The Shift To The Direct Brand Economy – Key Learnings From The IAB Direct Brand Summit

Snaps attended the IAB Direct Brand Summit (DBS) this week in NYC. The IAB announced a first-of-its-kind analysis that pinpoints the most important Direct Brands to watch and the event was for large and emerging brands to learn from each other. The audience consisted of hundreds of direct-to-consumer (DTC) brand executives, incumbent brand executives, publishers, and platforms. Some attendees and speakers included:

  • Andy Dunn, Founder, Bonobos
  • Jesse Hurwitz, CEO, Hubble Contacts
  • Jake Bailey, Facebook’s Head of Industry for Emerging Disrupters
  • Tom Cortese, COO and Co-Founder, Peloton
  • Jared Cluff, CMO, Blue Apron
  • and more

Here are four learnings we took away from the event:

1) “What works today might not work five years from now”

Mobile in combination with Moore’s Law means marketing is changing….. fast. This notion was expressed in a multitude of ways. Jesse Horwitz, Co-Founder and Co-CEO, Hubble Contacts, explained how they are working with different channels and partners for their marketing and “watching very closely every channel then probably overreacting a lot,” as they constantly optimize and reallocate budget. He encouraged attendees not to be afraid to test weird ideas, challenge your brand, and see what works. Jeff Weiser, CMO at Shopify, also shared that 76% of consumers buy from brands based on messaging they saw from that brand on social. Google’s Managing Director of Retail, John Nicoletti, explained how to build deep immersive relations with customers through messaging with the catalyst for change being the mobile device in this “Age of Assistance.”

2) Facebook Messenger is one of the top 3 marketing opportunities recommended to direct brands by Facebook

Jake Bailey, Head of Industry for Emerging Disruptors at Facebook shared that 8 Billion messages are sent between consumers and businesses every month on Facebook Messenger, and globally the platform has 1.3 billion monthly active users. While customer experience use cases are a common use case, brands are effectively using Messenger to acquire and convert new customers into their ecosystem, leveraging key tools that help advertisers and marketers gain exposure to the entire Facebook ecosystem. Click-to-Messenger (CTM) ads are driving stronger conversions than traditional social ad units. A number of advertisers are successfully using CTM ads and automated chats to bypass complicated or inefficient eComm sites. In some markets, brands are seeing 5-6x improvements in conversion rates as a result.

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3) In the digital economy, your audience has an audience

The “godfather of the Direct Brand Movement,” David Bell, President and Co-Founder, Idea Farm Ventures, is a Wharton professor and educated many top founders (Warby Parker, and others). David shared some insights about the future of brand and the evolution of location with his BOSS Model as the future of “Go-To-Market,” explaining that it is about Bonding rather than branding, Orators not customers, Showrooms not stores, and Science not service, focusing on transparency, authenticity, and direct relationship with customers. While many people know the term DNVB, or Digitally Native Vertical Brand, David presented two other acronyms: Experiential Location-Centric Brands (ELCB) (SweetGreen, Drybar, etc), and the Authentic Wholesale-Led Brand (AWLB)(Halo Top Ice Cream, RX Bars, Sir Kensington Ketchup).

4) Direct brand movement is just starting. Incumbents need to be prepared.

IAB’s CEO, Randall Rothenberg, and Mark Shmulik, McKinsey & Company, revealed findings from IAB’s inaugural Direct Brands 2018 Founders’ Insights, based on research collected across a benchmarking survey, round table discussion, and one-on-one interviews with founders. They shared some key findings: Direct brands are born to disrupt: 97% of respondents listed “category disruption” as their goal.  Direct Brands are in every aisle, above all health, wellness, and beauty. They are not tech-led, they are marketing led and truly servicing customers is in their DNA. Tina Sharkey, CEO and Co-Founder, Brandless, talked about reimagining what it means to be a direct brand. Companies like Brandless are creating new types of authentic relationships with customers that are better suited to today’s shifting consumer habits citing that 90 of the top 100 U.S. leading household goods brands lost market share last year.

 

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