How are Leading Retailers and Direct-to-Consumer Brands Investing in Digital?

Chameleon Collective partnered with CommerceNext & Oracle to produce an industry-leading research study. Here are the top five takeaways from this research on DTC brands investments.

A CommerceNext market research survey was recently published, reporting valuable information on the state of e-commerce marketing in 2019. The survey was sponsored by Oracle Customer Experience (CX) Cloud and created, administered, and analyzed by a team of experts in the B2B marketing practice at Chameleon Collective. Our team created the survey, administered it to top-level e-commerce marketers, analyzed the survey results and wrote the report on behalf of CommerceNext. It gleaned information from various senior marketers in top-performing companies, and its purpose was to provide a “benchmark by which digital retailers can compare their investment levels and product priorities to those of their peers.”

What is most interesting about this report is the disparity revealed in the marketing priorities of digital native direct-to-consumer brands versus those of traditional brands. While there are many similarities in the marketing strategies of the two, DTC brands approach marketing spend and investments quite differently than their traditional counterparts.

This article will break down the top five key findings of the report.

1. DTC brands are outspending their traditional retail counterparts

Seventy-eight percent of DTC brands indicated budget increases for 2019, compared to 60% of traditional retailers. While marketing spend is up for all contenders in 2019, DTC brands are still outspending their traditional counterparts and increasing their budgets at a faster rate.

 

2. Profitability as the focus for Direct-to-consumer brands, while traditional retailers struggle with aging technology and org structure misalignment

Digitally native DTC brands are focusing heavily on profitability in 2019, whereas the primary focus for traditional retail brands lies in managing tech integrations across the marketing stack. Forty percent of DTC brands noted that achieving profitability at scale was a primary concern, compared to just 11% of traditional retailers.

 

3. Acquisition marketing is the primary focus across all retailers

Acquisition marketing was a priority for all companies surveyed. However, DTC brands are investing more heavily in acquisition marketing than their traditional counterparts. Furthermore, direct-to-consumer brands were found to be more pleased with the fruits of their investments – 85% of DTC brands surveyed felt that their acquisition spend “met” or “exceeded” their expectations, as opposed to 74% of traditional retailers.

 

4. A shift towards programmatic TV & leveraging AI for DTC brands

 

Digital native DTC brands are focusing heavily on programmatic TV as a way to attract new customers. Fifty-six percent of these brands planned on increasing their investments in programmatic TV in 2019 as compared to just 26% of traditional retailers. Programmatic TV isn’t just important; it’s a primary focus. The study found that it’s the “fourth-most popular technology investment priority” for marketers at DTC brands.

The study also shows that DTC brands are looking towards technologies such as AI to increase personalization and enhance customer experience. Fifty-six percent of DTC brands surveyed noted they were increasing their spend on AI-driven technology initiatives, compared to just 41% of traditional retailers.

 

5. DTC brands spending more on personalization and unified customer data this holiday season

While both DTC brands and traditional brands are placing a focus on personalization and unified customer data spending for the holiday season, DTC brands are allocating more towards these endeavors than their counterparts. The study found that 68% of digital-first brands plan on allocating more funds towards personalization, whereas 58% of traditional retailers plan to do the same. When it comes to creating a unified view of the consumer, 63% of DTC brands plan on increasing their investments in this, compared to just 48% of incumbent brands.

Make sure to download the report here if you’d like to see more details about the above 5 key findings.

Final Thoughts

While the study highlights the various disparities between the marketing priorities of DTC brands and traditional retailers, it also shows that much can be learned from both sides.

For example, digital-first DTC companies can learn from their traditional counterparts when it comes to the notion of expansion and achieving profitability at scale. On the other hand, traditional companies can take a page out of the DTC playbook to make more effective decisions around digital transformation.

Overall, these valuable research findings have provided vital information that any business, regardless of its background, can use as a benchmark to assess and improve upon its current strategies.

Is your company looking for help with a market research project that will drive new leads and bolster credibility to your business? Get in touch with Chameleon Collective to find out more about how our team can build a strategy that gets results. We’re proud to be a part of this new benchmark report, giving online retailers the data they need to measure their priorities and evaluate which technologies deserve a larger or smaller portion of the budget. We look forward to hearing more from retailers about their thoughts on the data contained in the survey, and what it means for both traditional and DTC e-commerce retailers. We’ll also be speaking at the CommerceNext event on July 31 to August 1st in New York and hope to see you there.