FMCG goes direct-to-consumer – but don’t expect a Tony the Tiger Facebook page any time soon
Opinion Last month Kellogg’s – joining a host of established FMCG brands – launched a new foray into the direct-to-consumer (DTC) market as it hired a new director of eCommerce platforms.
I would be surprised if this news made any jaws drop (except maybe Tony’s). From Warby Parker to Kylie Cosmetics, the line that launched Kylie Jenner to become the youngest self-made billionaire ever, DTC brands have made huge waves in the retail space for disrupting a historic model and doing things differently.
With a preference towards more ‘guerrilla’ campaigns, DTC brands are often associated with affiliate marketing channels and influencer campaigns. Huel, for instance, was born with an investment of £220,000 that Julian Hearn made from the sale of his affiliate marketing business in 2011. Since then, the brand has gone on from strength to strength, with ads now found across every young millennial’s Facebook and Twitter accounts.
Despite the power of using social influencers to impact online sales (looking at you, Fyre Festival), the next step from Kellogg’s won’t necessarily be to launch a brand new, social-first ad campaign, but rather something entirely new. Or should I say… old?
There’s no ‘town hall’ in a DTC strategy
Rather than depend solely on Facebook and Instagram, leading DTC brands such as Glossier, Harry’s and Wayfair are finding differentiation through hitting the rewind button, and complimenting social with more classic marketing techniques.
Check your mailbox (yes, the physical one). In the US, Glossier, Harry’s and Wayfair have turned to snail mail to complement Facebook’s ‘town hall’ - to cite Mark Zuckerberg’s own description of the platform that touts a billion users. Why? Because it’s become questionable whether Facebook is the most effective means of scaling a loyal customer base.
Many marketers have seen a significant decrease in their Facebook page engagement, since the algorithm was changed to encourage “more meaningful social interactions with family and friends. Way back in 2012, organic reach on Facebook was at an all-time high of 16%, but has been in steady decline ever since. In 2014, it fell to 6.5% and changes to Facebook’s algorithm in 2018 has brought down this number even more. Today, brands are seeing an organic reach of just around 2%.
Alternative options for marketers
But beyond reach challenges on social media platforms, the reason that FMCG brands with newly christened DTC channels likely won’t go “all in” on social media is because they have a new opportunity: owning customer data.
For FMCG companies, it's about playing catch up in terms of data ownership. FMCG brands may be running extensive advertising campaigns targeting their products’ end-consumer, however their actual customers are retailers. The result is that retailers own the point of purchase data and FMCG brands are reliant on purchasing back “shopper profile” information to inform their consumer ad targeting strategies.
It’s for this reason that customer data ownership is a huge opportunity for FMCG brands. They can cross customer profiles and purchase data to understand more clearly who their heavy consumers are and the products they like, resulting in higher efficacy and better ROI of their advertising.
Brands should take control of the customer relationship
While social media platforms are, of course, an important way to connect with your audience, it’s increasingly become clear that doing so means you are communicating on someone else’s property – not your own - and are at the mercy of how other platforms decide to distribute your content.
Now that DTC is breaking down this lack of proximity retailers have to their end-consumers, FMCG companies going DTC will be thinking about how to most effectively engage with the consumers they now hold a direct relationship with. Email marketing will be one to watch. For instance, 100k followers on Facebook, Instagram, Twitter, or LinkedIn is not nearly the same as 100k subscribers who have consented to receive your email newsletter. Assuming you land in 99% of inboxes, and you get a respectable open rate of 20%, you are already well above the rate of Facebook followers that will even have a chance of seeing your post.
Credit where credit is due, social media has offered the benefit of personalisation and targeting in a way we didn’t know possible only a few years ago. Today, however, owned channels such as email are right there with them, and in fact are doing so in a way that is based on the explicit permission of the audience. For DTC brands, connecting new data-led insights with owned marketing channels will provide the pillars of effective market strategies throughout 2019.
Editor's note: It is worth noting that there is a 'Tony the Tiger' Facebook page, which can be found here, although there is no affiliation with Kellogg's.
Picture credit: "Winter Olympics Sochi 2014 Kellogg's Frosted Flakes Box", by Mike Mozart, used under CC BY 2.0
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