Powering Up to Programmatic: Why DTC Brands Should Make the Leap  

Direct-to-consumer brands (DTCs) have experienced tremendous growth in recent years, fueled by the pandemic and by younger customers who prefer to make purchases online. Data-driven and requiring real-time investment decisions, DTCs have relied almost entirely on social media for their advertising outreach, given its immediate engagement capabilities.

However, in recent years the DTC advertising landscape has changed dramatically, a shift generated not only from workforce challenges, but also from new legislation. DTCs have been affected by stricter privacy standards, data transparency, and loss of data signals, all of which curtail a brand’s ability to prospect in real time. Programmatic, although largely unknown among social-first brands, can help solve current customer acquisition and retention challenges.

Why Push Play on Programmatic Now?

DTCs can reach their target audiences by implementing a full-funnel programmatic strategy with the option to focus on a specific goal. Programmatic technology delivers new customers, provides transparent reporting, and helps create cash flow through high returns on ad spend (ROAS). Starting in 2021, Apple changed how iOS handles users’ privacy preferences by introducing a new feature — App Tracking Transparency (ATT), making it harder for app developers and advertisers to track user behavior. The iOS update lowered the average return on social media platforms as less-informed decisions impacted performance. In fact, Facebook, X (aka Twitter), and YouTube saw a revenue loss of an estimated $9.85 billion in 2022, according to the Financial Times. META alone was forced to lay off 11,000 employees, 13 percent of its global workforce.

Faced with this crossroad, DTC brands are now realizing that programmatic is a channel with proven efficiencies that's also data-rich, immediate and transparent. It can boost a social investment that helps founders, along with companies on their second and third round of funding, reach a next level of growth.

Programmatic can also help customer lifetime value (CLTV). Brands can now target, measure and optimize a unique audience for each single campaign and product, at each stage of the customer journey. Let’s be clear, DTCs don’t necessarily need to give up their current advertising approach — the strategy just needs refining. As regulations continue to make targeting more challenging, brands can rely on programmatic platforms to reach both their upper and lower funnel goals. DTCs can continue to reach high-value audiences to grow their marketing share, strengthen their brand, and nurture a customer’s brand loyalty.

DTCs + Programmatic = The Perfect Pair 

So, what makes programmatic such a good fit for DTCs? It’s all in the data. Remember, DTC brands are data-driven so this is a natural evolution. Programmatic empowers brands with data that not only discerns where and how to allocate advertising budgets, but also guides businesses on which potential areas to fund next. Brands are able to continually optimize, investing in ad delivery where performance is strongest while utilizing online attribution to better understand their inventory needs and patterns. Furthermore, DTC brands can obtain first-hand knowledge as to where to target consumers based on their behaviors, such as sites visited, keywords searched, content read online, and location.

Programmatic also allows brands to leverage their CRM. In many cases, brands haven't executed on their first-party data, sometimes because they're simply not aware how easy it is to implement within an addressable programmatic environment. The ability to target customers by product line or price level delivers significant value, as well as in suppressing existing customers during acquisition campaigns. Programmatic helps brands expand offerings, manage inventory, discover new markets, and reach new audiences. These strategic benefits are significant for growth in today’s highly competitive marketplace where a brand, particularly a DTC one, is trying to secure a next round of funding.

Maximizing Growth Through Programmatic

DTCs should consider programmatic because these digital-first brands are, in many ways, programmatic by design. This move is a logical next step, especially as they're being impacted by supply chain and workforce issues plus privacy standards at multiple levels. Brands can quickly grow their customer base beyond social media and search marketing by finding high-value audiences through a programmatic strategy that provides granular and transparent reporting. This transition, while pragmatic, requires more than just the desire to find a more efficient solution. DTCs should engage a team that can help implement this strategy effectively, while navigating the ins and outs of programmatic, to maximize growth. Once these pieces are assembled, DTCs can turn that corner and reach the next level of growth, be it their first million or first hundred million milestone.

Sandra Murillo Sareyko is vice president of sales for E-Commerce, DTC and International Group, Simpli.fi, an advertising success platform that provides programmatic advertising and workflow solutions to agencies, brands and media companies.