Tim Armstrong: DTC will eat the big brand elephants one bite at a time
Former Google, AOL, Verizon and Oath executive Tim Armstrong says direct-to-consumer (DTC) models will change the consumer brand landscape, creating data-rich holding companies (Modern Retail).
Key quotes
- “15 years from now, you’re going to see the emergence of new holding companies that have aggregated a bunch of those [DTC brands]”
- “I think you’ll have a lot of successful brands and companies that will replicate more of what a P&G looks like, rather than giant, monopolistic, one brand digital companies that own every piece of data on the planet”
- “The product development cycle, and how close they are to the consumer — that’s what’s going to allow [DTC brands] to eat the big elephants one bite at a time”
- It echoes Mi3's Deep Dive on DTC last month and why start-ups are using brand building in mainstream media to cut through the clutter in social media - the traditional home where challengers launch cheaply. Not so much these days. Read the Deep Dive here
Former Oath boss says a shakeout “like what happened in tech” is coming to the consumer brand category, with new holding companies of aggregated DTC brands sitting at the top of the pyramid. As a result of a direct consumer connection, those companies will be data-rich, says Armstrong, which will rebalance the data economy away from “ten 10 companies that own every single piece of consumer data”.
But that utopia is 15 years away. Right now, says Armstrong, there are two kinds of DTCs in the world. Those who know their unit economics, and those that don’t. The latter will not be successful, he suggests. The former stand a chance of success, he says, because they are “fundamentally better” at understanding their customers than traditional brands or retailers.
“If you made me bet between the old economy and the DTC economy, I would put all my chips into DTC. Because they’re closer to consumers, they have better product development and they understand their business on a molecular level, which will over time allow them to scale,” says Armstrong.
Food for thought.
