Direct-to-consumer (DTC) marketing strategies mainly focus on achieving two overarching goals:
- Acquire net new customers and retain current customers
- Drive business revenue by hitting CPA & ROAS goals
Simple, right? Of course, it sounds simple, but the road to reaching those goals is rocky. To acquire net new customers and hit CPA and ROAS goals, DTC marketers need to focus their efforts on marketing channel diversification.
What is marketing channel diversification? It’s exactly what it sounds like—leveraging various channels to market and promote your brand, products, or services to hit your marketing goals. But what channels should your brand be using? How can marketers effectively integrate channel diversification into their marketing strategies? That’s what’s on the agenda for the blog today.
This blog draws on insights 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 copy of the eBook here.
Key takeaways from this blog:
- On average, DTC marketers advertise on 8.5 channels, but only 54% are confident they know which channels perform best.
- 89% of marketers want to escape walled gardens like Amazon and Meta by using first-party data, but only 40% are sure they have enough first-party data.
- 73% of DTC brands that test on more than 3 channels report higher ROAS.
- Alternative marketing channels are gaining traction, with email marketing, referrals, and gifts (i.e., Nift & Rokt), Amazon PPC, TikTok ads, influencer marketing, Pinterest ads, and Snapchat ads being the most popular channels.
Why Marketers Must Prioritize Channel Diversification
Traditional marketing channels aren’t performing like they used to. This year, brands utilizing Meta ads are seeing a 12% decrease in click-through rates, 12.5% increase in cost-per-click, and a $3 increase in cost-per-acquisition. Conversion rates have also decreased by 10% since 2023.
To combat this, DTC marketers need to prioritize channel diversification to ensure long-term growth, resilience, and adaptability in an increasingly competitive ecommerce landscape. Relying on a single or limited number of channels, such as Facebook or Google Ads, exposes brands to significant risks that can drastically impact performance and revenue.
By diversifying marketing efforts across various channels, DTC brands can:
- Gather more data to reach more diverse audiences
- Optimize ROAS and CPA spending
- Mitigate dependency risks
Additionally, a multi-channel strategy allows for more comprehensive customer engagement, a more substantial brand presence, and the ability to adapt to changing consumer behaviors and preferences.
6 Challenges Marketers Are Facing With Channel Diversification
Channel diversification has its challenges. Marketers must navigate several hurdles, from skyrocketing acquisition costs to first-party data restrictions, to achieve a genuinely effective multi-channel approach. Here are six key challenges that marketers are currently facing with channel diversification:
1. Skyrocketing customer acquisition costs
One of the most pressing challenges with channel diversification is the rising cost of customer acquisition. As more brands compete for attention on popular platforms like Facebook, Google, and Instagram, the cost-per-click (CPC) and cost-per-acquisition (CPA) have significantly increased.
2. Lack of confidence in channel performance
Emerging and alternative marketing channels like TikTok and referral platforms offer unique opportunities to acquire new customers. Still, the need for historical data and benchmarks can make it difficult for marketers to gauge their effectiveness. It can be challenging to reallocate budgets to take a chance on a newer platform, which leads many marketers to stick with traditional platforms, even if it means higher costs and lower performance.
3. Insufficient channel diversification
Insufficient channel diversification often results from insufficient resources—whether budget, personnel, or expertise—to manage and optimize multiple channels effectively. Researching and implementing a strategy that can succeed with alternative marketing channels takes time and money.
4. Difficulty in testing channels against one another
Even though DTC marketers, on average, advertise on 8.5 channels, only 54% are highly confident they know which channels perform best. It’s challenging to test channels against each other. Each channel has its own metrics, user behaviors, and engagement patterns, making it challenging to compare data and performance. How can marketers determine which channels offer the best ROAS if the measurement framework is questionable?
5. Over-reliance on channels you don’t own
Social media channels and digital advertising platforms can be effective channels for acquiring new customers and driving results, but there’s one main problem: you don’t own them. Marketers are at the mercy of algorithms and policy changes beyond their control. When marketing strategies heavily focus on channels like social media and Meta, algorithm updates, increased ad prices, or stricter content regulations can significantly impact a brand’s visibility and profitability.
