PALM DESERT, CA: Nike, Kellogg and PepsiCo are among the established players responding effectively to the growth of the “direct-brand” economy, according to Randall Rothenberg, President/CEO of the Interactive Advertising Bureau (IAB).

Rothenberg discussed the 21st-Century Brand Economy” – defined by an increasing number of digitally-led upstarts selling products to consumers without the traditional middle men – at the IAB’s 2018 Annual Leadership Meeting (ALM).

“Some major incumbents have answers,” he argued, “and they’ve been adapting for years.” (For more, read WARC’s in-depth report: IAB's Rothenberg: The direct-brand “revolution” threatens legacy marketers.)

A case in point: “By 2015, Nike was already showing 55% year-on-year increases in ecommerce sales. Nike plans for DTC sales to grow by almost 2.5 times in the next five years – from $6.6bn in fiscal 2015 to $16bn by fiscal 2020.”

In fact, Rothenberg observed during his keynote presentation, “The company beat its own target of $5bn in DTC sales by fiscal 2015 by over $1.5bn.”

Just as there regularly are new kinds of indirect enterprises – namely, big firms that have adapted their established business models – so are there new points of entry for the indirect businesses seeking to change.

“Some are aggressively buying their way into the direct-brand revolution, acquiring both capabilities and talent,” Rothenberg said.

As proof, he cited Unilever’s $1bn acquisition of Dollar Shave Club – a purchase the global marketer said was premised on "expertise and technology in direct-to-consumer sales we can use internationally and in other parts of our business.”

Unilever has also reported that 70% of its growth in “the near future” would come from two platforms: personal care and ecommerce/DTC.

“Look to PepsiCo,” Rothenberg further encouraged the IAB assembly. “It has unleashed a team of some 200 ecommerce professionals, charged with capturing growth in DTC.

“Look to Kellogg, which is investing millions in Project K, a retooling of its supply chain to become more flexible and responsive to changing consumer demands.

“Look to Mars Petcare, which is bringing in unprecedented amounts of first-party consumer data, volunteered through its app Whistle – a ‘Fitbit for dogs.’”

For brand stewards large and small, traditional and entrepreneurial, he counseled, “Watch and adapt to what the world’s most forward-thinking incumbent brands are doing. They remain by far the largest spenders on advertising.”

Sourced from WARC