A panel of experts discuss how and why DTC brands are owning digital while also bringing back traditional methods like TV + outdoor.
- Chris Moore Head of Strategic Partnerships, Publishers Clearing House
- Dan Levi CMO, Clear Channel
- Heather Steiger Senior Marketing Manager, Freshly
- Jeff Fagel SVP, Head of Marketing, Epsilon and Conversant
- Sean Surdovel Product Specialist, Creative Strategy, Taboola
- Tracie Kambies US Retail & Consumer Products Alliance Leader Global & US Analytics Alliance Leader, Deloitte
Watch the 40-minute panel discussion or read the transcript below.
Jeff Fagel: Hello, everyone. My name is Jeff Fagel. I'm the chief marketing officer for Epsilon, and we've got a solid group of individuals up here from a combination of media, digital marketing, as well as directed consumer brands. I'll be your guide for this discussion.
In lieu of time and knowing that we've got five folks on the panel here, we're going to hold the introductions, because those tend to run a bit long, but feel free to jump in and share what you do throughout.
We're going to tackle three things here. Number one is, first level set on what actually is direct-to-consumer? There's a lot of questions on that, and I felt like it was important for us to start there before we jump into the discussion.
The second thing we're going to talk about is how traditional brands are being disruptive, and the third is how we should think differently and how are brands thinking differently about leveraging traditional channels as well as digital channels for direct-to-consumer marketing.
So let's start here. Thought that this was a good jumping-off point, and a quote that was from Henry McNamara in Digiday. He's saying that he's saying the direct-to-consumer word, brand, phrase is outdated. It seems like it wasn't that long ago that it was coined, right? So I'll start there. How are all of you thinking about... What actually is direct-to-consumer brand, and how are you thinking about it?
I'm going to start with Heather from Freshly, and then others can join in.
Heather Steiger: You already introduced me, I don't have to say where I'm from. Hi, I'm Heather, I'm from Freshly. Direct-to-consumer to me is pretty basic. It explains itself at its core. I am basically cutting out all intermediaries, I am going straight to the consumer and selling my wares. I'm not sure if there's any other way to define it.
Chris Moore: I think there's also a level of engagement directly between the brand or the company and the end-consumer. Something that we do really well at Publishers Clearing House is creating that engaging environment for our customers, and they want to keep coming back.
Ultimately, they want to win a million dollars, or whatever the sweeps might be at that point. But I think generally, and a lot of people make fun of me for being a walking D-to-C ad because you have Allbirds, you have Lululemon, you have all these brands who have decided to go directly to the consumer because there's not a lot of value in most people's... in some people's perceptions with those intermediaries.
Tracie Kambies: But I would say, as a retail person in the market today, serving retailers primarily, the retailers would say that's why they went into private label is also to compete with some of the brands that are going to market, and have their own direct-to-consumer experience, through their online experience as well and their private labels.
But it is still that you're trying to engage directly with the consumer. I think Lulu is a great example of a company that knew that they had a particular clientele and customer to go after and they went after them really hard in the market, and then they expanded to compete with the retailers that were carrying competitive brands.
Chris Moore: I think there's also, what they've done a good job. I don't think there are a lot of ways, or there's only one way you can buy their goods is from them directly. But even someone like Amazon, they create a lot of their own products after they've learned so much with every mom-and-pop or whomever has put their goods up on their sites.
Dan Levi: Just jumping in... Dan, from Clear Channel. I think that's the key for me on direct-to-consumer, it's about using data and understanding your customers to personalize and really be nimble in the way that you work with your customers, in a way that you can't when you have a solely retail business, where basically the customer experience is distributed out into the world.
Jeff Fagel: Part of that, I guess... We recently did some research, and I think one of the telling stats was this. As you think about traditional marketers, and so we looked and talked about traditional marketers, as well as direct-to-consumer brands. The fact that 80 percent of them are saying that direct-to-consumer brands are impacting how they think about marketing, it sounds like... We've seen, especially in retail, bankruptcies, and a lot of that could be from what we all are talking about here, engagement or lack of engagement of how do you connect and work with and think about the customer experience.
