DTC brands all reach a point in their growth cycle where paid advertising becomes an indispensable part of the strategy. Traditionally, they first focus on low cost and highly measurable paid media campaigns on Google, Facebook and Amazon.
The ability to spend only a few hundred dollars and reach an enormous but also extremely targeted audience is obviously appealing. Moreover, the built-in attribution tools on digital channels allow early-stage startups to verify their thinking and direct ad dollars toward profitable campaigns in almost real time.
However, as paid media budgets grow and DTC brands go from early stage to emerging challenger, they will eventually have to expand their media mix to include more traditional channels. Many DTC brands are hesitant to test offline channels like radio, outdoor or television for fear of high minimum costs, inability to quickly measure and the perception that they’re outdated, skew older or are prohibitively expensive. While the offline media world has its drawbacks there is no doubt it can catapult an ecommerce pure-play brand into the stratosphere. No one channel exemplifies this like TV.
Before highlighting how TV can drive web or app traffic for a digitally native brand, first consider the key metrics every company should be tracking: Customer Acquisition Cost (CAC), Conversion Rate, Average Order Value (AOV) and Return on Ad Spend (ROAS). Each one plays an important role in the marketing funnel and conversely should be addressed by channel in the media mix. As a brand your ability to drive value comes simply from increasing AOV and conversion rate or decreasing customer acquisition and media costs.
TV has the reputation of being a highly untargeted, legacy media platform that is expensive, largely unmeasured and sometimes a vanity purchase by CMOs who want to see their brand’s name on the big screen. This is simply untrue and TV has proven to not only improve brand awareness, authority and recognition, but can also play an important role in lowering CAC and improving ROAS.
In fact, hundreds of DTC brands are using TV to increase top-of-the-funnel site visits and app downloads. DRMetrix estimates that online and mobile-based companies have increase their TV ad expenditures on average 26% each year since 2016, with no sign of slowing down. Indeed, in 2019 alone an estimate $2.3 billion was spent by the top 50 DTC brands on TV in the United States.
Brands in almost every category from automotive (CarGurus), health and wellness (Noom), food delivery (Hello Fresh) to fashion (Mack Weldon) have flocked to TV. These brands all have a few things in common: They were born on the internet, are hyper focused on data and measurement and have year after year increased investment in TV to drive top-of-the-funnel growth and lower acquisition costs.
So why is TV so powerful in delivery growth and helping improve ROAS? There is no more cost-effective way at scale to reach millions of potential customers. Contrary to popular belief, TV offers some of the lowest CPMs in marketing and the ability to reach engaged customers in their homes. TV should be treated as your first point of contact with a prospect, an opportunity to introduce them to the brand, provide them with an offer and allow your digital marketing infrastructure lower down the funnel to retarget, upsell and close the deal.
Very few customers will see an TV spot and click to purchase minutes later, but many will Google your brand, visit your site or social media presence and provide you with invaluable data for retargeting. This is the power of TV: The opportunity to create huge amounts of traffic and improve your digital media’s ability to narrow in on interested parties.
Adam Seaborn is Director of Sales and Media Operations for Kingstar Media