Nearly two-thirds of direct brand shoppers are aged over 40, according to research by Pollinate for IAB Australia.
The report, Direct Brands Australia, dispells myths that most direct brand shoppers are millennials and aims to help the local industry understand the implications of the rise of direct brands.
It revealed that almost 80% of all direct brand shoppers always research before making a brand purchase for the first time versus 66% for people who do not purchase from direct brands.
It also found that 67% of direct brand buyers shop online monthly, compared to 54% those who haven’t purchased a direct brand.
Direct brand shoppers are more likely to be advocates but don't see themselves as influencers with 62% saying they tend to tell everyone about it if they love the brand versus 48% of non-direct brand shoppers.
Word-of-mouth (26%) and search (22%) are where most Australians discover direct brands and price is the number one driver to get purchasers over the line.
The local research also looks at what it takes to build and retain a sustainable direct business, identifies the challenges as these business grow; and gives guidance to traditional brands now moving to data-driven and e-commerce models.
It found that direct brands are doing more than just selling online directly to consumers.
Direct brands' nimble business models, strong brand purpose, empathetic mission-based marketing, combined with classic marketing expertise across pricing, promotion, product and distribution were all contributing to the resilient direct brand landscape in Australia.
IAB Australia CEO Gai Le Roy says direct brands are redefining what it means to be a customer centric, data driven business.
“Even though this research was conducted pre-COVID19, the findings are more important than ever for marketers,” Le Roy says.
“These direct brand organisations are engaging resilient and well-rounded marketers who are hands on with the promotional components, as well as driving product, pricing and distribution strategies.
"While direct brands will find themselves in a learning phase as they mature, the success of sustainable direct brands offers important lessons for the wider retail and advertising industries."
Direct Brands Australia recommended that traditional brands should focus on four key areas to adapt to the direct brand model:
- Understand the opportunity of direct-to-consumer including the value of using new channels and routes to market that offer first party data relationships;
- Return to a clear brand purpose;
- Position the brand as a master of a category to demonstrate authority; and
- Employ a nimble test and learn approach to marketing and innovation in product development.
It also recommended that direct brands need to focus on six key areas to build long term sustainability including combining branding and performance in campaigns; prioritising customer lifetime value (LTV) over customer acquisition (CAC) and avoiding over reliance on word-of-mouth and advocacy.
“Direct businesses should continue to be customer-centric and explore the opportunity in a broader media mix, but they should look to learn from the wider media industry and traditional marketing models to drive growth without losing what’s special about them," Pollinate CEO Howard Parry Husbands says.
Direct Brands Australia also noted the convergence of commerce, data and content popularised by direct brands and e-tailers is also surfacing the opportunity for direct brands to potentially disrupt traditional media companies.
The IAB USA direct brand research released in February 2020 noted that while only one third of direct brands see incumbent brands as their primary competitor, an increasing number of traditional brands are adapting to the direct brand model, including Nike, P&G and L’Oréal, often both with their own existing products and with the acquisition of disrupter brands.
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