Direct-to-consumer (DTC) brands invested a collective $3.8 billion in television ads in 2018, a 60 percent increase from 2017, according to the Video Advertising Bureau’s (VAB) report, “Direct Outcomes: Analyzing the ‘Big Bets’ DTC Brands are Making on TV.”
VAB surveyed 125 brands across 52 categories to determine how television impacted consumer action across all stages of purchasing in their DTC market and helped these brands cultivate their primary marketing goals—customer retention and acquisition.
Due to different business lifecycles, VAB divided the DTC brands surveyed into two categories—emerging brands and expanding brands—and measured the success of their television advertising via digital interactions, website traffic, and revenues.
According to the report, brands tap into television ads because social media-driven strategies, while still a significant part of the approach, present issues like high cost, inability to accurately scale audience, and ad saturation. With television advertising, on the other hand, these DTC brands have seen subscriber growth, increased valuations, IPO issuances, and more raised funding.
The emerging DTC brands—Poshmark, Lyft, Etsy, Dermstore— surveyed in the report, contributed $1.4 billion to the television ad marketplace in 2018, a 167 percent increase from 2017. Those same brands experienced double- or triple-digit lifts in online search queries and non-paid online video views related to their ads as a result of investing more on television marketing. They also saw an “84 percent increase in their unique website traffic during their television launch month and a 93 percent average monthly increase from launch month to present day.” For underwear brand ThirdLove, its first television ad increased sales revenues by 100 percent from 2017 to 2018.
Among the expanding DTC brands that VAB surveyed are Casper, Uber, Grubhub, and Wayfair, who collectively spent $2.4 billion on television in 2018. VAB’s findings show an 80 percent correlation between television spend and website traffic for these brands that have a continual advertising presence. When it increased its television spend, Peloton’s sales revenue spiked 106 percent in 2018 YoY.
The report is contrasted by eMarketer findings from earlier this year that predict all forms of traditional ad spending, including television, will drop by 2.2 percent, bringing television ad spending revenue to $70.83 billion. Digital ad spending, the most prominent form being mobile, in the US is projected to be $129.34 billion, according to eMarketer.