6. First-party data restrictions
Marketers live in an increasingly cookie-less world as they face growing restrictions on collecting, storing, and using first-party data. 89% of marketers want to escape walled gardens like Amazon and Meta by using first-party data, but only 40% are sure they have enough first-party data to do so.
Alternative Marketing Channels Are Gaining Popularity
The days of relying solely on Facebook and Google ads are behind us. While these platforms remain essential, many DTC brands are exploring alternative marketing channels to diversify their reach and improve ROAS metrics. These platforms provide unique targeting capabilities and often come with lower barriers to entry, enabling brands to better connect with niche audiences without breaking the marketing budget.
Aside from significant platforms like Google, Meta, and YouTube, DTC marketing teams currently utilize the following alternative marketing channels:
Various alternative marketing platforms are available, but that doesn’t mean you should try your hand at all of them. Find the right platform for your business needs based on your goals, audience, and internal operations. For example, if rising costs and complex campaign management are your main concerns, Amazon PPC may not be the best option for your DTC brand. Alternatively, you may seek out referral and gift platforms like Nift for a cost-effective way to drive high-quality leads without the time commitment.
Hot tip: Follow up and test marketing channels against each other.
4 Strategies For Effective Channel Diversification
Diversifying your marketing channels can be overwhelming, but here are 4 strategies to get started.
1. Experiment with emerging technologies and channels
The marketing ecosystem is rapidly evolving, with new technologies and channels constantly emerging. From artificial intelligence and machine learning to emerging marketing channels, DTC brands are beginning to explore these innovative technologies to provide unique and engaging customer experiences.
DTC marketers agree that these are the most productive tests to increase marketing performance:
But how many channels should your DTC brand be utilizing? 73% of DTC brands that test on more than 3 channels report higher ROAS.
New technologies and marketing channels take time and effort to master, but DTC marketers must test and experiment to stay ahead of the competition and capture new audiences.
2. Integrate digital and physical channels
Channel diversification isn’t limited to digital channels. While many DTC brands started online, the value of having a physical presence through pop-up stores, flagship stores, or partnerships with retailers is growing. This trend is driven by the desire to provide a more immersive brand experience and build stronger customer connections. Omnichannel strategies enable brands to meet customers wherever they are, offering a seamless experience from online browsing to in-store purchasing.
For DTC marketers, finding the right mix between digital and physical presence is critical to creating a cohesive brand experience.
3. Implement tailored marketing strategies
Just a few years ago, DTC brands could work from a cookie-cutter marketing strategy and get by. However, as customers demand a more personalized experience, one-size-fits-all marketing strategies are becoming less effective.
Through channel diversification, marketers can better leverage customer data to understand their preferences, behaviors, demographics, and pain points. With these insights, brands can develop customized content, offers, and experiences that speak directly to customer segments. Tailored strategies drive higher engagement and build trust and loyalty, fostering long-term customer relationships.
4. Invest in growth, data, and acquisition
Investing in growth, data, and acquisition is vital for DTC brands aiming to scale and thrive in a competitive market. Growth marketing involves a mix of tactics that focus on the entire customer journey, from awareness to retention. To optimize these efforts, DTC marketers need to leverage data-driven insights to inform their decision-making.
What’s driving your customers to purchase? What channels are most effective? Where are high-quality leads coming from? Marketing teams must invest in analytics tools and marketing automation software to gather, analyze, and act on this valuable customer information.
Diversify Your Marketing and Acquisition Strategy With Nift
Rising acquisition costs, strict privacy laws, and insufficient channel diversification have made acquiring net new customers a significant challenge for DTC marketers. Download our ebook to discover more in-depth insights and channel diversification strategies, including:
- How to navigate a cookie-less world
- Marketing challenges DTC and retail brands are facing
- Why testing and optimization is the key to maximizing ROAS
- The rise of alternative marketing channels
- 3 critical KPIs DTC marketers need to measure
- And more!
Download your copy of Nift’s 2024 Marketing Channel Diversification Report, titled Navigating Success: Insights from Marketers on Channel Diversification, today.
Ready to get started with Nift Advertising for 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.
