D2C marketing in COVID-19: two sides of the storyBy Chris Ashley on March 26, 2020
As businesses continue to adjust to the ongoing coronavirus pandemic, the vast majority of direct-to-consumer (D2C) companies – as well as those forced to switch to a more D2C approach in light of COVID-19 – will currently be busy fine-tuning their marketing contingency plans.
Depending on their sector, they’ll be reviewing the measures they need to take to either ‘keep the lights on’ in times of crisis, or manage and retain their new levels of demand later down the line.
Sectors such as retail or D2C consumer goods have been severely divided, with some companies finding themselves in a position of never-before-seen market dominance, whilst others are now questioning their long-term futures. How the next few months play out will define what the future of retail looks like when we finally find light at the end of the tunnel – so what does this mean for your business, and what steps should you be taking?
A changing landscape
From chatting with our current retail and D2C customers, one trend that has emerged is the shift in marketing and spending strategy, with the majority of focus now purely on digital channels – mainly ads. This is something of a given, especially for those high street stores who are now being switched into essentially an e-commerce-only mode for the next few months, it would appear.
On the whole, marketing budgets are being slashed and businesses need to make sure they’re spending cash more wisely – particularly when it comes to avenues such as digital ads and PPC, which will be under more scrutiny than ever before from those above. However, as we’ve already alluded to, different D2C businesses are now being faced with different problems and priorities, with the traditional retail marketing model flipped on its head.
High demand businesses
Many businesses now find themselves in an unprecedented situation of being so high in demand that they are unable to accept any new customers. As peoples’ everyday lives and routines adjust to the new ‘stay at home’ approach, the businesses thriving during the pandemic include the likes of subscription services, supermarkets, home delivery services, educational tools and other such businesses. For example, HelloFresh, the global provider of meal kits and direct-to-your-door recipe boxes, has created 400 new jobs at its UK factory to help meet demand, while e-supermarket Ocado has stopped accepting new customer registrations entirely.
Toilet roll has become something of a mascot of COVID-19, with the hoarding and panic-buying of supplies quickly becoming the subject of social media satire. However, with D2C sales of toilet paper up 225% since the beginning of March, those businesses operating in this space are reaping the rewards. The question is – what do they do next?
Let’s take Who Gives A Crap as an example. The previously under-the-radar UK startup sells just toilet paper – nothing else. It’s an ethics-first company, with all of its products made from 100% recycled paper, and 50% of its profits going towards building toilets in third world countries. As you may have guessed, it has been completely out of stock for weeks, unable to cope with a drastic spike in demand caused by coronavirus-related panic buying.
We’ll update you as soon as we’re back stock ❤️ 🚽 💪 pic.twitter.com/d7vcVDVbZB
— Who Gives A Crap (@WhoGivesACrapTP) March 13, 2020
For these types of businesses, there are obviously a large number of supply chain and fulfillment challenges that will be being dealt with as a matter of urgency. However, from a marketing standpoint, the focus should now be on customer experience, and using this opportunity to build brand loyalty to retain these new customers a few months down the line. How will Who Gives A Crap, for instance, fare when the major supermarket chains are fully-stocked with toilet paper once again? The same applies to the likes of streaming and subscription services; by looking after their newly-acquired customers in the best way they can now, and by placing a focus on areas such as basket maximization and LTV, they can help to minimize the risk of losing customers when the crisis calms – rather than essentially ending up back at square one.
Of course, not all businesses find themselves in this situation. The high street, unfortunately, is feeling the full force of coronavirus. Burberry has reported a 40% drop in sales due to store closures, while sectors such as travel, entertainment and, of course, pubs, bars and restaurants find themselves in uncharted and uncertain territory.
In the post-recession marketing era (c. 2010+), online advertising became something of a safe haven for marketers to push spend into. This was due to easy measurability, and being able to report back to those anxious executives upstairs who didn’t want to take any risks with spend. Store lockdowns and a switch to online-only mode mean it’s highly likely that this will happen again, meaning that it’s more important than ever for these struggling businesses to ensure that their ad spend is going as far as possible.
More focus on online obviously means more competition, with ad prices set to rise as businesses turn towards PPC and social media to keep the sales coming in. For example, social ads are expected to jump in price by 22% as COVID-19 continues to rock the industry. There’s already frustration amongst digital marketers around paying to win, with Google and Facebook’s duopoly of the online advertising space (they control 61% of all spend) only set to be amplified as it becomes even more crowded.
The role of artificial intelligence (AI)
AI is ideally placed to help businesses overcome the challenges associated with marketing during the current pandemic – no matter which side of the fence your business currently finds itself. For those companies who are looking to retain their newly-acquired customers and maintain these newfound levels of demand, an AI-powered view of customer, transactional and behavioral data can help you to provide better recommendations and personalized experiences, in order to maximize customer value, drive brand loyalty and minimize the risk of churn.
On the other side of the coin, with budgets being slashed for those who are struggling and paid performance more under the microscope than ever before, optimizing your ad campaigns has never been more vital. AI can leverage your existing customer and advertising data, using it to identify and predict the most effective advertising strategy – driving smart recommendations around which ads to start and stop, and which audiences to target, to maximize customer acquisition while controlling spend.