Here’s How DTC Brands Are Divvying up Their Marketing Budgets

Direct to Consumer (DTC) brand marketers tend to spend more on prospecting than on retention and retargeting, but not by a wide margin, according to a report [download page] from Measured and Sequent Partners. The study indicates that while DTC marketers are facing challenges in obtaining useful insights from measurement, the majority are confident in tying media to business to outcomes.

The research is based on a survey of 300+ marketers at director-level and above from DTC brands across a range of verticals, with the Apparel & Fashion, Consumer Goods, Health, Wellness & Beauty, and Tech & Services verticals most heavily represented.

Overall, respondents estimated allocating 37.2% share of their budgets to prospecting, with 30% spent on retargeting and 32.8% on retention.

Social media platforms figure prominently among the channels used by DTC marketers (which aligns with consumers’ desire for social media content from DTC brands), with the broadest adoption of all channels being for Facebook (79%) and Instagram (77%). Google / Bing Search (68%) follows, ahead of YouTube (65%).

There’s then a steep drop-off to the next-most used channels, which include TikTok (29%), Audio / Podcasts (29%), Catalog / Direct Mail (29%) and TV Linear Local (26%).

An analysis of the DTC brands’ estimated budget allocations across channels shows that Search is tops with 20% share. Social platforms are next, with Facebook (17%) and Instagram (12%) combining for almost one-third of the DTC brands’ marketing budgets. In fact, if including YouTube (12% share) as a social platform (rather than video one) and adding in the budget allocations to TikTok (3.6%), Snapchat (3%) and Pinterest (2.5%), social media as a whole combines for almost exactly half of the respondents’ budgets. Previously, survey results have shown that DTC brands consider social media their top customer acquisition channel, so with budgets allocated to prospecting, it’s natural that social platforms would loom large in DTC brands’ spending.

As for YouTube, the authors note that with CTV/OTT occupying just 1% of the marketing budgets, lower than that of TV (9.1% for Local and National combined), “YouTube is still winning the majority of the digital video budget for now.”

Meanwhile, with 6.5% of spend, Direct Mail is the 5th-largest budget item, which the analysts note is “reinforcing the retention efforts of DTC brands.”

Looking forward, Google (60%) is the channel for which the largest portion of respondents plan to increase their investment in the coming year, followed by YouTube (53%), Instagram (50%), Facebook (45%) and TikTok (39%).

Although it’s a strong budget item, almost one-quarter (24%) of respondents plan to decrease their spending on direct mail, the largest percentage of any channel. Even so, that’s outweighed by the 37% who expect to boost their direct mail spend in the coming year.

Other Findings:

  • The biggest challenge limiting DTC marketers’ ability to get useful insights from measurement is manual data and reporting.
  • Among key performance metrics, ROI is important to the largest portion (70%) of respondents, followed by Sales or Revenue (61%) and, further back, Return on Ad Spend (41%).
  • Some 8 in 10 respondents are either extremely confident (42%) or confident (39%) in their ability to tie media to business outcomes.
  • Data accuracy is DTC marketers’ top concern, as 7 in 10 are either very concerned (38%) or concerned (31%) with this issue.
  • 8 in 10 say that experiments and in-market tests increase their decision-making confidence.
  • Cost is a bigger barrier to implementing marketing or media experiments than time, skills, or executive buy-in.For more, download the study here.

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