IAB Report Illustrates How Direct-to-Consumer Disruptors Are Transforming the Marketing Landscape & Uncovers Core Lessons for Success in the Direct Brand Economy

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Findings Are Driven by Detailed Research into Business Practices
and the Market Forces Propelling Strong Performance

PHOENIX–(BUSINESS WIRE)–IAB,
the national trade association for the digital media and marketing
industries, today released a comprehensive research report entitled “How
to Build a 21st Century Brand: 2019,” an in-depth analysis of how direct
brands are driving tremendous transformation in the way consumer goods
and services are created, marketed, and sold. It points a way forward
for stakeholders across the digital ecosystem with insights and guidance
for flourishing in the shifting consumer economy—where upstart brands
such as Allbirds, BaubleBar, Brooklinen, Dagne Dover, Dirty Lemon,
Kopari, Madison Reed, Peloton, and Plated are grabbing market share away
from household name retailers.

The new study, presented at the 2019 IAB Annual Leadership Meeting,
showcases the latest developments throughout the consumer marketing
landscape, a deeper dive into the initial milestone work IAB CEO Randall
Rothenberg presented at last year’s conference. The direct brand economy
is strengthening while: physical retail continues to decline; growth in
e-tail business accelerates; and consumer e-tail spend vastly outpaces
brick-and-mortar in categories as varied as beauty, groceries, and
wellness. All of this is happening in tandem with a slowing CPG
marketplace, in which ecommerce is driving 82 percent of all CPG growth.

Within this extensive research is a new direct brand roadmap that
uncovers lessons for incumbent brands, up-and-coming direct brands,
publishers, and the entire support system enabling this growth, from
technology to suppliers:

  • There is a playbook emerging that takes brands from customer
    acquisition cost (CAC) to lifetime value (LTV)
  • Disruptor brands are acquiring individual customers at scale,
    overwhelmingly through mobile channels
  • Storytelling lowers acquisition costs
  • Community turns customer acquisition cost (CAC) to lifetime value (LTV)
  • For disruptors, branding must perform…and vice versa
  • Direct brands are becoming media promiscuous, moving beyond social
    media marketing—spending on channels such as over-the-top (OTT) and
    addressable television
  • Omnichannel shopping is the new normal, from online to
    brick-and-mortar to pop-up shops
  • Fast is the new fashion in every category, with new product launches
    happening in just 4 to 7 months
  • Two-day delivery is the cost-of-entry standard for customer
    service—and 2 hours is next
  • Delivery of one product should empower the discovery of others

“The digital media and marketing industries are now in the business of
brand creation, brand sales, and brand replenishment—and no longer in
the business of banner ads and video spots,” said Rothenberg. “Thousands
of smaller brands are storming the barriers that once protected the
giants and they are changing the craft of marketing and selling. Today,
advertising is just one part of an evolvingly complex marketing mix that
relies increasingly on first-party data, owned media, self-managed
pop-up shops and stores, a feedback loop for rapid and responsive
product development, and in terms of ‘traditional’ media, largely mobile
and addressable television.”

“How to Build a 21st Century Brand: 2019,” expands upon a complementary
study published yesterday, the “IAB
250 Direct Brands to Watch
.” That report identifies the
direct-to-consumer brands to watch in the U.S. The number, variety, and
diversity of young businesses on the list demonstrate just what a
powerful force this trend has become.

“After more than 100 years, the consumer brand economy is moving away
from an ‘indirect brands’ model,” added Rothenberg. “These indirect
brands that you all know by their household names long dominated through
owned and operated, high-barrier, capital-intensive supply chains.
Revenue resulted only after a series of third-party handoffs from brand
to publisher to retailer. In contrast, the new ‘direct brands’ model
that builds value through low-barrier, capital-flexible, leased or
rented supply chains, and revenue results from the direct relationships
between the company and its end consumers. Any brand that wants to
survive must prepare for this new reality.”

“How to Build a 21st Century Brand: 2019” is sponsored by the Direct
Brand Initiative Strategic Partners, Google, Hulu, Pinterest, and
Spotify.

To read the full report, visit https://www.iab.com/direct-brand-economy.

About IAB

The Interactive Advertising Bureau (IAB) empowers the media and
marketing industries to thrive in the digital economy. Its membership is
comprised of more than 650 leading media and technology companies that
are responsible for selling, delivering, and optimizing digital
advertising or marketing campaigns. The trade group fields critical
research on interactive advertising, while also educating brands,
agencies, and the wider business community on the importance of digital
marketing. In affiliation with the IAB Tech Lab, it develops technical
standards and best practices. IAB and the IAB Education Foundation are
committed to professional development and elevating the knowledge,
skills, expertise, and diversity of the workforce across the industry.
Through the work of its public policy office in Washington, D.C., IAB
advocates for its members and promotes the value of the interactive
advertising industry to legislators and policymakers. Founded in 1996,
the IAB is headquartered in New York City and has a San Francisco office.

Contacts

IAB Media
Laura Goldberg
347.683.1859
laura.goldberg@iab.com

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