Ad agencies see an uptick in business as direct-to-consumer brands expand beyond Facebook
When Bark, the company behind the dog-treat subscription service BarkBox, sought to cut its Facebook spending and launch its first TV spot last November, it faced a quandary. Although BarkBox does all its creative in-house, it didn’t have the expertise to do national media buys in a brand-new channel like TV. So it turned to an agency.
Bark isn’t alone. Direct-to-consumer companies that were born online and long relied on digital marketing, especially Facebook, are hiring ad agencies as they seek to reach wider audiences with other media types.
“You’ll see a rush toward agencies,” said Jay Livingston, CMO of Bark, which is using Havas Edge, the performance marketing arm of Havas, for its TV buying and planning. “To put an integrated campaign out there and buy across media, it’s complex and expensive. Most [direct-to-consumer companies] cannot do that internally. Agencies help you with that.”
Like Bark, many DTC companies will keep handling their digital marketing themselves. When it comes to traditional channels like TV, radio, print and out of home, they’re using agencies for media-buying, creative or both.
Chad Crammer, vp of client services at Havas Edge, said the agency has seen a 40 percent rise in the number of DTC clients in the past year, in categories including delivery services and insurance.
“There’s a lot of online entrepreneur clients who are saying, ‘OK, we’ve squeezed as much juice as we can out of digital. Where can we go next?’” he said.
Some DTC companies are spreading their needs across a few agencies. Erectile dysfunction startup Roman used Havas Edge to plan and buy a TV spot in May, but used Circus Maximus for the creative. “We’ve found that different agencies have different specialties,” said Rob Schutz, co-founder and chief revenue officer at Roman. “For our TV spot, we loved Circus and their tone around Roman and our story, and how to communicate it to the world. When it came to [direct-response TV] buying, we went with a media-buying agency with deep experience in direct-response TV.”
DTC companies have different needs from agencies than traditional companies. Having grown up online, DTC companies have a bigger learning curve when it comes to the offline world. As far as creative, results-driven DTC companies are most drawn to direct-response TV ads, whose goal is to educate the viewer about the products and drive orders with deals and a visible URL. Bark, for example, which went with a DRTV campaign, measures the success of the ads by looking at the number of subscriptions they drive within five minutes of appearing on TV, Livingston said.
DTC companies, which typically rely on online sales, also are more vulnerable to Amazon’s might than non-DTC companies are, something their agencies have to keep in mind, said Ryan Kutscher, founder of Circus Maximus, who has also seen a rise in the number of the agency’s DTC clients.
“Traditional brands have to play shelf games,” he said. “DTC brands not only have to get noticed, but have to convince users to continue the experience month after month, while convincing users that a direct relationship with their brand is in some way more valuable or unique than something arriving from Amazon.”
As for the agencies, the growth in DTC clients is a bright spot for those that are seeing some of their larger clients taking their media buying and creative in-house.
“We need all the business we can get,” said one executive at a medium-sized ad agency, speaking anonymously. In a Digiday survey conducted in February, more than half of 30 industry executives from major brands across the U.S. said they planned to move more marketing in-house.
“Any agency would say more clients are better than less clients,” said Crammer.
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