How DTC Brands Are Shaping the Future of TV Advertising

Author: Oriana Swindt. Source: MediaVillage

Call it a coincidence, if you like: As ever-more conversations between TV ad buyers and sellers begin to revolve around the Holy Grail of business outcomes — attribution — direct-to-consumer (DTC) brands such as Dollar Shave Club have been moving aggressively into TV advertising. DTC brands have added $1.4 billion to the TV ad pie in just the last year, according to the Video Advertising Bureau. In 2018, seventy DTC companies ran ads on TV for the first time.

Actually, it's not such a coincidence that digital-first DTC brands and attribution entered the TV ad world around the same time, according to Brian Catterson, A+E Networks' vice president of ad sales, direct response. DTC brands and their dollars have, in fact, been one of the major influences in the shifting TV ad sales landscape.

"They're looking at TV in a whole new way," Catterson says. That is: less beholden to demo guarantees against specific, narrow age groups and much more focused on business outcomes tied to their media investments.

These DTC brands — your Caspers, Dollar Shave Clubs, and Warby Parkers — are digital natives, where attribution is not only fairly simple, but also table stakes, as far as ad buying is concerned. They're used to running an ad on Facebook and seeing how many web visits or sales come directly from that ad.

And while that level of attribution may have seemed incompatible with TV in the past, Catterson, who has been at A+E for 14 years now, knows differently.

Direct response TV ads used to be an afterthought in the TV ad world — the realm of Chia Pets, Ginsu knives, and other cheesy infomercials. But they were the pioneers of attribution, Catterson says. A simple method such as using different toll-free numbers on ads airing on different networks let the advertiser know exactly how specific media outlets were performing — something that sounds an awful lot like attribution.

Even targeting has its roots in direct response.

"As the industry at large goes down this path of more precise measurement, we're collectively seeing that individual days of the week can potentially have more success or less, individual creative has an effect, time of day of an airing has value," Catterson says. "That's something the direct response community has known for decades."

The digital-native DTC brands of the 21st century may be hipper than their infomercial counterparts, but they are also bumping up against the limits of what digital advertising can do for their bottom line. This is why they're starting to shovel increasing amounts of money into TV ad spending: because they can see the massive reach and power of TV ads. "TV is the ultimate premium, brand-safe environment when it comes to video," Catterson says.

Unlike legacy brands that are accustomed to transacting on demos such as "adults 18–49" or "women 25–54," though, DTC brands are thinking holistically.

"Despite erosion across some of the younger age groups in the linear TV space, viewership across the broader demos is still very strong," Catterson says. The more advertisers can begin to see a potential customer at all ages, the better for all stakeholders. "There is tremendous value across the full breadth of television audiences, not just the isolated audiences many legacy brands have focused on for years."

If you're selling mattresses, it doesn't make much of a difference if the person buying the mattress is 25 or 65, though the 65-year-old, Catterson points out, is more likely to have more money to spend on your mattress. Baby boomers in America hold 54 percent of the country's household wealth and $548 billion in annual spending, according to Pew Research. Boomers also make up the majority of the linear TV audience these days. And the gulf between an 18-year-old's finances and a 49-year-old's is vast. "It's like the Grand Canyon," Catterson says. "A 49-year-old has much more in common with a 60-year-old."

So, why are legacy brands still transacting on traditional demos? "A lot of the reason the industry does this is simple inertia," Catterson says.

But the conversations with these legacy brands are changing. To help those brands think more like savvy DTC companies, A+E Networks (along with several other major media companies) has been putting in the work to shift the industry paradigm to outcome-based results. The company has created a Precision and Performance team to guide targeting and help track outcomes in a way that Catterson sees as the perfect marriage of old-school direct response sensibilities with new-school tech capabilities.

"Now more than ever," Catterson concludes, "both sides of the business are becoming more unified in terms of how we measure success."