Tom Goodwin: The unlikely secret to direct-to-consumer success

Despite some questionable business models, we can all learn from ‘digitally native vertical brands’ but not necessarily for the reasons touted.

Delivery

When I was eight I would go to the Hook Norton village shop and buy the TV Times and the Radio Times, it was our way to know what was on TV.

The Radio Times covered the BBC channels and even in the earliest stage of my ad land career I could tell it was a bit posh. The TV Times was downmarket; I knew this because the ads were for crap things. It had coupons to buy slippers that old people must have liked, and mail order firms that sold only trousers. These were companies that did one thing well. I was more into the innovations catalogue; like cocaine or the latest iPhones or Aesop shampoo, life’s way of extracting money from selfish people with too much.

What was interesting about these products was not how they got to us. There was little talk about “direct-to-consumer” or about how “mail order is rewiring commerce”. It was quite simple: here was a way to phone up someone or post something and get what you wanted – a lot lot later.

We call this new tranche of trendy brands, with snazzy websites, groovy logos and an influencer marketing department, digitally native vertical brands (DNVB). They have become the gods of the branding, commerce and advertising world.

READ MORE: How direct-to-consumer brands are reshaping marketing

Today, we’ve become fixated with the thing that matters least: how all these trendy new DNVBs get stuff to us. With trendy brands we celebrate what is effectively a catalogue shopping model but on digital paper.

We give too much credit to the upstarts and for the wrong thing. We assume that Casper is amazing because it was one of the first to cut out a middle man, that Away suitcases change the game because they “are online”. Warby Parker is said to be insanely great for both selling things in shops and also, wait for it, from a website, as if Argos hasn’t done a version of this for 23 years.

We think it’s the modern language of these companies which gets us. It’s the founders’ story for the products. People love Brooklinen sheets because it was probably the brainchild a poor hedge fund exec who cried in Ikea one day and got so mad he borrowed money from his dad’s friends and set out to tour the world finding cotton. Or because Allbirds was set up by a weather-beaten farmer who loved sheep a little too much but saw solace in spinning wool.

The biggest error marketers make in the modern world is not understanding anything at all about contemporary consumers.

We think that wanky jeans brands thrive because they disrupted fashion or that it’s the shampoo that has “reimagined” shampooing that is changing the world of commerce. It’s not a reimagined shampoo, it’s a shampoo that is precisely the same in every single way, as every other single bloody shampoo in the world, but it’s got a nice website and an Instagram feed.

The biggest error marketers make in the modern world is not understanding anything at all about contemporary consumers. They are awash with data but immune to empathy. They awake every day as a homo sapien worried about their kid at school, pondering if the credit card bill will come or distracted that their partner may have tried Tinder. They then put on their marketing head and drive to work forgetting what it is to be human, assuming people care about their brand or product and not illicit affairs or bankruptcy or picked-on kids.

For many reasons the number of products in the world has massively expanded, the number of decisions per day people make has grown, the amount of media and distraction has ballooned and our attention feels short and harrowed. In this environment of doubt and confusion, we need a few things. We need to make good decisions, fast. All of the time. We need three things:

A brand to believe in

When we buy stuff we need a tiny bit of reassurance that we’ve not been scammed or are about to get poisoned. Because life is empty, short, stressed and futile, we also sometimes need to use brands to bring meaning to our life, to tell the world we have money – too much money, or use brands to signal to others we don’t care about brands. Hello Next clothing.

We use brands mainly to justify to ourselves we are not being a moron. We use stories sometimes to give us a little thing to believe. Brands have never been more important. DNVBs use simple, effective, powerful confident media, typically outdoor first and then TV when the VC money comes in, to impart in a highly wasteful way their confidence in the world. Please shut up all Silicon Valley types who say brands are dead while wearing Atom shoes and drinking Blue Bottle coffee.

Easy buying

We need to buy things fast. Yes, we need fast delivery to quench our need to own things and push our fear of an empty life with a “look new shoes!”. But more than anything else we need websites that make extracting money from us easy. If you don’t take Apple Pay and PayPal, we can’t be arsed to get up and find our credit card. You need us to fill in address forms , kiss my arse.

What modern DNVBs do well is the use of conversational forms, they auto-populate entries, and they just feel nice. They are the digital equivalent of being seduced at a bar, not interrogated by someone with amnesia. These companies break the main rule of advertising, you either do performance marketing or build a brand, they use shoppable advertising on premium, highly visual media like Instagram to spread the word and convert interest in one place.

Simplicity

The most common aspect of these brands is that they sell one thing well. We just don’t have the time, mental capacity or will to try 50 mattresses, we just want one type that is fine. We don’t want to navigate 1,356 colours of elaborately named paint, with satin, gloss, sparkly and incandescent options for each, and then to think about undercoats.

We don’t want a niggling feeling that the UMSPD-42-APS TV was actually better than the MSRAPI-42-APD model. I’d love a company that just sold one TV for each size and called it “VISION ONE” or something simple. We largely and increasingly don’t want choice, we want good, better, best at the most and then to go home and see if the bill came.

Digitally vertical brands are fascinating, they have changed the playground for all. For one, they often have disastrous business models, terrible unit economics and, like Dollar Shave Club, extract all profit margin from a category. But if they grow fast enough and burn enough VC money in the process a legacy brand may buy them, perhaps to limit the damage they do thought subsidy.

READ MORE: Dollar Shave Club shifts business model as subscription growth slows

They challenge the rules about commerce. They make it easier for anyone to enter. A quick visit to Alibaba, a drop shipping arrangement, a Shopify website and a nice logo from Fivrr and a global FCMG or fashion label can grow overnight.

Advertising is different to them too; we can now grow brands, do performance marketing and even make ads shoppable (more on this another day) in a single ad format on a premium site like Facebook and all without agency expertise or buying rates. They can refine copy and images and optimise in real time.

Digitally vertical brands are fascinating, they have changed the playground for all – despite often having disastrous business model

DNVBs may be a flash in the pan, they don’t have moats, they have fickle brands, they can die as soon as they fade and we can’t keep talking to the 1/100 companies that make it as anything other than survivorship bias. But we can all learn from them.

The world has not been upended by technology. We are basic primal animals. The world now allows us to make ads you can buy from, websites you can buy from, payment details can be stored and accessed by our faces. We like a bit of a narrative, we like a bit of product innovation, but more than anything else we want two things: for brands to reassure us and for someone to take our money fast. Before we change our minds.

Tom Goodwin is executive vice-president and head of innovation at Zenith USA. He is also the author of Digital Dawinism. 

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