How DTC can be the opportunity media needs
Social as we knew it is over. Brands must adapt to create new opportunities.
The brand-audience ecosystem has changed. It’s well-documented that social media has undergone a seismic shift over the previous years, moving from a free tool that brands used to interact with audiences, into platforms putting monetisation at the forefront.
Most media brands are evaluating direct to consumer (DTC) options, and whilst the headlines are troublesome, there are new opportunities to implement diversified business models returning control, revenues, and live audience insights to brands for those bold enough to seize them.
Brands fund the social ecosystem
Ad revenues now represent >94% of Facebook’s revenue, with brands forced into brutal acclimatisation of this new era of social. Digital media felt the impact most — losing unrestricted traffic (the basis of VC funding in many cases), while content revenue-sharing agreements shifted. This new co-dependency on ad revenues with social networks created further competition and conflicting objectives, enhancing margin pressure on digital CPMs.
In the same week that Facebook announced record $17bn revenue in Q4 of 2018, Buzzfeed fired 15% of their workforce, Vice fired 10%, while Verizon, previously Oath, owners of Yahoo and Huffington Post, released 800 staff. These redundancies have become commonplace across the media landscape and will continue until current thinking has shifted away from the mass market towards a strategy focused on precision and profitability.
Do brands still need social?
Yes, but it’s time to reduce dependency on legacy social platforms and switch focus to one that is brand-controlled. Social network reach will remain unparalleled to generate referral traffic, despite the escalating costs, but the aim must be to stop this perpetual cycle of paid reacquisition of anonymous audiences.
DTC (direct to consumer) allows brands to avoid third party platforms to interact and monetise audiences for themselves. Retail have been doing this for years, launching independently online, gathering data, then monetising these audiences without having to share the profits, or more importantly the data, with a third party.
The opportunity for media will be to synchronise with legacy social networks, taking advantage of established mass market audiences to ‘acquire once’. Bringing, and then retaining, these customers on a brand-owned platform, returning control, revenues, with transparent audience insights.
Brands own the social conversation, understanding each individual customer
By enabling brands to reclaim social audiences, and with it the social conversation, editorial teams can align data-driven curated content, creating resonating pieces in areas that audience members truly engage with.
This style of highly targeted content strengthens the connection with audience members and advertisers alike, giving brands the incentive to start charging higher CPMs. Social networks have been monetising these audiences for years (generating $7-$25 ARPU), what’s different now is brands too can use social to monetise audiences with diversified live social business models.
Mobile social penetration is as high as 78% in fashion retail, but with the social conversation owned by social networks, audience insights are not revealed until a conversion or sign-up occurs. Hence why DTC has become such a popular option in fashion as brands look to improve their understanding of the motivation behind a sale.
Is there an option to do nothing?
Not for ad-funded digital media. It’s adapt or face an highly uncertain future. Social networks have conflicting objectives to deliver improving revenues that are dominated by advertising. Brands can do nothing but risk missing the potential market value of owning their own social platform offering wide arrange of benefits, including improved conversions.
DTC offers brands the opportunity to reduce the dependency on social networks, acquiring and monetising audiences for themselves, while offering their partners deeper, direct engagement.
The tipping point has been reached, and if brands are able to seize the opportunity to reclaim ownership of the social conversation, and with it the social audience, the possibilities are significant — maybe even bigger than before.