Direct-to-consumer (D2C) brands have been on the rise for several years now, but the COVID-19 pandemic has accelerated the trend even further.
As e-commerce sales skyrocketed, many D2C companies found themselves struggling with inventory and shipping costs, while others struggled to navigate the changes brought about by Apple’s iOS update, which impacted tracking and advertising metrics.
To learn more about the state of D2C and what’s coming next, Nathan Resnick spoke with Hemant Varshney, CEO of DigiCom, a company specializing in helping D2C brands optimize their advertising and marketing strategies.
The discussion revolved around the challenges D2C brands are facing today. Hemant notes that it can be difficult for new brands to break into crowded markets, especially when competing against established players with deep pockets.
However, he also points out that there are opportunities for niche brands that solve specific problems and have a strong understanding of their target audience.
Here’s what went down in this week’s episode of eCommerce On Tap!
The iOS Update and the Impact on Digital Marketing:
One of the biggest challenges facing D2C brands today is the iOS update, which has made it more difficult to track and optimize advertising campaigns.
Since the iOS 14.5 update, things have become more complicated for digital marketing, especially for businesses that rely on targeted advertising on social media platforms.
One of the most significant changes is the App Tracking Transparency feature, which requires apps to obtain users’ permission before tracking their activity across other apps and websites.
This means that businesses that use advertising platforms like Facebook, which rely on this cross-app tracking to deliver targeted ads, may see a significant impact on their ad campaigns.
With the new feature, users are now given the option to opt-in or opt out of cross-app tracking when they install an app or update it. This results in restricted access for businesses, meaning fewer amounts of user data to use for targeting their ads accurately. As a result, targeted advertising may become less effective and result in reduced revenue opportunities for businesses.
In addition to the changes in tracking, Apple has introduced a new privacy report feature that allows users to see which apps have requested permission to track them and whether they have granted that permission. This information can impact users’ trust in businesses and their willingness to allow tracking in the future.
Businesses that rely on digital marketing will need to adapt to these changes by finding alternative ways to reach their target audience.
One option is to focus on first-party data by building their own customer databases and using them for targeted advertising. Another is to work with publishers directly to reach their audience through sponsored content or product placements.
Overall, the iOS 14.5 update marks a significant shift towards privacy and transparency, which will likely have a lasting impact on digital marketing. Businesses will need to navigate these changes carefully to maintain their revenue streams and build trust with their customers.
Hemant explains that D2C brands need to be more creative and strategic in their advertising efforts, focusing on testing strong creatives and ensuring that their landing pages can convert effectively.
By doing so, they can increase click-through and conversion rates, which can offset the higher media buying costs that have become the norm on many advertising platforms.
Lack of Capital Funding in the D2C Ecosystem
Another challenge facing D2C brands is the difficulty of raising venture capital funding in the current market.
Unlike traditional retail businesses, D2C businesses often require a significant amount of capital upfront to develop and market their products, as well as build the necessary infrastructure to sell and distribute them.
In 2023, securing funding for D2C businesses can be difficult as investors are especially reluctant to invest in companies that lack successful track records.
And to make things worse, most of the budget these new brands have goes towards creating a trustworthy image in the eyes of the audience with marketing efforts geared towards awareness and conversion campaigns.
Another issue that D2C businesses face is the high cost of customer acquisition. Hemant notes that it’s more important than ever for brands to control their customer acquisition costs (CAC) through testing and optimization.
By doing so, they can demonstrate to potential investors that they have a sustainable business model and are well-positioned to succeed in the long term.
Timing is also crucial when it comes to launching a D2C brand, as Hemant explains. By launching during a time when advertising costs are low, brands can test their strategies at a much cheaper cost, which can be a significant advantage.
However, he notes that it’s important for brands to keep an eye on their total business metrics, not just their advertising metrics, to ensure that they are truly operating efficiently.
TikTok Ban Suggestion in Congress
Another discussed topic in the podcast concerned TikTok. The platform still serves over 1 billion users in the world, making it an undeniably significant platform for advertising.
