Are big media companies ready for another big wave of disruption? They’d better be. The direct-brand revolution is starting, and it might not be pretty for large incumbent players in the media industry.
I spent this past Tuesday morning participating in the Interactive Advertising Bureau’s introductory event on The Direct Brand Economy, focused on fast-emerging disruptor brands like Quip, Casper and Hubble Contacts.
We were lucky to have many of these brands’ founders and heads of growth in attendance, which meant the chance to learn how these digitally born companies see everything from data and dashboards to traditional advertising and podcasts to partnerships with brick-and-mortar retailers. To say the least, it was a fascinating morning.
My biggest takeaway was that direct brands present both enormous opportunities and even bigger challenges for the media industry. Here are a couple of reasons why:
Direct brands represent a brand-new segment with theoretically unlimited ad budgets — since the more products these companies sell, the more ads they want to buy. This is a big opportunity for media sellers.
When it comes to advertising, direct brands want their cake, and they want to eat it too
Digital is where their founders cut their teeth. They buy lots of search and social, and most hope to graduate to television advertising at some point. But they want TV to work just like search and social: They expect performance pricing, daily reporting, analytic dashboards, granular targeting, low campaign entry points, the ability to optimise across lots of ad creatives and a positive ROI from each and every channel. This is a real challenge for TV companies.
Direct brands will kill many legacy advertiser brands
How many ads are Sears, JC Penney, Montgomery Wards and Borders buying these days? Exactly. Dollar Shave Club and Harry’s don’t have to beat Gillette in market share to teach tens of millions of men to buy razors online and stop shopping for them at Walgreens, Walmart and CVS. It’s the same for chewy.com and The Farmer’s Dog versus Petco, teaching people to buy pet food and supplies online.
This means that media companies had better build relationships with these new brands, since some of their long-standing advertisers are likely to go away over time.
Most of these direct brands manage their search and social in-house. While they are outsourcing podcast media and out-of-home, most expect to in-house their TV ad buying when they’re ready.
This could be trouble for TV companies. Inviting these brands and their agencies to your upfront presentation once a year won’t be enough – even if you had room enough in the theatre for the thousands of these brands that have emerged just so far this year. Selling to them means going on the road — which might only mean taking the L train to Brooklyn — if you want their business.
Trying to do business on the phone won’t cut it. All this will be tough for a lot of legacy media sellers.
What do you think?
Dave Morgan, a lawyer by training, is the CEO and founder of Simulmedia. He previously founded and ran both TACODA, Inc, an online advertising company that pioneered behavioural online marketing and was acquired by AOL in 2007 for $275 million, and Real Media, Inc, one of the world’s first ad serving and online ad network companies and a predecessor to 24/7 Real Media (TFSM), which was later sold to WPP for $649 million. Follow him on Twitter @davemorgannyc