Summary.    Early direct-to-consumer companies relied on plentiful capital and low-cost digital marketing to power growth. But as this sector has matured, capital is more constrained, social media is more cluttered, and customer acquisition costs are rising. DTC companies...

In the early days of direct-to-consumer (DTC) brands, we saw companies engage in innovative tactics to earn media and PR to help them achieve organic (as opposed to paid) marketing. Casper, the online mattress seller, created Nap-Mobiles which allowed potential customers to try out their beds. Airbnb (then still AirBed and Breakfast) created special edition cereal boxes that generated buzz and revenue. Some DTC firms optimized their packaging to be “Instagrammable,” drawing people to post unboxing videos organically. Over time, these tactics became commonplace and therefore drew less attention. Newer brands had a harder time breaking through the noise.

In those early days, companies were also able to effectively leverage social media (especially Facebook) to reach their customers and convince them to buy their offerings. The cost and efficiency of acquiring customers through digital channels made it worthwhile, and favorable investment markets allowed firms to raise capital and spend spend large amounts on customer acquisition. Over time, more and more companies started advertising heavily on social media, making the space more crowded and making it harder to break through the ad clutter.

In recent years, customer acquisition costs (CAC) on digital channels have been rising, making these channels a less economic growth strategy. Additionally, the markets cooled off to DTC brands, making them more cash constrained. Moreover, between privacy concerns and Apple’s iOS 14 changes, Facebook has become much less effective in targeting customers, reducing the overall efficiency of digital customer acquisition. These changes have led brands to search for ways to manufacture organic marketing again.

Faced with these challenges in 2023, new DTC brands, as well as existing incumbent brands,  have to develop strategies that will allow them to generate organic attention and marketing. To that end, they can leverage the 4 Cs of manufacturing organic marketing:

Content

Brands need to spend time and effort to develop engaging content that will draw consumers in. In the early days of DTC, colorful and creative ads did this effectively. Casper Mattress was one of the first to create cartoon ads that were particularly different and engaging compared to traditional mattress ads. Magic Spoon, a high-protein/low-carb cereal brand, created a colorful ad that communicated the value of the brand: It was one of the first “us” versus “them” ad copy on social media, illustrating that the brand has more protein and less carb compared to traditional cereal. Hubble Contact Lenses found success with ads that included articles about the brand, and quizzes about contact lens practices. Brands also invested in creating blogs and how-to articles to drive traffic to their website and to convince consumers that they are more than one product brand, but instead a lifestyle and experience around that item.

In 2023, video and Reels rule social media. Companies must quickly adapt to this new medium and generate video content to ensure they are top of mind for consumers. While it’s impossible to predict what will gain traction and go viral, generating a lot of different ideas may lead to a winner.

Consumers seek authenticity and are less attracted to very polished videos. One example of a video that went viral and gained traction was Bobbi Brown’s response to a beauty influencer who misused her “Jones Road” beauty products. Milkbar, Christina Tosi’s bakery, also found success on TikTok, when they uploaded videos of at-home recipes during the early days of the Covid pandemic. The company recognized a need of people cooking at home and leveraged their brand and products at that time. Chipotle, the Mexican food chain, gained traction by starting “challenges” on TikTok, encouraging consumers to try the challenge themselves. One such challenge was started by an employee that flipped the lid of the Chipotle container to exactly match the bowl. Other brands participate and interpret in their own voice existing challenges on TikTok, or currently trending memes, thus staying relevant in the mind of consumers and meeting them where they are.

Consumers

Superior brands and products are often able to naturally gain brand evangelists and supporters. That leads to organic posts and excitement by consumers, who create their own user-generated content (UGC) that hopefully gain traction.

Sometimes, this can be completely unintentional. For example, Ocean Spray saw a lot of organic attention when a consumer recorded themselves drinking its cranberry juice while skateboarding. Other times, brands create their own challenges (using a unique branded hashtag), in the hopes that consumers will engage with them and spread the word. For example, the aforementioned #ChipotleLidFlipChallange generated more than 100,000 videos within six days, with more than 104 million views. This challenge also drove actual downstream behavior outside of TikTok – more people downloaded the app and ordered Chipotle.

Creators

In 2023, influencers and creators are social media royalty, and the sponsors and opinion leaders of this era. Unlike consumers, who may post a testimonial or join in a challenge, influencers habitually post interesting content that draws the attention of other social media users who then follow them. Smaller creators might have hundreds or thousands of followers, and larger ones might have millions of them. Creators of all sizes are able to generate a lively community around them. Often, when brands want to amplify their content, they engage with creators to post for them, to generate additional views.

Creators and brands have different monetization relationships — from per-post payment, revenue sharing, or free products. While this relationship is paid, it does help brands manufacture more “organic” visitors, because followers of creators often feel a close connection with them and treat their recommendation as if it is a recommendation from a friend, rather than a brand. What is important for brands who employ this strategy is to figure out which creators are the best fit for them, and which creators will authentically promote and advertise their products.

Celebrities

In some sense, celebrities are mega-creators. They have a large following and are therefore able to influence those followers. For years, brands have paid celebrities to advertise them in ads and in sponsorship deals. We’ve seen that brands that have strong relationships with celebrities often gain traction. This was once known as “the Oprah effect“– whatever she recommended became viral. Celebrities often are able to generate more buzz compared to non-celebrity creators, due to the general public interest in them and their PR capabilities.

In the age of DTC, we’ve see a further evolution in the role of celebrities. We now have celebrity-founded or celebrity-run brands and ventures, including The Honest Company (Jessica Alba), Fabletics (Kate Hudson), Goop (Gwyneth Paltrow),  Pattern Beauty (Tracee Ellis Ross), Skims (Kim Kardashian), Casamigos Tequila (George Clooney), Aviation Gin (Ryan Reynolds), and Beats by Dre (Dr. Dre).

There’s a saying attributed to Neil Blumental, the CEO of Warby Parker, the DTC eyewear brand: “It’s never been cheaper to start a business, although I think it’s never been harder to scale a business.” We agree. In the new era of retail, brands must adapt and develop strategies to “manufacture” organic marketing. The 4 Cs framework — content, consumers, creators, and celebrities — provides a guide to unlocking organic marketing. Brands may choose a subset or all of these to further their growth and success.