Sean Surdovel: And that level of engagement has basically meant that these direct-to-consumer brands are essentially the new household brands in a lot of ways. That as these brands have grown up and matured and found new ways to engage their audiences, they're not just this unique crop of brands. And that's why so many traditional retailers are thinking about them, according to eMarketer, thinking about them as a threat to their business in some ways, is that these are really the new household brands in a lot ways, because they've grown up with people who have kind of been growing up with the digital environment and with all the media we now consume. As just people out in the world walking around with micro-supercomputers in our pockets.
Heather Steiger: I think direct-to-consumer pretty much all came about because they were trying to solve a problem. So if you hate grocery shopping, a direct-to-consumer brand will pop up to say, "This is how we're going to solve that problem." So Freshly is a food-tech company. And the food tech space... If you love to cook but you hate grocery shopping, you've got Hello Fresh. If you want to eat healthy but you hate to cook, you've got Freshly. If you want to have restaurant food, but you don't really feel like going out to a restaurant, you've got Grubhub.
You want to buy a bra, you can go to ThirdLove, you don't have to necessarily go into a store and get measured anymore. It's basically just all spurred about to think about a different way of doing all the traditional things we used to do.
Chris Moore: And do you consider Freshly direct-to-consumer even though there's still a level closer to the consumer? You can go to a farm stand or you can go somewhere before then.
Heather Steiger: If you want to just eat an apple, yeah. But if you want risotto, and you don't want to have to cook it, you can go to Freshly.
Chris Moore: There you go.
Jeff Fagel: It's part of, I think we were talking a bit about the product experience as well, in talking with some CEOs on the direct-to-consumer side. I think that the product piece, and this was from our research, we talked to Greg Shugar who was the founder and CEO of thetiebar.com and now he's the CEO of Beau Ties. And fairly explicit as far as... It starts with creating a product, right?
And although we'll be talking a lot about the marketing piece here... The fact that, often brands feel that it's just about Instagram marketing or Facebook marketing and then throwing up a webpage and that's going to be something that's scalable and sustainable. You've got to start with the product piece, right? Heather, you mentioned a bit about the product piece, obviously that's extremely important to your business, because if you don't get it right, the customers are no longer going to be there.
Heather Steiger: Right, I can do well, but I can't do too well, because if I do too well, I run out of food.
Tracie Kambies: Yeah, you've got to monitor that inventory, right?
Heather Steiger: Exactly. So if I have one channel that's performing very, very strongly, I have to scale back in other channels. Otherwise, you run out of chicken.
Tracie Kambies: True. And we would all hate that.
I think one of the interesting things about the product is that direct-to-consumer has to focus really hard on having a quality product in reaching their end consumer directly. Like we talked about, that's the whole purpose of direct-to-consumer, but if your product isn't good, isn't meeting a need, isn't touching a moment that matters in the life of that consumer that you are trying to engage with, then you lose. You will automatically lose. And we've seen a lot of brands that have entered the market, had a really interesting concept or a product that may fit a need or was ethically inclined to the values of me as a consumer, but it did not actually deliver. It wasn't of high quality, it didn't meet my expectations of what I was paying for to have that direct experience.
Chris Moore: It's important to, you have to create that experience from...
It's so valuable to create that experience when you already have the user or the consumer with you. Because to go acquire a new user is much more expensive than that lifetime buyer.
Tracie Kambies: Totally.
Dan Levi: Isn't this just always been true? If you have a bad product, you ultimately aren't going to be able to build a sustainable business. I think what's different here is not the importance of a good product, it's the velocity that that happens. Your ability to actually get to an understanding of, is your initial product idea resonating? With the ability to adjust that idea. In a traditional retail model, you're manufacturing a product, you're distributing that product, it happens at a much slower pace. I think the beauty of direct-to-consumer is that constant, direct customer relationship, and the feedback and the engagement gives you the ability to optimize the product.
