direct-to-consumer brands

Grove: 'How We Built Our Internal Agency'

Image above: Drew Barrymore, an investor, stars in a brand awareness ad. 

Looking to maximize its advertising efficiency as it expands into retail, Grove Collaborative recently switched to an internal agency model.

While it hasn't been an easy shift, vice president of marketing Samantha Howe told attendees at MediaPost's recent Brand Insider Summit D2C that the change is paying off in greater brand awareness, more efficient spending and increased agility in many channels.

She said the reorganization evolved as Grove intensified its shift to retail.

The company just announced that it added CVS to the list of retailers selling its products in stores, joining Kohl's, Meijer, Giant Eagle and Target. And retail accounts for roughly 90% of the purchases in the categories in which Grove competes.



The company started in 2016 as a D2C company selling other companies' products. It quickly moved into creating its own brand of "cleaner" cleaning products aimed at reducing plastic use.

"Our mission is to reimagine and transform the products you use at home into a force of human and environmental good," How said.

"Every home in America should have access to clean, safe, natural and sustainable products."

In 2020, Target became Grove's first retail partner. Because it was still a D2C CPG company, "we initially approached that with existing D2C frameworks."

But it quickly realized retail messaging had to be radically different, so it formed a separate -- and siloed -- retail team.

While people who arrived at Grove's digital presence came because they craved more environmentally friendly solutions, the average Target shopper was just looking for dish soap.

"They were arrested by our end caps," Howe said. "It is a very physical moment -- there isn't a lot of room for messaging."

So Grove began dabbling in higher-level marketing to build awareness, "but as a D2C, it wasn't a natural place for us to play. We were always very performance-driven."

The new approach meant shifting messaging to discuss Grove products' effectiveness -- a key consideration for brick-and-mortar shoppers. "Our sustainability message almost came second," said Howe.

Internally, the attitude was that everyone shouldn't be distracted by the retail launch. "We'd say, 'Just keep doing your regular jobs.'"

It quickly became clear that approach wasn't working. "There are teams that are functionally important to both channels. We saw we would have to ultimately create more of a cohesive messaging strategy to work across both."

So the company reorganized "so there are essentially two arms of the business, with a centralized body," Howe said. One arm focuses on D2C and the other on retail, with two brand identities: its core Grove Collaborative brand, and Grove Co., which is how products sold in stores are branded.

But many functions are centralized, including the branding, creative and paid media teams.

Both arms now submit briefs, "and the media teams decide which requests can be met."

It results in having to say no, and push back. And staffing changes were painful for some departments, including headcount reductions.

"Producing high-quality creative is expensive, and the products we sell at retail are not always the same as D2C."

The move required cultural shifts, including training D2C teams to prepare briefs much earlier than they're used to, and training retail teams on shopper media. And while Grove previously paid much attention to conversion rates, "the omnichannel function has highlighted the need to grow brand awareness. People need to recognize and understand us, no matter where they make that purchase decision."

That includes a splashy TV campaign starring actress Drew Barrymore, its first brand ambassador and an investor in the San Francisco-based B corp.

The decision to use Barrymore has also been effective. "Our social posts are getting seen by 10 times as many people because of her."

Howe sees the two channels as "fairly symbiotic," with people discovering it through retail and finding their way to the expanded product range online.

Among the most significant changes? A shift away from paid social. "That's instant data, and you can get hooked on that instant read, making changes in the moment."

Teams are now learning to be more patient, she said, understanding that it can take months to measure the impact of a brand campaign running on TV.

"It's been an interesting learning curve. We are spending fully across the funnel now in a way that perhaps we didn't before."

In the company's most recent quarterly results, net revenue dropped 12% to $79.3 million, and declined 20% year-over-year. Losses swelled to $35.3 million from $28.5 million in the comparable period of last year.

Advertising efficiency is key to its turnaround plan.

"We believe that the performance of the D2C business will solidify in the second half of 2022," said Sergio Cervantes, chief financial officer, in its most recent earnings announcement, "on the back of more efficient advertising spend and higher average order value for existing customers."

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