nearly 45% of DTC brands named "achieving profitability at scale" as a chief barrier to meeting marketing goals for 2019, in contrast to fewer than 18% of traditional retailers.
The report also finds DTC brands are leaning away from the use of promotions toward other channels, such as programmatic TV, to attract new customers.
Veronika Sonsev, cofounder of CommerceNext, says: "Once the domain of only the largest retailers with the biggest budgets, television is now a feeding ground for many digital-first DTC ad campaigns."
The 21st century is dominated by technology, artificial intelligence and algorithms, but it’s difficult to challenge a good, old-fashioned brick-and-mortar store or a Super Bowl commercial.
But Hubble Contacts cofounder and co-CEO Jesse Horwitz believes DTC models allow for greater adaptability toward the needs of the consumer.
"Consumers talk right back to you," he says, referring to the relationship between the contact lens brand and its customers. "You get to hear what they want, what they like and don’t like about your offerings, and you can iterate based on that feedback.
"You don’t get one by them, and it’s killed a lot of the day-to-day BS. They already know what you are and what you aren’t," he adds. "There doesn’t have to be big moments of reveal. It's happening every day in the comments on Facebook."
However, as the IAB’s Rothenberg points out, DTC models cannot serve everyone. They can wear out consumers with too much communication, struggle to set themselves apart and exhaust the limited existing channels they currently use to communicate.
SourceCode’s Honeyman notes that DTC brands may also struggle to remain authentic and consistent in their efforts to personalize products to everyone.
While the hybrid model may not be as adaptable and customizable, or may struggle to expand to the masses without losing the essence of the brand, Observatory’s Lazarus says it allows brands to "meet people where they are."
But ultimately, it comes down to whether a consumer believes in the brand.
"The consumer is more empowered, enlightened and informed than ever before," says Dawn Colossi, CMO of Focusvision, a market research company that recently commissioned a study with Forrester on consumer emotions and behavior.
"We have 24/7 access to conversations, news and data. People are in control of where they spend their money. They are no longer forced to go to the neighborhood store – they can order from anywhere in the world."
Brands increasingly find that millennial and Gen Z cohorts make decisions based on what social issues a brand takes a stand for, or against.
At a panel discussion in July about Gen Z at Day One Agency, agency intern Sofia Tasolides explained that making a wrong move can be damning for a brand and transport them into a fog of "canceled culture," a place of no return.
"[Gen Z] is much more aware of social issues," Colossi states, attributing the cause to what they read, see and hear on social media. "They believe their voices can be heard by supporting companies that back issues they're interested in and support," including race, gender, marriage equality and sustainability.
However, consumers must feel the support is authentic, a feature venture capital firms value in an investment as much as a consumer would.
VC firm Lerer Hippeau invests in numerous DTC brands, including Glossier, Casper and BarkBox. Principal Caitlin Strandberg says investors are attracted to founders that deeply understand the market, the problem they’re solving and the brand’s vision and voice.
Investors search for an intangible "brand DNA" founders either have or don’t, she suggests. This is revealed to them by who a founder hires to their team.
Lerer Hippeau searches for teams "that understand different touchpoints," including individuals with performance marketing and human resources experience as well as brand, partnership and influencer connections.
"The founder has to understand [the consumer’s] needs, where the consumer is and hire the right people to get their service in front of them," she says. "The brand or founder has to stand for something. Brand affinity is increasingly important for consumers, and they’re looking to put their dollars toward businesses, people and founders that stand for something – whether it’s sustainability, equality, diversity or anti-discrimination. That’s becoming must-have."
BarkBox has used digital storytelling and outdoor media to enhance its brand. (Credit: BarkBox)
Bark/BarkBox, a monthly subscription brand that offers themed dog toys and treats, has employed campaigns featuring digital storytelling and outdoor media, including:
- Card Art illustrations of a customer’s dog as part of a gift to subscribers.
- Digital campaigns such as a dog-mom rap and dog-dad love song with the #DogPeopleGetIt, resulting in over 562,000 combined views on YouTube.
- Personal stories campaigns that remind the audience how valuable their pets are to the family.
- A membership-based dog park called BarkPark, offering a physical space subscribers can use to create community.
"The more high-touch ways that [consumers] enjoy our ecosystem, the longer they stay with us," says Allison Stadd, VP of marketing at Bark.
There is only one location at present, but Stadd says Bark truly believes in the future of BarkPark and connecting with consumers in that way. A Say Bark! App lets consumers make fun cards by uploading photos and videos of their dogs and overlaying them with filters.
Bark is also exploring other media such as TV advertising and direct mail. It has also used data and feedback from customers to expand business by bringing products to Target nationwide for an on-the-shelf experience.