Direct-to-consumer brands splurge on TV ads, sell more stuff

Industry Contributor 13 Jun 2019 - 2 min read

Direct-to-consumer brands splurge on TV ads, sell more stuff

By Paul McIntyre - Executive Editor

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Tags: Direct-to-consumer, DTC, Facebook, TV advertising, brands, Dollar Share Club

Direct-to-consumer (DTC) brands spent more than $3.8bn on TV advertising in the U.S. last year, adding $1.4bn to the TV ad marketplace (AdAge).

Key points:

DTC brands reporting massive increase in website hits and sales after upping TV spend, according to research by the Video Advertising Bureau (VAB)
125 DTC brands spent $3.8bn on TV ads in 2018, finds the VAB, +60% YoY
TV networks creating formats and measurement capabilities geared around DTC brands, as well as making buying ads more like buying on digital platforms
VAB found ‘most’ emerging DTC brands gained triple digit search query and non-paid video view increases driven by TV advertising, and 84% increase in web hits in the month after commercials aired
A sample of five DTC brands that bought TV ads for the first time in 2018 recorded YoY revenue increases of 25% to 800%

There’s an irony in digitally native start-ups blowing their ad budgets on TV, and finding, lo and behold, it works. Part of the reason is due to increased clutter, competition and cost on social media: As Dollar Shave Club's executive creative director Matt Knapp told Mi3 last month, what worked for DTC brands five years ago, is now much harder. “The cost to run ads [on social media] is much more expensive and more competitive and because you've [acquired] a certain amount of the market, the growth you had initially starts to plateau.” As a result, he said, “a lot of brands that were doing strictly online, Facebook-type stuff, are … coming out with big brand outdoor campaigns and TV”.

Credit's also due to the TV networks that have invested in formats and technology to woo DTC brands. $3.8bn is only 5% of the U.S. TV market – but that’s 5% growth direct from the platforms that have plundered traditional media revenues, a growth shoot local TV bosses would give their eye teeth for.