There's brands that have been launched without the actual product. They build the demand based on understanding where the interests are. All these offers you see on Facebook and Instagram for effectively dropship products. That's an example of bad products that are trying to squeeze out a little bit of revenue. I think what we're talking about here is if you have a good product now, there's a much better model to allow you to grow that and scale that because of the direct insights you get from the customers.
Sean Surdovel: So many of these brands are incredibly adaptable to their consumer needs, and they're able to involve their customers in their brand story, which is another thing that a lot of these brands have that enables them to find success in today's media environment. Is that they have these very interesting, very engaging stories that as a consumer, you can join along with, and you can be a part of the growth of these companies.
Tracie Kambies: I think that's where traditional CP brands have been struggling over the last few years, is actually finding their true customer voices that can represent them in the market because they've been in such a mass demand and mass available market for so long, and it's been about the general consumer segment and not necessarily down to individual stories. So they've had to evolve that since direct-to-consumer brands have really entered the market and actually disrupted the general consumer products companies that are out there today.
Jeff Fagel: I think that's a good transition for us to take a look at, as we think about the marketing aspect of it. How it's one thing to engage and drive customer acquisition, how do you keep that customer? And then how do you leverage various channels to help in ensuring that there's a sustainable business?
So why don't we jump to that? Specifically around, what is the new playbook? Is there a playbook for direct-to-consumer marketing? Here's another quote from Henry, specifically around how do you think beyond just what people would expect or how maybe we as consumers see direct-to-consumer marketing? What does that shift look like? Why don't we start with Sean, and then we'll move on to Dan.
Sean Surdovel: Sure, so to reintroduce myself, my name is Sean, I'm from Taboola. Hadn't said that yet, figured I might as well get it out there. I actually think this is a really apt quote when you talk about the evolution of the direct-to-consumer space. If you think about just a couple years ago when a lot of these brands were starting to emerge, if you got into a conversation with someone who's doing the marketing at a direct-to-consumer brand, almost all of them would be able to tell you what their primary acquisition channel was.
So you'd talk to someone, they say, "I'm doing a lot of influencer on Instagram, or I'm doing a lot through Facebook." And it's funny because over the last couple years, that's evolved as the media environment has evolved around consumers. I think with Google actually did a recent piece where they looked at attribution models for different products, and they found that something as small as a candy bar had 20 marketing touchpoints before someone actually went out and made that purchase.
And when you look at e-commerce brands, those touchpoints can be in the hundreds in some cases. And so having a strategy that engages your audience at multiple points, and who creates value with your audience at multiple points is essential to growing a direct-to-consumer business in the modern media environment.
Heather Steiger: God, thinking about hundreds of touchpoints, because that is my job. I'm the direct mail channel at Freshly. That's enough to give me a stroke, how would I ever do the attribution for that type of sale.
Dan Levi: I can help you with that one.
Jeff Fagel: When you say you're the direct mail channel, explain that a bit. Let's start with, why direct mail?
Heather Steiger: At Freshly, I would say our acquisition team runs very lean. So where I sit, I work on the direct mail channel. The person to my right does paid search. The person to her right does paid social. The person to my left does television.
Jeff Fagel: Left, right, trying to...
Heather Steiger: Yeah. I'll draw you a map afterwards. But every single person has a channel focus. So for me, my channel focus is direct mail. Now up until maybe the end of 2017, Freshly was digital only. All of their marketing efforts were done online, primarily paid search, paid social. Then email affiliates. Then they got into the end of 2017, they tested direct mail, because it works for Hello Fresh, so let's give it a try.
I went through an agency, and they saw that it was something that worked, so when they went into 2018, they figured, "Okay, we know we want to be a national brand eventually, but we need to see if this is a source that we could scale while we're still serving half the country." And it worked, it was responsive, and there was a really good return on investment. The CAC was pretty strong, it was in line with their paid social channels. So when we moved into 2019, this is the first year that Freshly is a national brand, and direct mail has gone from a 100,000 in the mail test pilot up to 11 and a half million in the mail.
Chris Moore: What do you see about the future for direct mail? Because there's no larger direct mail company, I think in this country, than us?
Heather Steiger: I am not looking to compete with you on volume.