“TikTok is beating records on user adoption and getting advertisers to start to advertise on there.”
Advising brands on how to go about advertising on TikTok, Hemant says, “It’s super important for brands to have great content that’s not paid [for]… talking about what their brand is solving”
Once you get the traction going, Hemant advises brands to go with repurposing videos with the most engagement on other platforms as well.
“Now TikTok also has come a long way. A year ago, their pixel allowed tracking users based on single session last touch purchasers, and now there’s actual proper attribution occurring.”
Hemant references the 7-day attribution window in the TikTok pixel.
Users converting in 7 days show up in TikTok Ads Manager. Similarly, for views, users converting in the past 24 hours from the time when the ad is viewed are visible in the TikTok Ads Manager as well.
Coupled with the fact that it’s extremely cheap to advertise on TikTok right now compared to more established social media giants like Meta and YouTube, Hemant says that it’s definitely worth the effort to adopt TikTok.
In March 2023, the Restrict Act was presented to the Senate, citing national security concerns arising out of the massive adoption of TikTok in the United States.
Hemant says, “Can this happen? Will it happen? I don’t have a glass ball. I’m not sure. But will it impact a lot of advertisers? Yeah, of course.”
Final Thoughts
Hemant is optimistic about the future of D2C, despite the challenges that brands are currently facing. He sees opportunities for niche brands to carve out their own spaces in crowded markets, and he believes that creative testing and optimization will continue to play a critical role in helping brands control their CAC and stay competitive.
As the interview concludes, Hemant shares his thoughts on where he sees the future of D2C heading in the coming years. He believes that automation and machine learning will become even more important in helping brands optimize their advertising and marketing strategies, and he expects to see more brands experimenting with new channels and formats, such as TikTok and podcasts.
He also notes that brands will need to focus on building deeper connections with their customers, through personalization, community building, and other tactics that can help to differentiate them from their competitors.
Overall, Hemant’s insights provide a valuable perspective on the current state of D2C and where the industry is headed.
While there are certainly challenges facing brands today, there are also many opportunities for those that are willing to be creative and strategic in their marketing efforts. By focusing on testing, optimization, and customer engagement, brands can build sustainable businesses that thrive in the long term.
About Hemant Varshney and DigiCom
DigiCom is a digital marketing company specializing in providing effective and innovative marketing solutions to businesses worldwide. The company is known for its cutting-edge strategies that leverage the latest technologies to help businesses reach their target audiences and achieve their marketing goals.
DigiCom has an impressive track record of delivering measurable results to its clients, and it has quickly established itself as a leader in the digital marketing industry.
At the helm of DigiCom is its CEO, Hemant Varshney. Hemant is a seasoned entrepreneur with over 20 years of experience in the technology and marketing industries. He has a keen eye for innovation and a deep understanding of the digital landscape, which has helped him guide DigiCom to the top of its field.
Under Hemant’s leadership, DigiCom has grown rapidly, expanding its services and client base while maintaining its reputation for excellence.
Prior to founding DigiCom, Hemant worked in several senior leadership positions at various technology companies. He has also served as a consultant to numerous startups and established businesses, helping them to develop effective digital marketing strategies and grow their online presence.
A thought leader in the digital marketing industry, Hemant frequently speaks at conferences and events around the world.
At DigiCom, Hemant and his team are committed to helping businesses succeed in the digital age. The company’s services include search engine optimization, social media marketing, email marketing, content marketing, and more.
What Does DigiCom Do?
Hemant describes his company’s services as:
“We can create videos, we can create statics, we can create gifts, we can tap into influencer platforms, recreate all of these creatives, and then also provide information to run your landing page test. That’s how we’ve been able to grow these partners.”
With regards to the cost of these services, Hemant says:
“We give our clients a very scalable model where it’s a 5K retainer or 10% of media spend. And we’ll do your budgeting and planning with you.”
With a data-driven approach using advanced analytics tools to track and measure the success of its campaigns and Hemant’s leadership and expertise to guide the operations team, DigiCom is well-positioned to continue leading the way in the digital marketing industry and helping businesses achieve their goals.