- A number of well-known direct-to-consumer brands like Dirty Lemon, Away, and Mailchimp are building in-house branded content studios to make long-form video.
- The focus on content marketing comes as some direct-to-consumer brands are scaling back on the now-saturated online platforms that fueled their initial growth and pursuing alternative ways of growing.
- Their hope is that making their own content not only lets them maintain control over its quality and the image they present but work faster and save money. It also helps them cut the number of agencies they use.
- But experts said DTC brands shouldn't lean too heavily on one tactic such as video and that brands need to advertise to people in a variety of ways.
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After spending millions of dollars on marketing on Instagram, Google, and Facebook over the years, in 2019, Zak Normandin pulled the plug on paid marketing on social media entirely. The founder and CEO of buzzy beverage startup Dirty Lemon decided to build its own content studio instead.
Normandin is not alone. A number of well-known direct-to-consumer brands like Dirty Lemon, Away, and Mailchimp building in-house branded content studios. While some of these companies have dabbled in creating some content internally, they are now working on longer-form content like documentaries and episodic series — posing yet another threat to traditional ad agencies.
Content marketing has been a mainstay for brands like GoPro and Red Bull for years. Now it's in vogue with some DTC companies who are scaling back on the now-saturated online platforms that fueled their initial growth and doing more brand advertising in places like TV. They realize that getting someone to buy an energy drink on impulse through social media targeting is one thing and cultivating a loyal audience is another, and having content can help.
"Earlier in the DTC life cycle, marketing is all about customer acquisition using performance marketing tactics to promote product attributes," said Forrester analyst Jay Pattisall. "But as competition grows and the category matures, they find themselves having to differentiate by building a brand."
Looking beyond the walled gardens and building long-term value
Take Dirty Lemon, which abandoned Instagram at the end of 2018 when its customer-acquisition costs (CAC) soared from under $50 in the first few years to consistently over $100, Normandin told Business Insider. It recently hired five full-time employees who are producing three video series for Instagram, YouTube, and podcast networks.
The idea is to build long-term brand value and meaningful relationships with customers by giving them content that they want to return to, said Normandin. The shows aren't about products either; "7 Minutes in Heaven," for example, is a modern spin on the childhood game, where Dirty Lemon will bring two people together for their first date on camera.
Read More: Big brands like Delta, P&G, and Under Armour are increasingly hiring Hollywood talent agencies like CAA, Endeavor, and UTA for marketing — posing yet another threat to traditional ad agencies
"We naïvely thought that Instagram was going to be a growth channel forever, but posting ads with your products just doesn't cut it anymore," Normandin said. "Consumers are getting smarter, and brands of the future will start to look a lot like media companies."
It's true that while Google and Facebook, respectively, account for 27% and 16% of all time spent on digital media, there are more media channels to fill and content being consumed than ever before. Several other brands including P&G and Anheuser-Busch are using branded content as people turn off traditional ads.
In-housing content also is on the rise, with 78% of ANA members reporting that they had an in-house agency in 2018 and that content marketing was among services that have grown significantly over the past five years.
DTC companies are trying to control costs and their messaging
For some DTC companies, the appeal of making their own branded content is that it's an extension of their model. Such brands have always owned their own consumer data and saved money by handling certain operations in-house.
Online marketing company Mailchimp and luggage company Away are creating more branded content in-house, especially video. Away is building a photo and video-production studio in its New York headquarters to support its expansion to apparel and wellness.
Similarly, Mailchimp has an 18-month-old Mailchimp Studios that's making original content, as Digiday reported. It recently released a docuseries on its website called "Second Act," which follows five people who've chosen a new direction in their careers, including a violin carver and a pizza restaurant owner. The docuseries, produced with Vice, also ran on Vice's channels.
"There's been a pretty dramatic democratization of both production and distribution, and that's made finding producers and creating content far more attainable today," said Mark DiCristina, head of brand and Mailchimp Studios. "This creates an opportunity for a different kind of relationship with customers where we're not paying for impressions and interrupting people."
These companies' hope is that making their own content gives them more control over quality and their message while being able to work fast and keep costs down. Mailchimp, meanwhile, cut ties with its longtime agency Droga5 earlier this year to focus on producing its own podcasts, documentary films and episodic shows, while Away never used an agency long-term.
"We like to have a lot of that control internally where we can play a role on how that content comes to life," said Sarah Wattson, VP of creative strategy at Away. "Working with agencies means giving them more freedom, and we're so young that we're not yet ready to turn over the reins quite yet."
"As great as they are, they are ultimately ad agencies, and we are trying to make things that are not ads," said DiChristina.
Bringing its original content production in-house has saved Mailchimp money and is getting results, with the docuseries getting more than 2 million downloads and research showing that people are more likely to become customers after they engage with the series, DiChristina said.
DTC brands shouldn't place all their eggs in one basket
But DTC companies should avoid leaning too much on one tactic, such as video, over another, said Forrester's Pattisall, adding that brands need to advertise to people in a variety of ways depending on how close they are to actually making the purchase. Another question is how quickly such video content will be able to scale. Plus, people already have a ton of high-quality episodic series to choose from.
Glossier, for one, recognizes that it needs various types of content, said Poppy Thorpe, head of brand marketing and strategy at the makeup company. The company has been prioritizing a range of content types as well as its own channels since late last year. Its latest campaign "Feeling Like Glossier" is its most 360-degree campaign to date, according to the brand.
"We view everything as content — from a sticker to a line of copy — and think holistically how various stories will best show up in the world rather than optimizing for a certain length or form," she said. "For example, with our complexion products, we focused our content strategy on stills."
Agency execs, of course, would also argue that DTC companies need their outside perspective.
"They need to watch out for being too drunk on their own Kool-Aid," said creative agency Mekanism's founder and CEO Jason Harris. "Bringing in an outside agency creative perspective on storytelling allows them to hear new possibilities and ways to express their story that can only come from outside their walls of politics and internal business as usual."