Chris Moore: No, not at all. It's not a competition, the USPS would be thrilled if we were competing.
Heather Steiger: I know.
Chris Moore: But what do you foresee the future of direct mail?
Heather Steiger: I see the future as getting smarter, getting more sophisticated, really understanding in how to utilize your data to make your volume tight and efficient and work for you. Because I could just pump all the money into the US Postal Service that God can create, but that doesn't mean I'm going to get effective users that are going to be engaged with me at the end of the day. I don't just want to shout our brand name from the rooftops to people who don't want to hear from me. It's like, whose problems can I help solve? And that's the audience that I want to reach.
Sean Surdovel: You touch on the importance of data. In every channel, not just direct mail, but digital, out-of-home, all of them, that's becoming such a big driver of all of our business now, is how do you build audiences and how do you find people who actually look like your audience in a lot of different ways. What messages resonate with your audience and kind of pull in who you're looking to reach? What ways can you actually segment and identify that person down as someone who's likely to engage with your brand, someone who's not likely to engage with your brand?
Taboola, for those who haven't heard of us, is actually the premier solution for native discovery in the digital space. Often times, consumers engage with us in feeds through the bottom of publishers. And a lot of what we do is looking at how consumers are actually engaging with the content from the advertisers we work with in these direct-to-consumer brands. Specifically, how they can find audiences that are going to be able to build their brands. And one of the things that we've been looking at is not just some of the traditional endpoint things that digital has kind of been built around, the transparency of being able to see where your conversions are coming from and how that relates back to your CPA.
But also looking at segmenting advertisers into who's engaging with your brand, who's really engaging with your brand, and who can you then move down the funnel? Because the value isn't just at the point of sale anymore. I mentioned all those touchpoints that were going to give you a bit of a conniption earlier. It does come down to how does each one of those touchpoints create different value for my brand when I'm trying to reach an audience. And sometimes, it can be as simple as, "Someone read my brand story and got really invested in what I was telling them about my brand, and now when they go out and they hear about a friend who's looking for something different, they might say, 'Oh man, I just heard about this really cool shoe brand or really cool meal kit brand that you've got to check out, because they have just the best story. I was reading all about it the other day.'"
And those touchpoints have a lot of value that's not just in terms of, "Okay, where's the endpoint of my funnel?" They have different branches and different ways where they can actually reach back to every brand's end goal.
Jeff Fagel: You touched a bit on data, touched a bit on creative as well. Dan shared a number of examples from out-of-home, and I'll pull them up now, that show that there's a mix between branding as well as direct response. So some might think that, as you think about traditional channels, that something I got at home might not be where you would want to spend your dollars, but Dan talked a bit about the balance between the messaging here as well as what you've seen in terms of success with brands that in the past were not in traditional TV and out-of-home channels.
Dan Levi: I think it comes to what Heather was referencing before. The problem we're solving is multi-touch attribution and having out-of-home participate in that process. Out-of-home has historically been a medium that, you know you like it because your ad or your brand looks great up there, but how do I know it's working? So what we've done is built ways to help advertisers, direct-to-consumer and beyond, understand the exposed audiences and the behavior of them by connecting those insights to a digital ecosystem.
So basically we're capturing mobile ad IDs of people who are exposed to billboards and then we can provide those to customers, either as a managed service to understand the attribution insights from it, or we're literally passing them to customers to ingest into their own models. What it allows brands to do is start understanding that in an environment where every human being is glued to their smartphone and the brand engagements that we're talking about, the exposures, most of them these days are happening outside of the home on the journeys that people are going through every day.
So we're now starting to help brands like some of these that we're showing up... I'm pointing down there, it's up there. Some of these that we're showing on the screen. Help them understand that when you get to that point that a direct-to-consumer brand where performance marketing is starting to perform a little worse, whether that's because of increasing costs for digital media, or the fact that there's only so many people you can target on social media. You can't squeeze that lemon anymore, what do you do next? Typically that question is asked b-round. It's when they've got money to spend, and they've got an expectation of hockey stick growth, and that's when you start seeing brands keep doing that... goes up there. Who are starting to realize that we need to put more on the top of the funnel.
