DTC brands boost TV spending to $3.8B as they reach beyond social media

Dive Brief:

Direct-to-consumer (DTC) marketers boosted TV media spending by 60% to $3.8 billion in 2018 from a year earlier as they pursued broader growth following initial investments in social media campaigns, according to a report the Video Advertising Bureau shared with Marketing Dive. The VAB examined 125 brands among 52 categories of DTC products and measured digital interactions, website traffic and sales revenue.
Indoor cycling company Peloton more than doubled its sales to $700 million after boosting its TV spending by 48% to $161.3 million last year, the highest among "expanding" DTC brands identified by the VAB. Uber, 23andMe, Carvana, Warby Parker and Grubhub also ranked high among expanding brands that boosted TV spending.
Mattress marketer Purple led "emerging" brands in TV spending at $140.4 million last year, leading among those whose TV spending was minimal or non-existent in 2017. Poshmark, Apartment List, Touch of Modern, Keeps and Ro also were among that DTC brands that boosted their investment in TV.

Dive Insight:

DTC companies are expanding their TV spending as they mature, face more competition or seek to drive traffic to online marketing channels. The VAB research supports other recent findings that DTC brands are significantly increasing their marketing budgets compared to traditional retailers. At the same time, many are building bricks-and-mortar retail strategies to educate consumers about the brands with a curated selection. At brands that originated with a DTC approach continue to expand, legacy marketers, particularly in the consumer packaged goods category, are increasingly looking to purchase DTC brands or building their own DTC strategies to hold off the growing competition.

Most DTC brands start with a social-media strategy, such as advertising Facebook or Instagram, before expanding into TV. Consumer acceptance of DTC brands support these trends, with about two-thirds (64%) of internet users saying that 20% or more of their total purchases will be through DTC brands in the next five years, per YouGov data cited by the VAB. TV's broad reach helps to bring consumers into the marketing funnel, leading to search queries and online video views, website traffic and final sales. Recent research from Telaria shows that DTC shoppers are receptive to ads on both streaming and linear TV.

Standing out from the crowd is key for particularly competitive market segments like mattresses, personal finance and real estate. The "mattress-in-a-box" category has more than 150 brands vying, including companies like Casper, Leesa, Nectar, Tuft & Needle and Purple. Together, the brands in this category more than tripled their TV spending to $266.2 million in 2018 from a year earlier. Digital payments company Zelle, which is sponsored by big banks, was a new entrant in the category of personal finance companies that boosted TV spending by 48% to $286 million. Real estate companies including Zillow, HomeLight and Apartment List more than doubled TV spending to $194.5 million last year, per the VAB’s analysis of Nielsen data.

DTC brands that initially depended on a social-media strategy to reach target audiences saw significant growth in digital interactions after spending more heavily on TV. VAB observed the growth among emerging brands that have an average age of eight years, and expanding brands that are 13 years old on average. Among the 63 emerging brands studied, car-sharing startup Turo boosted online video views by about 5,100% on TV spending that rose more than 8,600%. Emerging brands including Home Chef, Touch of Modern, Hunt a Killer and PillPack also saw significant jumps in online video views, per the VAB’s analysis of iSpot.tv data. Among the 62 expanding brands, GrubHub boosted online video views by almost 1,100% after tripling its TV spending, ahead of brands such as TouchNote, MTailor, Indeed, Experian and Uber.

Search queries also rose for emerging and expanding brands after they spent more heavily on TV. Social fashion seller Poshmark saw search queries jump more than 6,900% on TV spending that rose more than 8,400%. Touch of Modern, PillPack, MVMT and Apartment List also saw big gains among emerging brands. More established expanding brands saw double- or triple-digital gains in search queries, led by dog-product subscription service BarkBox, with gains of 824% on a 726% gain in TV spending. Wag!, FreePrints, Zulily, GrubHub and Indeed boost their search queries, too, per the VAB.