Direct-to-consumer brands have a very clear story to tell. One thing that’s common among many is how few of them use agencies, and claim to do their marketing work, creative and performance, in-house. In this edition of Confessions, one agency exec who works with many DTC companies that say this says it’s not true — and is part of the mystique of these companies.
Edited highlights below.
Why do they do this?
DTC brands are perceived as more valuable if their customer acquisition strategies are in-house. So there’s a very good reason to say you run the things you say you do in-house because of the perception. It is in two places: One is, just take a look at companies that have been acquired by bigger companies or have exited. The thing that’s always bandied about is how the acquirer, the legacy company, is now going to have the insights on what to do, which will be driven by the in-house marketing team of the DTC brand. Their teams are never purely in house. But that’s never talked about.
How does it work?
We worked on a brand for years, where we helped them do everything, including really fixing their Facebook strategy and building their offline strategies too. It was incredibly successful. When they were acquired, their lawyers came in and said our agency’s name would be wiped off all their work or any case studies we had made. I built the thing. The reason was, part of the story is, they’re being acquired because they’re really good at DTC. It makes the legacy acquirer look smart.
Does this matter for VCs?
Yes. It’s the same perceived value thing. How VCs think is, what is the moat you have that will protect my investment? The moat can be talent or technology. People, in house, certainly are a moat. If you work with an agency and that agency is gone, you’re less valuable. It’s risk mitigation, or perceived as risk mitigation because your secret sauce is your secret. That’s what built the brand.
Many DTC companies are simply great marketing companies.
DTC companies are marketers. Smoke and mirrors around the in-house thing adds to that mystique. There are some companies — in wellness, especially — where they all have the same ingredients, the same bottle shapes, as the companies they’re “disrupting.” So I ask big CMOs how these guys have come into their industries and managed to disrupt them when it’s the same product. It’s because of marketing.
How does it play out?
I’ve been at conferences where people say all their work is done by themselves. That they’re doing most of their marketing on Facebook. We’re being hired to do it. We’re building these brands.
This is pretty much a common thing though. Agencies have for years complained about credit. You could say it’s their money, they can say what they want.
Sure. It’s true. It’s also just worse in DNVB or DTC. You google things, you see CEOs where the CEO is the face of the company. There’s obviously some elements of the celebrity culture. With DTC brands, you know the founder names. It’s important to keep that story straight. It’s ego, and don’t get me wrong, it’s not earned. But it’s built into DNVB culture that wasn’t built into brands before. They look smarter for doing it: It’s like, “I figured out this thing.”
How do they describe you?
Agencies are a dirty word. They just take your money, they’re bad. It’s fashionable to hate on agencies. For good reasons. Agencies are shitty. They’re not wrong. But I’d argue creative is different from performance marketing. And they have to maintain perceptions. They sometimes do say they worked with a “strategic partner who looks at spend across channels to inform acquisition strategy.” It’s a Facebook agency, but which sounds smarter?
Would you consider not working with younger brands for this reason?
The harder the work is, the more fun that is. If I wanted, I probably could. It wouldn’t be fun for me. That said, what is exciting is using resources from bigger brands to implement strategic things. I’ve started working more with bigger brands. They’re changing now.
What effect does this have on you?
I’m used to being beaten up, but sitting in an audience where someone says they do something in-house, or in an article or podcast, I feel for the people who work here, younger people, who see that. They spend years growing that business beyond successful. That comes with pride. And to hear them lying about it. It’s denying your existence. It’s not just a generation that needs feedback. Anyone who dedicates time and care into things wants it. It’s not just that it’s unethical. It’s just mean. It’s not malicious, but it just doesn’t change the fact. That’s become part of the story.