What DTC Brands Should Know About Investing in CTV

DTC brands aren’t just having a moment, they’re having a TV moment. According to one study, the top 125 DTC brands added $1.4 billion to the Connected TV (CTV) marketplace last year—a 60% increase from 2017. But for DTC brands, TV investments aren’t about the cache of being on TV, they’re about growth. As a recent eMarketer study found, 93% of DTC brands cited customer acquisition as their number one priority, making CTV an invaluable tool for growing business.

DTC brands should emphasize their startup nature when working with CTV

Like startups, DTC brands must account for every advertising dollar they spend, which is why they focus on performance-driven channels like digital to get, keep, and grow customers. With its emphasis on data and targeting capabilities, CTV is a natural extension of this philosophy. But there are also organizational reasons that explain why a startup mindset is a natural fit for CTV.

DTC brands often begin marketing operations on search, PPC, and social before following audiences to other channels. Consequently, DTC teams are responsible for multiple channels, and just like at startups, it’s always about doing more with less. As DTC brands pivot to CTV, the startup mentality is an advantage for several reasons. First, it’s easier to create integrated digital and TV plans when you have experience working with multiple channels. Second, because DTC organizations are small, they don’t face the silos that plague larger enterprises.

DTC is data-rich and CTV actually lets you use it

DTC brands are unique because they have a direct relationship with the customer, which in turn puts them in a position to leverage powerful first-party data to improve marketing. CTV gives DTC brands a canvas that allows for unfettered use of their valuable data on television for the very first time.

Historically, linear television relied on demographics to provide something that felt targeted, at least insofar as the advertiser understood that with each desirable demo came wasted impressions. But age and gender targeting is of little use in a DTC brand’s marketing plan, where the goals might be to message existing customers or find new customers who have never been reached. CTV lets advertisers find the audiences they want and avoid the audiences they don’t want. In other words, it’s all the data and targeting of digital applied to the power of television.

A CTV campaign should have a single goal to achieve a specific business outcome

CTV can do a lot of things, but it’s at its best when it’s used to achieve a specific business outcome—more site traffic, increased sales, lower customer acquisition costs, etc. Here, DTC is perfectly aligned with CTV. But it’s important for DTC brands to understand that while they can track a wide range of metrics from their CTV campaigns, they need to focus optimization and success criteria on one outcome at a time. Otherwise, the picture becomes muddled.

Consider an example. A DTC brand might find that Roku audiences have a lower CAC (customer acquisition cost) than Apple TV audiences, despite the fact that Apple TV drives more site traffic. If the goal is to reduce CAC, there should be no hesitation prioritizing Roku audiences. But if the goal is to increase sales, the brand would want to expand reach by reaching audiences on both Roku and Apple TV. Ultimately, either goal is achievable, but you can’t do both at the same time without getting in the way of your own efforts. So it’s important to remember that CTV is an adaptable tool, but it’s up to the advertiser to deploy it in a focused way.

CTV allows for real-time optimization, but you want to let a campaign breathe first

Like digital, CTV provides a direct, immediate feedback loop on your campaign. For a typical digital campaign, DTC brands would use that feedback to optimize in something approaching real-time. CTV is different because of the medium. Television viewers aren’t clicking on ads and responding immediately. It often takes more time for a TV message to result in an action. So, while you can quickly tell if a digital campaign will be successful, CTV is best optimized weekly.

Of course, slowing down probably sounds like heresy to a digital marketer. But slowing down is just what audiences do when they watch TV. Remember, it’s a “lean back” experience—one that happens in the home. So while CTV represents the height of targeting capabilities, DTC brands should remember that the name of the game in CTV isn’t to disrupt someone’s feed, it’s to become a welcome guest in their home.

Chris LaHaise is director of TV Solutions & Product Marketing for dataxu




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