D2C brands have reached a tipping point where they are challenging age-old conglomerates and their mainstream product offerings. By providing healthier and more sustainable options, these direct-to-consumer brands have grabbed a sizable market share of the Indian consumer.
However, earlier D2C brands focused majorly on brand-building strategies to attract the consumer, whereas now, they are also looking to monetise their marketing efforts via measurable tactics. This also brings in a huge potential for marketers to be able to understand consumer demographics, their buying behaviour and their marketing ROI in real-time.
In an era where every consumer has personalised needs, D2C brands make an effort to provide experiences that stick with their TG via performance marketing, which unleashes the power for new-age brands to reach their consumer in every city.
Performance marketing offers the advantage of producing tangible, immediate results. When launching a new brand, especially with a limited budget, and operating in a category with high awareness, it's possible to weave a compelling narrative that guides customers toward making a purchase, according to Suraj Nambiar, National Media Head, Tonic Worldwide.
However, earlier D2C brands focused majorly on brand-building strategies to attract the consumer, whereas now, they are also looking to monetise their marketing efforts via measurable tactics. This also brings in a huge potential for marketers to be able to understand consumer demographics, their buying behaviour and their marketing ROI in real-time.
In an era where every consumer has personalised needs, D2C brands make an effort to provide experiences that stick with their TG via performance marketing, which unleashes the power for new-age brands to reach their consumer in every city.
Performance marketing offers the advantage of producing tangible, immediate results. When launching a new brand, especially with a limited budget, and operating in a category with high awareness, it's possible to weave a compelling narrative that guides customers toward making a purchase, according to Suraj Nambiar, National Media Head, Tonic Worldwide.
“This is also why traditional marketing methods like 30-second TV commercials, have become less effective in today's digital age," Nambiar notes. In contrast, platforms like YouTube provide a dual advantage, helping raise brand awareness and drive performance. "This allows brands to efficiently reach their target audience and achieve their marketing objectives," he points out.
According to Statista in 2022, about 68 per cent of marketers reported investing in data analytics and collection to improve digital marketing, especially in a soon-to-be cookie-free environment. This was followed by 49 per cent who invested in marketing automation.
Anshita Mehrotra, founder of Fix My Curls believes performance marketing is essential to gain insights about a brand’s audience. “Any brand currently using either Google Analytics or Facebook Pixel knows that the more ads you run, the more targeted your Pixel can become and the more you learn about your customer, what they like versus what they don't.”
On one hand where performance marketing is gaining muscle for its ROI, brand building also helps build an emotional connect with the consumer. But are performance marketing and brand building in an ‘either or’ situation or do they co-exist in the blueprint of marketers?
Manan Jain, group chief growth officer, Good Glamm Co. said, “Both performance and brand marketing hold their own and equal importance. Even though in the short term, performance marketing is able to drive a better ROI and more efficient result, without a continuous effort to increase the overall awareness for the brand, the returns of performance marketing starts seeing a declining trend.”
The split however has changed for most brands as they have found alternative ways to reach their target users as well as using data science to drive awareness, more targeted audience sets and demographics.
Bala Sarda, Founder and CEO, VAHDAM India opines that it's essential to identify the target segment and cater to their needs and appeal to their emotions and values. Everything a brand does adds up to the brand they are building. “Strategy for any brand keeps changing over time based on the market landscape, consumer behaviour and of course, macroeconomics. But building the brand is a constant effort.”
Nambiar believes the choice between performance marketing and brand building often hinges on a company's financial backing. Bootstrapped businesses, which operate without external investments, tend to prioritise performance marketing, especially if they are positioned within a robust market category. This strategy allows them to capitalise on immediate returns and grow revenue.
“Nonetheless, seasoned marketers are acutely aware of the long-term value and sustainability offered by brand building. Even for lean startups, cultivating a strong brand identity is vital for fostering customer loyalty and standing out in the marketplace,” he added.
The status of performance marketing not only results in better ROI but also helps marketers reach people, even if they aren't ready to make the purchase right now. Brand building happens as an afterthought in this sense. Moreover, today, traditional means of brand building are still much more expensive and capital intensive, something not every brand can afford, according to Mehrotra.
D2Cs today make big businesses on Amazon, and Flipkart and later rope in huge celebrities to make it a big brand, shared Shradha Agarwal, Co-founder and CEO, of Grapes. Hence, performance marketing is the key because you can make proof in pudding, which gets you sales but you can only charge a premium on the product when it becomes a brand.
Looking beyond opportunities and possibilities, the ever-evolving digital landscape also entails multiple challenges for D2C brands in building a concrete performance marketing strategy.
Nambiar mapped a few challenges that D2C brands are facing these days largely. The major one is that the space is crowded with numerous brands vying for the attention of consumers and as competition increases, so does the cost of acquiring new customers. D2C brands will have to carefully manage their budgets to ensure that the cost of acquiring a customer does not exceed the lifetime value of that customer.
Additionally, performance marketing relies heavily on data analysis. D2C brands need to collect, analyse, and interpret large volumes of data to optimise their campaigns. This can be a costly affair for smaller D2C brands.
He further highlighted, “D2C brands often use multiple marketing channels, such as social media, search engine marketing, and email marketing. Finding the right mix of channels and optimising campaigns for each channel can be complex and time-consuming.”
Agarwal of Grapes believes the major challenge is the platform itself. They arm-twist the brand for a 30-35% cut. Hence, a lot of D2C brands are struggling to not be affected by losses. Additionally, brands are focussing too much on the lower funnel and not enough on building a brand.
