How Big is the DTC Opportunity for TV? Q&A with Simulmedia’s Dave Morgan


Dave MorganAs direct to consumer (DTC) brands increasingly turn to TV advertising to reach the audiences they can’t find on social media platforms, some ad tech companies and agencies are in turn working to make their transition to TV. One such company is Simulmedia, which last year launched D2Cx.com, a marketplace for linear TV advertising geared towards the needs of DTC brands. This week Simulmedia founder and CEO Dave Morgan announced a series of new capabilities for the service, including the removal of campaign minimum spending limits, and the release of new measurement and attribution tools. VAN spoke with Morgan to hear more about how big the DTC opportunity is for TV advertisers, and how the TV industry can attract more DTC brands. 

 

Just how big is the DTC opportunity and how different are they to conventional brands?
We expect to see emerging direct-to-consumer brands (those less than 10 years old) spend $3 billion on TV advertising in the US in 2021 and $5 billion in 2022. They are different from legacy, channel-driven, brands in a number of critical areas. One, they are maniacal about the ultimate consumer first, not retailers or third party sales channels. Two, they are digital-first in all of their thinking and acting. Three, they are very focused on performance and ROI. Four, they love data and want it fast, ideally in real-time. And fifth, they love sight, sound and motion and story-telling platforms, which is why so many of them are moving onto TV.

 

You have adapted your platform with a view to catering to the DTC market. What changes have you made?
We realised that they are different than legacy brands, so we purpose-built D2Cx.com to talk to them in their own language. It is designed to deliver a direct-to-user experience like they give their users. They want to get their hands on keyboards, they want to see information fast, and they want an analytics-first view of their audiences, customers and competitors, so we put a lot of focus around TV and customer analytics. Finally, they want to buy TV ads like they do it in search and social, with a test, learn, optimise approach. That is the opposite way that most TV advertisers work, so we had to build a workflow for D2Cx.com that was essentially opposite of what we offer through our Transparent TV platform, which follows a more conventional TV planning, buying and measurement methodology, even though it is closed-loop as well.

 

DTC brands are renowned for having a strong direct response mindset and many companies who have been selling to them say it’s difficult to wean them off Google and Facebook. Is there an education piece about the role of TV advertising in the marketing mix, or are they actually seeing comparable returns on TV?
Yes. The TV industry needs to approach these direct brands differently. They shouldn’t focus too much on pitching TV against search and social, but show how TV ad campaigns can be synchronised with search and social programs and make 1+1+1= 6 or 7. They need to prove it in cross-platform performance analytics. TV companies need to be able to show these direct brands the value that they can get by starting to advertise on TV early in their lifecycles. They also need to give them really easy on ramps, low cost , low risk ways to try out TV.

 

What can larger brands learn from DTC brands and is it possible for them to adapt? 
Yes. It is possible for legacy consumer brands to adapt, They need to develop their own direct to consumer strategies. They can no longer just rely on big distributors and retail channels. They need to think and act much nimbler when it comes to their TV and video advertising. They need to look at TV like they do digital ads, and make performance, analytics and real-time reporting key performance indicators.  They need to hold their TV suppliers accountable for not just getting spots (and tickets for sports games and cool events), but acquiring customers for them and managing direct to consumer relationships.

 

What can the TV industry do in order to attract more DTC spend?
TV media owners need to go through the same metamorphosis as large, channel-built brands – they have many of the same legacy issues. They need to develop their own DTC strategies. They need to walk away from old dogma and approaches that work well for legacy brands and agencies – annual planning cycles, campaign reporting that happens weeks after the end of campaigns, focusing first on media costs and efficiency rather than results and effectiveness. They need dedicated teams, and products, that are purpose-built for the direct to consumer mindset.

Subscribe to Weekly VAN Newsletter

 
Ad TechBrandsConnected TVDataMeasurementMediaOpinionTechTVUS