The beauty of what we're doing with data is we're no longer a top of the funnel media. So you look at Casper, Casper is not just building a brand, but literally doing the oldest of old-school ways of using out-of-home, directional signage.
Tracie Kambies: And they did direct as well. And they went hard on direct with their particular segments of customers that they were going after, and they leveraged every touchpoint I think in the live cycle from inspiration to getting them to convert in their original journey. And then they started to explore the physical space, which I think bringing out-of-home with the physical space and luring people to kind of come and experience it for real, and touch and feel that product that we've been appealing to you in your nature through your more digital marketing channels. They used data to power all of those decisions from the very beginning. They're a bunch of smart people who work at Casper and they changed my family's life, for sure.
I would say that as we look at the comment earlier by McNamara, given that the playbook is not really existing and looking at just Instagram and AdWords is, as a strategy? No, that's not a strategy, you have to understand the consumers you're trying to target, what you're trying to do. And then I think by looking at different points of where you're trying to engage that consumer, in the physical space as well as in the digital space, because we do leverage our devices so much, it is critical that you look across the landscape, across all the channels and how each consumer segments are engaging with your brand in those channels.
Chris Moore: The common denominator that you mentioned there is, it changed your family's life, with Casper. So there's a sensation or happiness that comes out of it. Happiness of winning can come out of a lot of things, too, that we create in people and that's why they keep coming back.
Curious for either of you guys down at the end, how much marketing-wise, DTC brands versus more traditional brands, what are you guys seeing these days?
Dan Levi: We're seeing DTC explode as a category. It's funny, you look at all the use of pop-ups, that's baby steps into out-of-home. You have a physical presence in the real world, you start to learn how that can drive further engagements and further customer acquisition. We're seeing DTC, and that's interesting when looking at the creative, the challenge that that brings to these brands is it's a completely different way of communicating with customers. So we're seeing brands embrace out-of-home, as a way to not just drive more top of the funnel demand, but to build a brand.
Jeff Fagel: Sorry. There's a creative piece, but also there seems to be a shift of expectations, too, in terms of what does success look like? If you're used to performance, and then you transition and you start developing and building more brand, driven initiatives, while you might try to drive to a specific location here. What are the biggest challenges you're seeing in terms of expectations from what success and measurement looks like?
Dan Levi: From out-of-home customers.
Jeff Fagel: Yeah.
Dan Levi: At this stage... So, we've been in the market for about three and a half years with our mobile data analytic solution that we call Radar. We're still in that education phase. So much of it is about helping CMOs, strategists, digital marketing teams understand that it's possible to actually leverage mobile data to not just measure performance but to target your message at the right audiences, to integrate out-of-home with mobile as a way of really driving people down that brand experience and the brand funnel.
The challenge is we're still being bought typically through agencies that are working on this. They're absolutely working on breaking down the silos, but the silos still exist. So there's really smart people, for example, on the out-of-home side, at the out-of-home agencies, who have the right ideas, that understand what can be done, but still have to fight the fight to get the agencies and the clients to think not in terms of out-of-home as a channel, but think in terms of audiences.
It's a lot of education and changing of behaviors that we need to continue to drive, and not surprisingly, we make the most progress when we're talking to the customer directly to get them involved, and then partnering with the agency to say, "There's an interest here. Let's work together to activate this."
Sean Surdovel: I think one of the challenges for us in the digital space is because we have all of the performance tools available, because you can actually do a hard conversion, CPA, a measurement through a digital channel like Taboola, it's for us how do we actually integrate with all the different touchpoints and how do we become an attribution partner with the brands that we're working with. We have our reporting, but that only sees our portion of the picture. And so we have to integrate with agencies who are also managing out-of-home, who are also managing television, who may be managing other digital channels, and work with them to kind of paint the whole picture. We've started to evolve our reporting to not just show, "Okay, what's the actual action point we're driving?"