In the time to come, the majority of brands plan to strike a perfect balance of marketing mix, indulge in more AI/ML and have high hopes with OTT as a potential marketing channel in future.
Performance marketing will play an even more crucial role in the future, especially when it is integrated with Machine Learning (ML) technologies, highlighted Nambiar. By leveraging ML, marketers can enhance their performance marketing strategies, gain deeper insights into consumer behaviour, automate campaign adjustments, and improve targeting accuracy to achieve their goals more effectively.
“Data privacy laws keep changing, new tools and channels get introduced and each brand uses these in their own unique way. In order to stay in the game, you need to keep yourself updated with all the developments, follow trends and be able to stay away from FOMO as that's the worst thing you can do to your brand. What works for others might not work for you and you should be able to test and improvise quickly,” shared Sarda.
Anshita Mehrotra, founder of Fix My Curls believes performance marketing is essential to gain insights about a brand’s audience. “Any brand currently using either Google Analytics or Facebook Pixel knows that the more ads you run, the more targeted your Pixel can become and the more you learn about your customer, what they like versus what they don't.”
On one hand where performance marketing is gaining muscle for its ROI, brand building also helps build an emotional connect with the consumer. But are performance marketing and brand building in an ‘either or’ situation or do they co-exist in the blueprint of marketers?
Manan Jain, group chief growth officer, Good Glamm Co. said, “Both performance and brand marketing hold their own and equal importance. Even though in the short term, performance marketing is able to drive a better ROI and more efficient result, without a continuous effort to increase the overall awareness for the brand, the returns of performance marketing starts seeing a declining trend.”
The split however has changed for most brands as they have found alternative ways to reach their target users as well as using data science to drive awareness, more targeted audience sets and demographics.
Bala Sarda, Founder and CEO, VAHDAM India opines that it's essential to identify the target segment and cater to their needs and appeal to their emotions and values. Everything a brand does adds up to the brand they are building. “Strategy for any brand keeps changing over time based on the market landscape, consumer behaviour and of course, macroeconomics. But building the brand is a constant effort.”
Nambiar believes the choice between performance marketing and brand building often hinges on a company's financial backing. Bootstrapped businesses, which operate without external investments, tend to prioritise performance marketing, especially if they are positioned within a robust market category. This strategy allows them to capitalise on immediate returns and grow revenue.
“Nonetheless, seasoned marketers are acutely aware of the long-term value and sustainability offered by brand building. Even for lean startups, cultivating a strong brand identity is vital for fostering customer loyalty and standing out in the marketplace,” he added.
The status of performance marketing not only results in better ROI but also helps marketers reach people, even if they aren't ready to make the purchase right now. Brand building happens as an afterthought in this sense. Moreover, today, traditional means of brand building are still much more expensive and capital intensive, something not every brand can afford, according to Mehrotra.
D2Cs today make big businesses on Amazon, and Flipkart and later rope in huge celebrities to make it a big brand, shared Shradha Agarwal, Co-founder and CEO, of Grapes. Hence, performance marketing is the key because you can make proof in pudding, which gets you sales but you can only charge a premium on the product when it becomes a brand.
Looking beyond opportunities and possibilities, the ever-evolving digital landscape also entails multiple challenges for D2C brands in building a concrete performance marketing strategy.
Nambiar mapped a few challenges that D2C brands are facing these days largely. The major one is that the space is crowded with numerous brands vying for the attention of consumers and as competition increases, so does the cost of acquiring new customers. D2C brands will have to carefully manage their budgets to ensure that the cost of acquiring a customer does not exceed the lifetime value of that customer.
Additionally, performance marketing relies heavily on data analysis. D2C brands need to collect, analyse, and interpret large volumes of data to optimise their campaigns. This can be a costly affair for smaller D2C brands.
He further highlighted, “D2C brands often use multiple marketing channels, such as social media, search engine marketing, and email marketing. Finding the right mix of channels and optimising campaigns for each channel can be complex and time-consuming.”
Agarwal of Grapes believes the major challenge is the platform itself. They arm-twist the brand for a 30-35% cut. Hence, a lot of D2C brands are struggling to not be affected by losses. Additionally, brands are focussing too much on the lower funnel and not enough on building a brand.
In the time to come, the majority of brands plan to strike a perfect balance of marketing mix, indulge in more AI/ML and have high hopes with OTT as a potential marketing channel in future.
Performance marketing will play an even more crucial role in the future, especially when it is integrated with Machine Learning (ML) technologies, highlighted Nambiar. By leveraging ML, marketers can enhance their performance marketing strategies, gain deeper insights into consumer behaviour, automate campaign adjustments, and improve targeting accuracy to achieve their goals more effectively.
“Data privacy laws keep changing, new tools and channels get introduced and each brand uses these in their own unique way. In order to stay in the game, you need to keep yourself updated with all the developments, follow trends and be able to stay away from FOMO as that's the worst thing you can do to your brand. What works for others might not work for you and you should be able to test and improvise quickly,” shared Sarda.
Performance marketing is going to slowly equalise with organic marketing efforts, as Mehrotra foresees. Brands will no longer be able to solely rely on ads to gain traction and repeat purchases and will definitely need to rely on community building, content to commerce, and influencers to build a brand that converts because now every other brand uses the same approach to performance marketing. A new wave will definitely come in as consumers will get bored of the same thing over and over!
.jpg)
