Direct-to-Consumer Startups

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Part
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Direct-to-Consumer Startups

Two case studies of DTC startup companies and their marketing efforts are detailed below. One noticeable difference between the DTC startup companies and conventional companies seems to be the lack of defined campaigns. Instead, they seem to adopt a marketing strategy that evolves over time. Different advertisements are produced over this period, but the messaging remains relatively constant. Barkbox initially relied on digital advertising, looking predominantly to Facebook and YouTube in its marketing efforts, before completely changing its strategy in a new campaign, moving to television advertising. Aloha, on the other hand, has a social media-based strategy, complemented by live events where samplings are on offer.

Barkbox Overview

  • The pet market is currently valued at $86 million and continues to grow. Barkbox is a DTC startup that took a different approach and has reaped the rewards. Rather than attempt to serve the entire market, Barkbox focused on a niche — the diehard dog lover. They offer only one product, a box of doggie treats, delivered monthly. The box is a different cross-section of goods and samples.
  • The company recognized that Millennials rather than lavishing money on their children were spending money on their pets, with 44% of Millennials viewing their pets as startup children. Barkbox also realized that 92% of Millennials with pets bought them gifts and looked to capitalize on this.
  • Barkbox currently has over 600,000 customers, with a retention rate of 95%. It has shipped over 10 million boxes and 70 million doggie toys since it was founded.

Barkbox Historical Marketing

  • When Barkbox launched back in 2012, it was with minimal marketing. A basic website was developed to test the waters, and the founders waited to see if the product would gain favor with the consumers. Once the company started receiving positive feedback, it launched a full marketing campaign.
  • The marketing campaign was multi-pronged and predominantly digitally based. The company relied heavily on search ads. They also used a monthly subscription email, containing tips and fun lists for dog owners to promote their product. While these methods were successful, word of mouth and "customer opening videos" proved to be their best marketing.
  • Realizing the following the customer opening videos were getting on YouTube, the company began targeting YouTube reviewers, sending them free samples of the Barkbox. This is a strategy that worked well for them. The unboxing videos continue to pay dividends for the company, and consumers continue to post them on YouTube.
  • Following this initial success, they branched into producing an animated commercial based on a rescue dog and an "America's Got Talent" type show featuring talented dogs. All of these ventures were tied back to the Barkbox brand and included a message about supporting dog shelters.
  • Barkbox also relies on influencers to market the product on social media. Facebook was used extensively initially for advertising. The company currently has just shy of 3 million Facebook followers.

Barkbox Current Marketing

  • Around 75% of Barkbox's marketing budget was spent on Facebook advertising until late 2018 when they changed their marketing strategy and looked to fall back on more traditional advertising avenues. They cut the percentage of their marketing spend on Facebook to 25% and looked to television, direct mail, events, and retail as their primary marketing strategy, planning to incorporate radio advertising at a future point.
  • A test national direct response advertisement ran on television in November 2018. Although Barkbox has not disclosed the exact number, a considerable number of subscriptions were generated within five minutes of the advertisement airing. As a result, Barkbox now uses television advertising extensively in its marketing.
  • Since its inception, Barkbox has done its own creatives in house, which allows for a quick turnaround and allows them to produce an advertisement for about one-tenth of the cost of hiring an agency. For the company, it is this that has allowed them to venture into the more traditional advertising streams. Jay Livingstone, CMO at Barkbox, has said, “That’s the difference-maker, if you add an expensive commercial in the mix, it suddenly makes those CPAs [cost per acquisitions] become less appealing.”
  • While venturing into television advertising, the company looked to participate in more live events that maximize its exposure to audiences outside of their traditional urban customer base.

Barkbox Marketing Message

  • Since changing their marketing tact and embarking on the current campaign, Barkbox has focused on several key marketing messages in its television advertising. The overall messaging focuses on "spoil your dog."
  • The advertisements have also used "blow your dog away" messaging. Special advertisements are produced for the holiday season, dog day, and other notable events, all based on the "spoil your dog" messaging.
  • The unboxing aspect of their marketing continues on YouTube, gaining a number of new posts over the Christmas period, and the unboxing videos have contributed to some advertisements produced for television.
  • Each advertisement has a relatively short shelf life running for around six weeks. This is probably one of the advantages of producing the advertisements in house.

Aloha Overview

  • Aloha is a DTC startup providing plant-based food options to consumers from a range of real food ingredients that are designed to nourish the body. The company was launched at the end of 2013, backed by over $4 million in venture capital funding.
  • The company places a high value on the aesthetic feel of its products with the packaging designed to look sleek and simple, which is meant to imitate the actual product itself.
  • The products were designed with the assistance of herbalists, dietitians, and physicians to maximize the health benefits of the product.
  • When the company was initially launched, it marketed only two products, a five pill supplement pack, "The Foundation," which was designed to supplement healthy eating, and "The Daily Good," a whole-food powder containing 14 ingredients. The product line has evolved with the company.

Aloha Marketing

  • Given that Aloha began life with only two products, much of its marketing has been orientated around the launch of new products.
  • With a new CEO at the helm in 2018, Aloha launched a new marketing campaign focused on a "grassroots" marketing strategy, with in store samplings featuring heavily. The company strongly believes that sampling is essential in establishing a loyal customer base.
  • Social media is a cornerstone of Aloha's marketing strategy.
  • Aloha's Facebook account has over 572,000 followers. On Twitter, they have over 12,600 followers, while its Instagram account has more than 92,500 followers.
  • They utilize shoppable media on their Facebook account for ease of purchase.

Aloha Marketing Message

  • Currently, the emphasis in Aloha's advertising is based around taste, with its most prominent marketing message, "Don't sacrifice taste for nutrition."
  • "Simple clean ingredients" is another of the current marketing messages.
  • The company also emphasizes its competitive advantage in its marketing, which includes the high quality of its ingredients and overall products, being certified USDA organic, and "pretty much any certification you could get."
  • The keto-friendly and low sugar aspects of the product are also emphasized in marketing. Aloha is anxious to convey to consumers that plant-based food is not a trend, but here to stay.
  • The company uses consumer reviews throughout its advertising, particularly on Facebook, where excerpts from reviews are often superimposed over a particular product offering to emphasize a specific aspect of the product, for example, taste or nutritional value.

Research Strategy

We reviewed a range of industry publications and media articles to determine the marketing strategies of different DTC startups. When selecting the two case studies, we noted that television advertising had formed part of the initial chat and attempted to find at least one case study that had incorporated this medium into its advertising strategy. One observation made when reviewing the different DTC startups is the lack of defined marketing campaigns, which are a hallmark of more traditional companies.

It should be noted that a couple of the sources used are outside of the last two years. We have used these sources to provide a complete picture of the companies and the historical aspects of their marketing.
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