Commentary

As Seen On TV: Does D2C Spending Mean Good Vibes, Or Bad Omen?

Thanks to a flurry of expensive ad buys, old-school TV viewers haven’t been able to escape the D2C onslaught led by brands like Peloton, Casper and Noom.

To many observers, that’s signaling a real coming of age in the category, a shift from disruptive marketing to all-grown-up advertising strategies. To some, it’s just another symbol of the upside-down-town of branding, with many legacy brands scaling back TV ads in favor of the digital marketing that put most D2C brands on the map. And to others, it’s all very 1999, conjuring images of Pet.com’s first-ever TV ad, with its famous sock-puppet ad airing on the Super Bowl in 2000.

A new study from MediaRadar finds that overall, DTC ad spending has been rising between 7% and 20% annually for five consecutive years, leading up to the recent explosion in TV ads. “DTC brands spent $900 million on national TV advertising in 2018,” says Todd Krizelman, CEO and co-founder, a number that's about five times higher than it was in 2015. “In the past two years alone, we’ve seen the number of DTC brands running ads on national TV nearly double, from 35 in the first quarter of 2017 to 67 in the first quarter of this year.”

The research finds these companies are also heavily outspending their indirect competitors in other categories, placing branded content three times more frequently than traditional brands. BuzzFeed and Yahoo are two of the biggest beneficiaries, with BuzzFeed especially useful for reaching younger audiences.

Of course, this could all be good news, and a sign that these organizations are just doing what they’re supposed to, he tells Marketing D2C Weekly. Of the thousands of D2C startups out there, most start out focusing ads on Instagram, which allow for seamless in-app purchases, as well as precise targeting. And social is certainly key: eMarketer reports 35% of consumers heard about the first D2C brand they bought from an ad on social media.

When they reach a point where they are trying to scale and build a mass audience, D2C brands then turn to mass advertising. It’s all perfectly logical and straight out of the classic MBA playbook. (And yes, Krizelman confirms the theory that D2C brands seems to have more of those MBA types than other companies.)

Overall, these ad messages tend to emphasize some level of social good. “It does seem that they understand that to connect with millennials, they need to portray that they are mission-driven companies,” he says. “They want to come across as good, that they are not just regular companies out for a profit.” And stepped-up TV spending is also likely a recognition that these coveted millennials are “turning into middle-aged adults, and aren’t on their phones looking at Instagram all the time.”

But like me, Krizelman is nurturing a healthy amount of skepticism about the rush to TV. It remains to be seen, he says, whether we’ll look back at these spending levels and say, yes, it’s proof these D2C companies are having success. “Or will it be like the late 1990s, and we realize it was just proof that they had raised money, and wanted to spend it?”

My money’s on the sock puppet.

3 comments about "As Seen On TV: Does D2C Spending Mean Good Vibes, Or Bad Omen?".
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  1. Andy Berman from Fat Free Media, May 13, 2019 at 3:57 p.m.

    Why is everyone so quick to say TV is a wate of money? Digital does a fantastic job of targeting a specific audience, but does not have the mass reach like Television does. You can get decent, efficient startup sales using digital, but if you want to grow and build a brand, you need to go to mass media.

    Also, where is the data behind the companies wanting to do social good as part of their TV commercial? Peloton, Chewy, Carvana, Ancestry, Poshmark, Stitch Fix, Boll & Branch, Hubble, Bonobos, Warby Parker....they are all using TV to increase sales, plain and simple. And the MBA types you are mocking who are used to looking at results from digital dashboards, are probably seeing strong overall results and a major digital lift while advertising on TV, which is why more and more are spending there.

  2. Ed Papazian from Media Dynamics Inc, May 13, 2019 at 4:19 p.m.

    Before we get all excited about the "explosion" of DTC ad spending on TV  just ask yourself as a viewer what percentage of your viewing time---and possible ad exposures----is represented by the supposedly vast influx of new DTC marketers? If the answer is a lot, you must be watching a lot of post midnight and weekend early AM TV on basic cable channels. Yes, once in a while, such spots appear elsewhere----but once in a while, not much of the time. Whether this is only the beginning of another of those much promoted "sea changes" that will revolutionize TV---like programmatic time buying, "addressable TV" , "advanced TV",  6-second commercials, etc. remains to be seen.

  3. Brian Durocher from GTB, May 14, 2019 at 9:17 a.m.

    Or, it could actually be that they understand that nothing matches TV's ability to brand, and creating a brand, instead of simply a purchase, requires more than digital. Online video and traditional TV is the best branding media, bar none, and also, objectively, provides the highest ROI and profit. 

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