But I mentioned earlier the engage versus deeply engage, that's something that we're working on called engagement metric, where we can actually see who those audiences are and see what kind of engagements they're making. We're also working at ways where we can see multiple touchpoints and see multiple ways that people are engaging with advertiser content and then report that back to our partners so that they have transparency into all the different ways that people are engaging with their content.
Tracie Kambies: I think for brands, and you can speak to this better than anybody, I'm just going to speak to my client's perspective. But I think brands are more savvy now than ever before, particularly those that have been direct-to-consumer, and they are leveraging their data, so this sense of having transparency with the agencies and who they're working with in the market, whether it be out-of-home or whether it be through an agency to get to out-of-home or an agency to have a better digital performance, every dollar that they spend on every piece of marketing or in any channel matters tenfold to what they drive from a topline growth perspective.
So I think they're trying to be savvier, and having that transparency, with their data, with the insights and the performances of what they're spending on, is critical to the direct-to-consumer landscape. I know it for every retailer, because we know the retail landscape is changing holistically. I think we just have to look at how these brands can actually continue to work and grow in the market and how they're going to leverage across each of these channels to spend their money more wisely and get greater return on every dollar.
Heather Steiger: I think the challenge where I work... It's more like every channel shouldn't be held to the same standard, and by that I mean, when I report up to... We report to the C-suite and say, "This is how we're performing." We pool all the spend, all the users acquired, it's a blended number to say, "This is our CAC." But not each channel has the same level of retention, so not every single channel should be held to the same CAC goal.
So I shouldn't be held to a $40 CAC while Facebook is also going to be held to a $40 CAC. One, my consumer may be more expensive to acquire, however a direct mail consumer does have a tendency to have a higher lifetime value, a higher retention rate. I should then be able to have more leeway, it may cost more to acquire a consumer, but they're going to stay for the long-term and they'll be a lot more valuable.
Jeff Fagel: Explain CAC.
Heather Steiger: CAC is... Okay, this is a funny story. When I started, I was like, "What the hell is CAC?" Because I was used to CPA, cost per acquired, user cost per acquisition. It's the exact same thing. Cost per acquired customer.
Jeff Fagel: So D-to-C, DTC, same thing, right?
Heather Steiger: And even then, I was looking for the number two, instead of the letter T, for D-to-C. I came from B2B.
Jeff Fagel: Lots of acronyms.
Heather Steiger: And they just keep coming.
Jeff Fagel: Let's transition a bit to some of the challenges ahead for direct-to-consumer brands. So specifically, as we look at both traditional and then direct-to-consumer brands, what we've seen is that there's a question about audience and generations in terms of how traditional brands are falling behind and we've talked a bit about that already. But specifically around generational, thoughts on just as the population continues to get younger, what does that mean for both traditional brands as well as DTC brands?
Dan Levi: I go back to what Jeremy presented in the session right before this. We have a generation of people who have grown up with smartphones in their hands who have control over media and marketing in a way that never existed before. And so the channels that they prefer are the ones they have the ability to either control or personalize, which is why we see out-of-home being the preferred advertising channel, because it's not in your face, it's not intrusive. It can be consumed along your journeys.
The trick for us is we have to break down the barriers between thinking of out-of-home as a traditional linear media, and thinking of it more along the lines of digital. One of my pet peeves, I think we should all stop using the word digital to describe media or marketing channels because they're all digital. If you're not thinking digitally, if you're not thinking about audience's data outcomes, you're not going to be in your role for much longer. So let's stop breaking down and saying it's digital or not, let's talk in terms of audiences and outcomes.
Jeff Fagel: Your biggest challenge is probably getting people to stop from looking down with their headphones on to looking up.
Dan Levi: The beauty of it is, no one wakes up in the morning and says, "I'm going to go to work today on a different route." You always travel in consistent journeys, and so the beauty of out-of-home is you're not delivering an impression that goes away. You have a role on those journeys, and we find that that frequency of exposure, that regular exposure, not only is it valuable at a high kind of qualitative level, but we see data that shows a direct correlation between frequency of exposure to out-of-home and measured conversions, because once you get to that point where you realize you have to make a decision about a brand, and I don't necessarily mean a purchase. It could be to do search, it could be to share what you think of it.
