DTC 375

After years as the financial engine powering podcast advertising, direct-to-consumer brands are turning more to radio as their marketing needs evolve. As DTC brands like ZipRecruiter, SimpliSafe, Audible and Hims get bigger, often competing with traditional brands, they’re latching on to radio’s reach and influence to help scale their business. “DTC brands fell in love with audio via podcasts and now are falling in love with AM/FM radio,” says Pierre Bouvard, Chief Insights Officer at Cumulus Media.

A DTC brand is any business that sells their products directly to consumers, rather than going through a retail store or other traditional distribution channel. From 2014 to 2018, direct-to-consumer ad spending across all media grew by 50%, according to MediaRadar, and was up 15% year-over-year as of late October 2019.

The list of DTC brands using radio is growing. In addition to the brands named above, Stamps.com, Policygenius, StitchFix, Hillsdale College and Dollar Shave Club were top 100 advertisers at both network radio and podcasting in 2019, according to Miller Kaplan and Magellan, which analyzes podcast ad occurrences.

Moving Up The Funnel

“DTC brands have been leveraging radio to reach audiences and reinforce their unique value propositions. Radio has been a proven channel for both acquisition and brand lift,” says Bart Roselli, VP of Strategy at ad agency Veritone One. “Used as part of a comprehensive audio strategy we've seen radio maximize reach and scale.”

To maintain growth, DTC brands are expanding beyond organic campaigns rooted in word of mouth and digital and social channels. This is key as many typically do not have high brand awareness scores. “Many DTC brands have found that these lower funnel tactics need to be supplemented with more top of funnel approaches to fuel greater discovery and sustained growth through mass reach,” says Jon Blum, Senior VP of Strategy, Partnerships and Analytics at Entercom.

To scale up, DTC brands are extending distribution into major retailers like Home Depot, Target, Lowes and Walmart, all big radio advertisers, giving them the opportunity to be featured in retailers’ radio ads. And as DTC startups founded only within the last decade siphon market share from legacy brands, more traditional brands from Nike to Walmart are reaching into the direct-to-consumer space, choosing to market their products directly to consumers.

That’s causing the lines between traditional and DTC to blur, opening the radio door wider. “It’s a great opportunity for radio,” says Kevin Garrity, CEO at rep firm GenMedia Partners. “It further solidifies radio’s power as a brand- and business-building medium.” DTC companies trying to stand out can tap into the personal relationships local stations and their personalities have with the audience. “Strategically aligning brands with specific stations and personalities can build brand equity and move products,” says Garrity.

Web-Native Brands

Because they enter the market directly instead of going through a third-party vendor, DTC brands usually start as online stores. Research showing how radio drives online engagement and search trends across numerous ad categories is helping prove the medium’s power to these web-native brands. “Radio ads generated an average of 27% lift in online search and web traffic across all vertical studies,” says Katz Radio Group President Christine Travaglini. “With this type of research, not only can radio provide great reach for DTC brands, but can then also deliver proof that radio drove listeners to their e-commerce sites and drove engagement with their brands.”

Attribution measurement firm LeadsRx tracked the advertising campaigns of 62 different DTC retailers across multiple product categories. It founds radio ads lifted site traffic for these brands by an average 21%, comparable to TV (+19%) and Google/Facebook (+17%).

“Radio has a proven track record in its ability to drive web traffic so regardless of the brand’s distribution strategy, radio drives action among its listeners,” notes Tammy Greenberg, Senior VP Of Business Development at the Radio Advertising Bureau. “Radio also has a proven track record for building brands and generating awareness lifts at an average of 35%.”

A critical tool in radio’s tool belt, attribution is even more important among DTC advertisers, who typically won’t invest in ad channels they can’t measure. “From web lift attribution for over-the-air terrestrial radio campaigns, to lead gen and conversion attribution on digital audio campaigns, radio can now quantify the return on ad spend and these DTC brands live in this space,” Blum observes. Using its broadcast attribution platform to measure incremental web lift, Entercom was able to show a leading online university how their campaign delivered a 34% lift in new user traffic, resulting in a significant increase in online leads within the exposed markets, Blum explains.

While radio has found a new cohort of clients in the DTC category, these accounts are voracious TV spenders. That has some radio companies brandishing a new weapon in the ad wars to show how adding radio to their existing TV plan makes the TV ads work better. “Radio can accelerate TV’s reach,” says Bouvard. For example DTC retailer Wayfair spent $7.4 million in a month on TV and achieved a 52% reach in its women 25-54 target. Reallocating 20% of the TV buy to radio would generate an astounding 50% increase in reach, according to Nielsen Media Impact data. Using the tool allows Entercom and other NMI subscribers to show the diminishing return from investing large budgets exclusively in TV, and the incremental reach delivered by shifting a portion of the budget to radio. “In essence, we can show these DTC brands how to build a better mousetrap,” Blum says.

To succeed within the boundaries of today’s consumer-run marketplace, many successful DTC marketing campaigns use multiple touchpoints to foster positive brand experiences. “Radio DJ influencers can build a fast and organic wave of interest for DTC brands,” says Travaglini. “Radio personalities are expert storytellers and can share unique brand experiences and extend a brand’s on-air messaging into social media platforms, blogs, podcasts and even on-site at experiential events,” which offer product sampling opportunities.

Tapping local personalities to tell their story and communicate features and benefits of their brand often produce impactful results. “These brands are demanding authenticity, so gone are the days of radio personalities simply getting a script and reading the words on a page. Today’s consumers are smarter than that,” says Blum. That’s why Entercom makes sure its personalities actually use the products and services they endorse, and spend time with the client’s brand managers “to really understand the product and its benefits.”

DTC brands are also being drawn to radio by the attractive cost efficiencies in media and production, notes Garrity. That’s becoming even more important in the face of rising costs for competing media. “DTC brands are getting priced out of Google and Facebook as cost-per-acquisition costs soar,” says Bouvard. The costs to acquire a new customer for a $100-dollar product has more than doubled in the past few years, from $15 to $20 to $40 to $50. “Given this paid social inflation, brands are turning to AM/FM radio, realizing that it can drive both sales and build a DTC brand,” he says.

As the overall retail industry shifts more toward a direct-to-consumer model, radio is playing an important part in successful marketing campaigns. “With thousands of trusted radio show hosts doing product endorsements, DTC brands can quickly and efficiently educate and activate audiences on their unique selling proposition through influential radio hosts” says Conor Doyle, Senior VP of Strategy & Investment at Veritone One. “We have found that radio delivers high returns on investment – this is very important for DTC advertisers with lean budgets and appetites for performance.” – Paul Heine