Many DTC brands start small, focusing on building brand awareness, perfecting their products, and gaining initial traction with customers. In the early growth stages, DTC marketers begin by targeting a specific, niche audience through one or two channels to solidify their name.
However, as DTC brands scale and evolve, so must marketing efforts. To grow their customer base, revenue, and brand awareness, DTC marketers have to venture into the world of channel diversification. On this journey, you’ll likely run into a few roadblocks, but by overcoming challenges in channel diversification, DTC brands can drive sustainable growth, reduce risk, and enhance customer engagement.
This blog highlights data from Nift’s 2024 Marketing Channel Diversification Report, which is included in Nift’s ebook Navigating Success: Insights from Marketers on Channel Diversification. The report features real-world data from a survey of over 150 retail marketing executives. With these insights, DTC and retail brands can leverage data to achieve their CPA, ROAS, and net new acquisition goals. Download your free copy of the eBook here.
Key takeaways from this blog:
- 89% of DTC marketers consider channel diversification critical for revenue growth, but only 34% always test channels against one another for performance.
- On average, DTC marketers advertise on 8.5 channels, but only 54% are confident they know which channels perform best.
- 73% of DTC brands that test on more than 3 channels report higher ROAS.
What is Channel Diversification?
Channel diversification consists of spreading marketing efforts across multiple channels to reach customers. Instead of relying on a single platform—like social media ads, Google search, and email campaigns—DTC brands allocate their marketing resources to a mix of channels. These could include organic search, influencer marketing, TikTok, Amazon PPC, email marketing, affiliate marketing, referrals and gifts, and more.
Channel diversification aims to create a balanced marketing approach where the brand isn’t overly reliant on one method, protecting it from the risk of platform changes, rising costs, or shifting audience preferences.
Why is Channel Diversification Critical for DTC Brands?
DTC brands must look beyond the status quo to grow and strengthen their competitive advantage. Diversifying your marketing mix offers several key benefits, including:
- Risk Mitigation: Over-dependence on a single channel can backfire quickly if that platform changes its algorithm, raises costs, or limits targeting options. Spreading efforts across various channels creates a safety net and protects your brand.
- Customer Reach Expansion: Different audiences respond to different channels. If you have a large audience of varying ages and demographics, diversifying allows your brand to engage with various customer segments where they are most active.
- Cost Efficiency: As customer acquisition costs (CAC) continually increase on traditional channels like Facebook and Google, exploring new channels can help DTC brands find more cost-effective channels that don’t sacrifice performance.
- Enhanced Data Insights: Multiple touchpoints provide richer data, helping brands better understand customer behavior, preferences, and buying journeys.
Most DTC brands understand the importance of channel diversification, but marketers need more support. On average, DTC marketers advertise on 8.5 channels, but only 54% are confident they know which channels perform best.
7 Challenges DTC Marketers Face in Channel Diversification
While channel diversification offers many benefits for DTC brands, effectively navigating this complex strategy presents significant challenges.
1. Increasing Customer Acquisition Costs (CAC)
The cost of acquiring customers has increased dramatically, especially on platforms like Facebook and Google, which have long been the go-to channels for DTC brands. To make matters worse, the costs and conversion rates aren’t trending in the same direction. For example, brands using Meta are seeing performance metrics plummet since 2023, including:
- 12% decrease in click-through rates
- 12.5% increase in cost-per-click
- $3 increase in cost-per-acquisition
- 10% decrease in conversion rates
Algorithms are also becoming less predictable, further driving costs. Brands solely relying on platforms like Meta face thinning profit margins, making it challenging to achieve sustainable growth.
2. Lack of Confidence in Channel Performance
One of the biggest concerns for marketers is not knowing whether new channels will deliver the desired return on investment (ROI). Channels like TikTok, Pinterest ads, or gifting platforms like Nift are unfamiliar territory for many brands, with different audience behaviors and engagement patterns. With new alternative marketing channels, marketing leaders are cautious. Wasting resources on unfamiliar platforms is not something DTC brands can afford.
Understanding how to optimize campaigns on these emerging platforms can also be challenging, which can deter brands from making a bold move. Even if they test new channels, long-term success can be hard to predict.
3. Insufficient Channel Diversification
Some brands believe they are diversified but, in reality, rely too heavily on just a couple of channels—such as paid social and search. This narrow focus leaves them vulnerable to platform algorithm changes, ad pricing fluctuations, or sudden shifts in consumer trends.
Proper diversification requires a more comprehensive owned, earned, and paid media strategy. Owned channels like email marketing should complement paid strategies to create a balanced marketing mix.
4. Difficulty in Testing Channels Against One Another
The only way to know the effectiveness of your marketing channels is to test them against each other. At the same time, 89% of DTC marketers consider channel diversification critical for revenue growth, and only 34% always test channels against one another for performance.
