D2C brands need to break free from the ad spend trap

Over-spending on advertisements that deliver negligible returns can trap direct-to-consumer (D2C) brands in a vicious cycle of excessive spending. Even lakhs of rupees spent on digital advertisements may not sometimes translate into increased sales or brand loyalty.

But, does it have to be this way? Actually, no. 

Brand marketers can achieve higher return on investment (RoI) and better results by following a few good practices. 

Align ad spending with brand strategy

For many D2C brands, advertising becomes such an itch to scratch that it is rarely aligned with brand strategy. They squander valuable ad budgets on non-brand identifiers or miscommunicate to the intended target audience.

The cure? Ensure a strong brand message in all advertisements so that every rupee spent can create long-term brand equity.

Focus on customer acquisition—not just attention

The customer acquisition costs have increased over time. Due to competitive pressures, brands have been investing heavily in strategies to grab customer attention. They have spent significant amounts to catch the attention of new customers, neglecting the diminishing returns of such investment.

Brands can address this by focusing on improving conversion rates and effectively utilising marketing communication data about existing customers to draw fresh marketing insights. This approach may help them maximise RoI and boost sales.

Make a strong brand management strategy

Robust brand management is the first and foremost essential, without it, most ideas in the world will fail to convert. A D2C brand needs to deliver on its brand promise through all customer touchpoints—through ads or through customer service. Only then it will be regarded as trusted and credible by customers.

Instead of focusing on these essentials, brands solely rely on paid advertisements, which is akin to gambling. D2C brands should expand their marketing efforts to include content marketing,

influencer partnerships, and community engagement. Organic growth on social media through instructive or entertaining content can help brands build a loyal following at a much lower cost than traditional advertising.

Learn from others’ mistakes

There is a reason why sage business leaders say that there is no reason to reinvent the wheel. Companies that have recognised the ad spend trap but pivoted themselves away from it offer valuable lessons to learn from.

Some of the best examples include retention marketing, investment in content that tells a compelling brand story, and crafting innovative loyalty programs. So, why not emulate their strategies with the necessary tweaks needed for one's brand?

Focus on customer experience

Another important factor that brand marketers often entirely miss in ad cacophony is customer experience. Brands should deliver seamless and delightful experiences—right from the initial impression created by an ad to post-sales support.

A positive experience not only generates loyalty but also minimises the need for heavy ad spending, letting word of mouth and repeat purchases do the trick.

Moreover, customer retention is cheaper and more efficient than customer acquisition. Brands' interest in CRM systems, email marketing, and personalised offers has all centred on customer retention. Moreover, loyal customers also tend to become brand advocates over time.

Make customer loyalty your priority

Instead of continuing to spend heavily on advertisements to acquire new customers, a brand should focus on creating customer loyalty. Building loyalty may involve more than just delivering consistent value and customer service. It also means creating experiences that cement a bond between the customer and the brand.

D2C brands need to unplug from the ad spend trap. They must revise their strategies, prioritise customer experience, and explore growth channels beyond advertising. This will ensure better long-term outcomes and sustainable growth. This approach focuses on management, retention, and loyalty, rather than purely on acquiring new customers.

- Kshitij Kaul, director, Outlook Media India