Exactly. We're influencing those points of decision along those journeys, and helping brands understand, based on your KPIs, where does out-of-home fit in the funnel? It's not just top of the funnel. For a lot of the brands we work with, we're a mid or lower-funnel tactic because we can now provide the data to understand in that kind of cross-channel mix, where do we help? Where do we deliver value?
Chris Moore: I think marketers, more traditional mindset marketers just need to do a better job, which is silly but true. But then also being able to create, I'm finding the word native here, just create a more native advertising experience that younger people will be able to have more confidence in, and it might be more subtle, but subliminally it'll work.
Sean Surdovel: It comes down to one, how can you customize your touchpoints to that audience? How can you create content that's going to resonate with people on a very personal level? And a lot of that comes down to the data, what you're learning about people. A lot of it also comes down to how you bring that person into your story.
You mentioned having a billboard along someone's regular commute. In a lot of ways, and I mentioned earlier about how a lot of these brands have kind of brought their consumer along for the story, in an interesting way, having a billboard that's part of someone's daily commute makes that brand already a part of someone's life. And when you think about the need to create additional touchpoints, because McKinsey Digital did a study and they found the more touchpoints you have with your audience, the more likely someone is to purchase your product. Having a daily touchpoint with someone that's just part of their commute is a really effective way to go about that. Having content that is going to be tailored to your audience is a really effective way to do that. Having content that does different things is a really effective way to do that.
If you look at video versus traditional text content, for example, video, according to the University of Minnesota Business School, is six times easier for someone to remember than a piece of text content, so having different touchpoints that do different things for this consumer and having a custom journey for each individual person you're trying to reach can be a really effective strategy to continue growing as we get a more digitally native generation buying from these D-to-C brands.
Dan Levi: So the beauty of what you're talking about is with the integration of mobile location data, mobile and out-of-home, you can not only deliver those messages along people's journey, but you can understand those journeys. We work with customers where we onboard their first-to-third party data, segment the audiences that we see against their data, and basically give custom inventory selections to understand where their customers are lookalikes effectively of their customer's travel on a regular basis.
So we've gone from being on that journey and telling top of the funnel, broadband stories, to understanding that people who buy those types of products... This is where we can see them most efficiently. It's not personalization, we're always going to be one-to-many, but it's customization, it's optimization of out-of-home, two words I never thought would ever go together. And now we're literally doing that on a daily basis.
Tracie Kambies: The other thing, I have Gen Z at home, and I deal with this on a regular basis. The ads that they see don't come through the general channels. I don't allow my Gen Z to be on social media yet, which is very interesting in and of itself, but they do have access to YouTube as an example of a channel that does deliver specific content, because they're in YouTube Kids and YouTube teen and all those other channels that I allow them to have access to. So because of that filtering, they are expecting to have more customized content. Not necessarily personalized, it doesn't have to be that for an 18-year-old male, it's that it's going to message and be custom to him, people like him, and get him to want to buy.
So the bike ads that he sees come through YouTube because he's searching for bikes, for example.
Jeff Fagel: So I want to transition. We've got about five minutes left, and then we'll open it up for questions. Lastly, challenges for direct-to-consumer brands as they think about kind of what's next? So I want to transition, coming out of the research, we really saw... This was across the board that direct-to-consumers saw their two major challenges were one, scale. So how they build their business. And then the idea around churn. Obviously, I'm looking at Heather here. Do you agree with this, and then especially around lifetime value of how do you get beyond somebody tries it to have them as being customers forever, or at least for long period of time. What do you face with your business?
Heather Steiger: The first issue that I face is patience, because you just don't scale overnight. It's just not something that happens. And also, for my brand in particular, we're not even national for a full year, so there are still... the learnings of consumer behavior to understand, "Are we a more seasonal product?" Because typically, when you're thinking healthy meals, you think January, New Year's. Or you think bathing suit season for the summer. How can we move away from thinking of ourselves as seasonal, positioning ourselves in a more relatable way in order to more level-set the playing field. And making each channel that we operate just more efficient, I think to scale the business that's the biggest challenge that we have. How to work smarter.
