Report: Direct to consumer brands now mainstream

A new report from iab says the direct-to-consumer brands are now mainstream and traditional brands are buying disruptors to keep up

The direct brand economy has gone mainstream, according to the IAB's latest US Brand Disruption 2020 report. And these direct-to-consumer brands are driving a tremendous transformation in the way consumer goods and services are created, marketed and sold. 

One of the effects of the rise in the 'storeless brand' is traditional brands eyeing off and acquiring new players in their space to keep up with the online, digital brand trend. There are numerous examples from across the spectrum of retail brands, such as cosmetics giant, Shiseido, buying startup, Drunk Elephant; US Peet's Coffee & Tea snapping up Revive Kombucha; Target Group buying wellness brand, Wisp; and Google buying education outfit, Socratic.

According to the Interactive Advertising Bureau's report, mobile will account for half of all online sales for the first time in 2020, another potential blow to traditional brands. As part of this trend, big brands are losing their dominance and the continuing popularity of ecommerce is forcing marketing strategies to evolve to become fundamentally more personalised. 

The report found digitally native brands, particularly in fashion, are increasing their market share at the expense of traditional retail brands. New brands are now born 'storelessly' and grow across channels, while the entire brand supply chain is increasingly available 'as-a-service' from 3D design and printing to robotics and warehousing, providing opportunities for incumbents as well as natives to adopt services in a way that is agile and cloud-based.

The IAB report outlines several other key industry trends acting as disruptors to traditional brands led by new, digitally native outfits:

  • Delivery wars are intensifying: Next-day now the norm, same-day is the frontier, with autonomous vehicle and drone delivery on the horizon.

  • Buy online, pickup in-store (BOPIS) is the new normal in shopping with curbside, petrol stations and collection kiosks among many options.

  • To survive, retailers and brands are engaged in a raging “experience war” which are both unique and relevant in-store and digitally.

  • Emerging tech from smart checkout-less stores to digitally enhanced pop-up stores and VR try-ons and drive-through smart menus are elevating digital shopping experiences.

  • A 'Shopify ecosystem' is materialising as a direct brand alternative to Amazon.

  • Digital data output will triple from 2019 to 2025, powering demand for – and availability of – personalised services, products, content and marketing. Diverse data allows more refined audience targeting for media buying and planning.

  • While regulatory concerns about consumer data are high, it’s not yet affecting companies’ data investments. But brands are developing new strategies to govern data use. 

  • Marketers are looking to utilise more first party data, although this adds in complexity, but new martech solutions are coming out to generate privacy compliant first party data.

  • Video consumption is skyrocketing entirely on direct-to-consumer channels, but the market is still confusing and fractured for marketers.

  • While industry is focussed on the streaming wars, for brands the video ad market is really two markets: story-based and “me-based” and content, commerce and data are converging with ad-supported content on a range of platforms.

  • Shoppable ads from Pinterest to Tik-Tok and even shoppable Google images search results are edging close to mainstream. 

  • Podcast and audio streaming are creating breakout brand opportunities such as Pandora’s ‘voice mode’ which lets listeners verbally request more details about a brand from an ad.

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