Randall Rothenberg, chief executive of the Interactive Advertising Bureau (IAB), discussed this subject at the organisation’s 2019 Annual Leadership Meeting.
“Direct brands have replaced the purchase funnel of old with a new purchase funnel,” he said. (For more, read WARC’s in-depth report: The IAB’s playbook for driving success in the direct-brand revolution.)
More specifically, he reported that an agile model is supplanting “the long-term process that brings consumers from brand awareness to preference to intent to purchase” for direct-to-consumer brands.
“This CAC-to-LTV chain is the essence of the direct brand lifecycle,” continued Rothenberg. “It also characterises their primary difference from incumbent brands.”
Additionally, disruptor brands create and manage personal customer relationships at scale. And incumbent brands find it hard to match the strength of that connection, as their primary points of contact are stores, not individual people.
The result, according to the IAB chief: “Direct brands are much more sophisticated in managing the lifetime value of these individual relationships” and measuring the other contributors to LTV.
“So too,” Rothenberg stated, “incumbent brands can only infer CAC – for example, from the relationship between advertising flights and store traffic.
“Direct brands know it exactly, because they are collecting names, driving sales, and gathering data entirely – or primarily on – the web.”
That information, in turn, helps keep the cost-per-acquisition low for digital disruptors. “It frames their media strategies,” the IAB head asserted, by addressing “the where and when of their advertising, and their experimentation with new media and marketing channels.”
By way of advising enterprises such as agencies and ad-tech providers, Rothenberg said: “If you can’t go to them with an effective and provable CAC strategy, you will not become their partner.”
Sourced from WARC