Brands Are The New Media Companies (and vice versa)
In 2021 the music stopped at the DTC customer acquisition party. Apple shut off app tracking with iOS 14, the pandemic’s decline got consumers outside and off their phones (sort of), and the first glimmers of inflation began to hint at a chilly macro to come. The narratives have pointed to impossible unit economics — CACs increasing by 2x to 3x overnight — but this hides a bigger issue: startup brands were building seemingly viable businesses for years on the back of subpar creative content. Starting in 2021 that no longer worked for the vast majority, and yet there were a small handful that thrived: those that embraced the reality that brands are the new media companies.
Startup brands were building seemingly viable businesses for years on the back of subpar creative content
It was only a few years back that the reverse became true, as media companies became the new consumer brands. As social platforms gave creators and celebrities unfettered access to a giant audience, the logical question became “how should I monetize this audience?” and the easiest answer was “sell them a consumer packaged good”. Thus launched a new generation of modern talent-led brands, from Glossier and Kylie Cosmetics to Aviation Gin and Feastables. The magic to these companies: no matter how expensive it gets to buy impressions, you can speak to your own audience for free and generate incredibly efficient buzz and trial.
At some point in every gold rush the masses catch on and gold gets a heck of a lot harder to find. Sure enough, the past few years have produced a laundry list of talent-led brands that have struggled just as much as the many DTC companies that relied on paid ads. It’s become clear that no matter how big your audience or what you pay to access it, content is king and a repeatable media engine is crucial to standing out.
Building a CPG Moat
There is a common misconception that CPG businesses have no real “moat”; as an investor in the space I get to hear this criticism quite often. While CPG rarely has the benefit of patents or contracted revenue, we do have the meaningful trifecta of product, distribution and brand. Together, they can be more effective than you might think.
Innovative products can be difficult to conceive, formulate and manufacture — any combination of these creates a powerful first mover advantage. Distribution is everything in CPG: if you have shelf space and you are selling through, it’s rare for you to be replaced by an absolute knock-off. What would the retailer have to gain? “Brand” is where things get a bit more intangible and where the critics tend to focus.
My definition of “brand” is the difference between what happens in a microeconomics textbook and what happens in reality. “Brand” takes many forms: it is the trust of safety, consistency and efficacy; it is the perception of quality relative to commodity alternatives: it is the tool of self-expression of the consumer through the logo, package and values; it’s the community of like-minded individuals; it is really complicated, impossible to touch and hard to explain. For all the time we spend debating what it is we often fail to consider how brand comes to be: through content.
How Does Brand Come to Be?
Brand identity does not just appear out of thin air — it stems from the content the company shares with the world. For many years this content was one-dimensional: advertising through print and video. Why else would a consumer sit down and watch a video created by Nike other than a forced interruption mid-sporting event? But over time our content consumption habits unlocked a new type of branded content.
The first example I remember of high quality, non-advertisement, branded content was The Art of Flight, a Red Bull documentary from 2011 covering an exhilarating helicopter snowboard excursion. Today, some of the best extreme sports athletes and a handful of the world’s largest sports teams form the content creation engine of a company whose primary purpose is to sell energy drinks.
Key to the Red Bull story is timing: the audience came after the product. They proved that it’s possible to create a world class media business to build emotional connection with their CPG consumers. Their success has inspired a new generation of media-led brands who have built their audience from scratch on day one; the most notable and eye catching of late is edgy canned water brand Liquid Death, founded by Mike Cessario, an ex-Netflix executive.
Haters will say it’s nothing but water in a can, but the consistent stream of hilarious creative — highlighted by their 2021 “breaking the law” super bowl ad — has been enough to attract a Live Nation partnership and freshly minted $700 million valuation. Liquid Death starting with nothing but a cheeky launch video and three years old now sports 1.5m followers on Instagram.
Why Should Brands Create Content?
While every great brand is built on the back of consistent strong creative, the content itself will vary in format and objective. Three roles of content really stand out as working in the modern digital age: to engage, to educate and to entertain.
Engage
The beauty of social media unlocked what had always been a one-way communication pattern between brands and consumers; it allowed consumers to talk back. Some of the most creative brands have seized this opportunity to seek active consumer input into their product, packaging and channel strategy.
Many brands have adopted consumer polls for flavor ideas and packaging updates, but the most creative have mobilized consumers to unlock retailers: requesting the brand on shelf and creating user generated content that can flow back to branded social channels. Consumer businesses face the notorious “cold start” problem; generating media that allows early adopters to put their finger prints on the brand can be the valuable spark to get things flowing.
Educate
Consumer products exist to solve consumer problems, but sometimes the problem and solution are more complex. Brands who set out to solve these problems with great products can have a much greater impact on their consumers’ lives by educating them on why their problem exists in the first place and why this solution works.
This content style can result in thought leadership as the trusted source for consumers quick than you would expect: Seed has emerged as a content leader in probiotics; Levels is the go to source for all things metabolic health; OneSkin has put skin longevity on the map. These brands are deep in the science of their field and do an excellent job making their content digestible. To educate does not require deep complexity though. Sometimes it can be as easy as simplifying a concept to turn a lightbulb on in the consumer’s mind: think of RxBar’s “No BS” packaging or Halo Top’s full-pint calorie count on the front label. A simple reframing can resonate deeply and educate clearly.
Entertain: Sometimes brand creative has no other purpose than to entertain their consumers. It is through this content type that the emotional connection is fostered: where the brand can articulate what they stand for, making the consumer care for them on a deeper level than the products alone could achieve. It is this content type where we have seen the most creative innovation in the past few years.
MUD\WTR launched Mud\films earlier this year, creating short form documentaries highlighting stories of human health and ritual, celebrating the values of a more mindful lifestyle unlocked by plant medicine and lower caffeine. Mid-Day Squares has torn down the curtains of their turbulent and hilarious quest to build the world’s greatest chocolate company, sharing every up and down along the way to embrace their consumers as fans in their corner.
The key to these strategies is that they’re repeatable — this is not an attempt to go viral as Dollar Shave Club 2.0 with a clever launch video (as epic as that was). As production quality continues to ramp and content consumption continues shifting to mobile, expect brand creative to be more and more about entertainment vs transactional call to action.
Conclusion
Brands have always been tools of self-expression. An emotional connection with the consumer is a powerful goal to strive for — it unlocks organic growth, healthy margins and repeat purchase, the golden trio of business health in consumer goods. The customer acquisition landscape won’t get easier and product defensibility won’t get stronger. Many of the moats of the future will be rooted in content, built by brands who realize and embrace that in some form they are the new media companies.