Jeff Fagel: Anyone else want to jump in on this one?
Tracie Kambies: I think it's real. The challenges they're going to face are more than even just scale and churn. That is definitely one. I think the reasons for scaling is going to be because they need to have a broader set of audiences that they reach and they are relevant to to maintain a growth trajectory. I think the churn is going to happen because of the economic situations, and what our state of the economy is going to be over the next few years, that D-to-C brands are going to continue to have to be innovative. They're going to have to think about different ways to enter into different audiences and different consumer bases, because the price point that they're at today may not work for the price point that it needs to be tomorrow, in order for them to avoid the type of churn that they may be experiencing.
So I think the other challenge that they need to think about is what does the economic landscape need to look like, and what does that mean from their product and what their offerings into the market are going to be.
Chris Moore: Yeah, and that's just creating a diversified user base and experience, because ultimately that will hopefully alleviate as many of these concerns as possible.
Dan Levi: I don't know if you guys saw a few weeks ago, really fascinating research that Facebook of all companies published. Looking at ways to drive further reach. In other words, if you're using Facebook, how do you get further reach with Gen Z and millennials? And out-of-home is what Facebook is recommending.
Chris Moore: I thought that's where you were going.
Dan Levi: It's just fascinating.
Chris Moore: Out-of-home quota is reached.
Dan Levi: But it's amazing to me-
Heather Steiger: Facebook needs more reach.
Dan Levi: But that's the challenge that so many D-to-Cs are facing, is if you're just relying upon social media-
Heather Steiger: No, for D-to-C that totally makes sense. For Facebook, it doesn't.
Dan Levi: And they don't need any more money, but I love the fact that we're starting to see the social media recognize that there are limitations on how many people you can reach through those walled gardens, so you have to think holistically about multiple channels. And the fact that they are out there, and yes, I love the fact that they said out-of-home, I like more the fact that they're recognizing that there's a limit in how far you can go just within their walls, so we need to start putting more people into those brand experiences and out-of-home and social work really well together.
Jeff Fagel: It looks like we're approaching the end, we've got about a minute and a half. I'm not sure if that gives us time for one question or not.
Chris Moore: Depends on the question.
Jeff Fagel: Let's see.
Heather Steiger: Let's see what Slido says.
Jeff Fagel: All right. Who wants to take one of these questions here?
Chris Moore: Good luck on number two.
Jeff Fagel: Does incrementality testing work better than multi-touch attribution? I'm looking at Tracie, no? You want to take that one?
Tracie Kambies: You have to do both. It's not one is better than the other. I think you're going to have to do incrementality testing, otherwise you're never going to really know what your marketing is truly impacting. You have to know from an incrementality... Are you moving the needle or not? Multi-touch is going to give you a view of how you're actually doing across the board and how the touches are making an impact or not. You made a great point earlier, Sean, to that point.
I love the second one. Who wants to take that one.
Heather Steiger: Actually, the first one. Do you have a hard time getting internal buy-in for using out-of-home when ROI isn't as [inaudible]. Yes, yes, absolutely. It's extremely difficult, and when we're at the point of growth that we're currently in, it's very easy to get very conservative very fast and say, "Well, I don't know exactly what I'm going to be able to attribute that billboard to, so I'm going to just scale back in the meantime." So that's why we're trying to get everything that we're doing much more efficient so then we can take those risks.
Chris Moore: On that second one, actually... So we're in a unique position, where we are a D-to-C because we have a $900 million a year commerce business, so we're competing against Amazon in that. But then we've also are working with Amazon as a partner on our advertising business, so it's an interesting dynamic. Not obviously, but hopefully, our advertising business can get to where our commerce business is one day, but that's kind of an interesting dichotomy there.
Heather Steiger: Maybe I can use Amazon as a distributor.
Tracie Kambies: They're like your frenemy, right? That's what I like to call them, the frenemy.
Jeff Fagel: So it looks like we're out of time. Thank you, panelists here. Thanks to all that are in the crowd here and are watching online.