It’s The End Of The World As Direct-to-Consumer Brands Know It, But Apple Feels Fine

Last month, my colleague, Michelle Houston (EVP, Client Services, CohereOne), offered her insights on how direct-to-consumer retail brands are weathering an onslaught of storms originating in 2020 that continue to disrupt day-to-day operations.

This month, I will focus on one specific disruption: Apple’s recent privacy changes.

If you haven’t closely followed this story, here’s a quick refresher.

Earlier this year, Apple updated its operating software to pack more punch from a privacy standpoint.  In short, iPhone and iPad users can more deliberately select whether or not the applications (“apps”) on their devices (social media platforms and games, in particular) can share their data for marketing purposes. Apple device users now routinely encounter pop-ups within the apps prompting an answer as to whether the user wants to allow the app to “track your activity across other companies’ apps and websites.”

The effects of this change are in the early stages of being understood – early indications are that there will be a material impact on direct-to-consumer retail brands’ marketing plans. CohereOne serves this industry, and all our clients are both curious and anxious to learn exactly how it will affect their business.

How many Apple device users will opt out of tracking? Independent analysts reviewing Apple’s App Tracking Transparency (ATT) initiative say a scant 4% of iOS users in the U.S. are opting into ad tracking. Predictably, the negative impacts to advertising performance are highlighted by direct-to-consumer retail brands – Vera Bradley’s Q2 2021 shareholder’s report, for example, placed partial blame on Pura Vida’s (a popular fashion accessories brand owned by Vera Bradley) sales on less effective Facebook and Instagram advertising caused by Apple’s software privacy update and subsequent tracking restrictions.

This newfound uncertainty has retail brands rethinking their marketing plans for Q4 2021 and beyond, emphasizing advertising channel diversification. Addressable channels that leverage first-party data, like email, SMS / text, and direct mail will benefit from ad spend reallocation.

What about prospecting, new customer acquisition – the “top of the funnel” – where direct-to-consumer brands must make significant investments? First-party data relationships with customers are often earned over a series of ad impressions. So, if measuring and tracking a prospect’s engagement with ads on their Apple iOS-enabled device has become nearly impossible at or near the top of the funnel, what are the alternatives?

Of the remaining addressable channels, direct mail is, by far and away, the best solution. As the saying goes, what’s old is new again – this is undoubtedly true concerning direct mail. However, the ugly, product-and-price-list types of pieces that used to flood one’s mailbox have been replaced mainly by surprisingly delightful content- and photography-rich vehicles.  These new pieces appeal to Baby Boomers, Gen-X’ers, and Millennials alike, driving them to their shopping and transaction channels of choice and delivering a unique, advertising channel integrated customer experience.

Direct mail is cost-prohibitive, some say – we respectfully disagree. Suppose you’re routinely paying north of $1 per click for top-of-funnel engagement on Facebook / Instagram or for non-branded paid search. In that case, it’s high time you test direct mail, where equivalently qualified audiences can be targeted for 20-40% less.

Direct mail is just as hard to track, others say – again, we disagree. Promotions files can be matched to transactional records with relative ease and very modest expense. And, unlike the digital domain, one can (and should) execute holdout panel testing, enabling brands to measure, as truthfully as possible, a campaign’s incremental return on investment (ROI).

Whether your brand is launching its first-ever direct mail effort, or you’re an established brand with experience operating in a complex marketing ecosystem, CohereOne can help. Let us assess your current direct-to-consumer marketing program. From that, we’ll develop a plan that leverages the direct mail channel to the fullest extent and one that’s integrated with your other addressable (i.e., digital) media.

Drop us a note today – we’d love to hear from you! – Todd Miller (tmiller@cohereone.com)

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