Every marketing channel operates with its unique metrics, KPIs, and algorithms. Take paid search and influencer marketing, for example. Paid search KPIs include click-through rates and cost-per-click, while influencer marketing success is measured by engagement rate or impressions.
With the right tools to track cross-channel performance, brands may be able to identify which platforms drive growth and which are draining resources.
5. Attribution and Tracking Complexities
With more channels in play, it becomes increasingly difficult to attribute sales or leads accurately to the correct touchpoints.
Cross-channel attribution requires advanced tools and strategies, as many customers engage with multiple channels before purchasing. Without explicit attribution models, brands risk misallocating their budget or missing key insights that could help optimize their campaigns. Some DTC brands also need more technical infrastructure or expertise to integrate suitable tracking systems, further leading to data gaps and missed optimization opportunities.
6. Over-reliance on Channels You Don’t Own
One of the most significant risks for DTC brands is overdependence on paid channels, which are subject to external factors like algorithm changes or increasing costs. Channels like Facebook, Google, and Instagram offer brands incredible reach, but they are rented platforms, meaning you don’t fully control the customer relationship. Any shift in these platforms’ policies could drastically impact your brand’s performance.
In contrast, owned channels like email lists, blogs, and mobile apps give brands more control over customer relationships. The challenge is building out these owned channels while effectively using paid platforms. DTC marketers need to strike a balance between paid and organic growth.
7. Building Consistent Brand Messaging Across Channels
Another challenge in channel diversification is maintaining a consistent brand voice and message across various platforms. Each channel has its unique audience behavior and expectations. For example, the younger audience on TikTok demands a more casual, playful tone, while the audience on LinkedIn will connect with a more professional, authoritative voice.
Brands must balance these tone shifts without losing their core essence. You want your brand’s identity to be recognizable across multiple touchpoints without appearing disjointed or inconsistent, which may mean that a popular channel is not the best fit for your brand.
Alternative Marketing Channels to Consider: Moving Beyond Meta
Scaling DTC brands search for solutions outside traditional marketing channels like Facebook or Google. While those platforms have a place in many marketing strategies, other alternative marketing channels are surging in popularity, including:
Nift Tip: Don’t overlook the power of gifting. For example, Blenders Eyewear partnered with Nift and generated 19,000 net new customers in Q1 of this year at a consistent CPA and ROAS. There’s power in saying ‘thank you’.
3 Tips For DTC Brands Wanting To Diversify
Channel diversification can be overwhelming, and however many channels your DTC brand chooses to utilize, there are a few best practices to keep in mind:
- Stay vigilant: In the world of digital marketing, nothing lasts forever. Trends change, algorithms update, policies fluctuate, and consumer demands shift. Make sure your team is always up-to-date with the latest happenings so your brand doesn’t fall behind.
- Have an open mind: It can be tempting to stick with the basics and only utilize traditional channels, but 73% of DTC brands that test on more than 3 channels report higher ROAS. To meet your ROAS and CPA goals, you’ll likely need to step out of the box and try something new.
- Follow the data: Data and analytics should always guide your decision-making. Don’t try out ‘hyped up’ popular channels just because everyone else is doing it. Make sure the historical data and success of the platform match your goals.
Looking for more in-depth insights and channel diversification strategies? Our ebook, Navigating Success: Insights from Marketers on Channel Diversification, covers everything you need to know about channel diversification, including:
- How to create a diversification strategy with limited cookies
- Why testing and optimization is the key to maximizing ROAS
- Why alternative marketing channels are the future of DTC
- 3 critical KPIs you need to measure
- And more!
Download your copy here.
If you’re ready to get started with Nift Advertising for DTC Brands, request a demo with our team.
About the Author
Cynthia LaRue is the Vice President of Marketing at Nift, where she develops an integrated sales and marketing growth strategy to elevate the Nift brand, foster customer awareness, and drive brand preference across various marketing channels.
Cynthia’s passion lies in leveraging digital platforms to connect with customers innovatively, driving demand for Nift. Collaborating closely with the Sales Team, she spearheads efforts to transform capabilities and stay ahead in the ever-evolving e-commerce industry. Her commitment to fostering diverse and engaged teams is at the core of her approach.
Throughout her career, Cynthia has navigated both scrappy startups and global enterprises. Before joining Nift, she served as the Head of Marketing for ShipStation. Her impressive track record includes pivotal roles at Fortune 500 organizations such as The Home Depot and Mars, where she focused on digital e-commerce and held P&L responsibilities for the M&M’s brand.
Outside of work, Cynthia resides in the greater Houston, TX, area with her husband. She indulges her creativity by designing jewelry, exploring hiking trails, kayaking, swimming, and writing. Cynthia holds a dual degree in management and an MBA from Belhaven University, where she graduated Summa Cum Laude.
