Direct
We caught two Twitter conversations this week that, on the surface, are entirely different, but have an underlying thread that are deeply linked.
First, this one:
Then, this one:
To our mind, these two lines of thinking are tied to the same problem: the growth playbook is overly tied to direct response advertising. And direct response advertising near fully relies on algorithmic audience selection.
The problem is not, in and of itself, this playbook, but more what we discussed recently in Influence:
“Algorithmic selection is where insights you don’t catch about yourself are used to manipulate interests and desires, both in categorical form (I want this type of thing) and specific brand form (I want this specific thing).”
Brands, then, by tying their growth strategy to algorithmic audience selection actually lose control over building category interest and, to a degree, brand interest. The algorithms do that.
For emerging CPG brands, this presents a challenge: direct-response advertising is the fastest, most efficient way to growth—and you need growth to build a brand.
But if you’re only reaching and converting customers predisposed to be category ready—and are in that bucket for reasons outside of your marketing—are you really building a brand?
Direct response may get you to $10M, $50M, maybe a bit further.
But the path to a billion-dollar brand isn’t really any different than it was before. It’s not just about fitting into existing categories, it’s often about creating new categories, expanding categories or changing cultural attitudes around existing categories. Sometimes, it’s a combination of those three.
That requires more than direct response advertising.
The difficult part, then, is balancing that algorithm reliance (we’ll stipulate for purposes of this newsletter that it’s needed for near-term growth) with breaking outside the algorithm.
This is, it seems, where many fall short today.
There are likely a number of reasons for this. Foremost, though, is that there was, during DTC 1.0, a belief that direct response could be enough. Some early outcomes even suggested that might be true. We’ve since learned that’s not the case, so many brands are early in the maturation curve of needing to balance both.
As it is, that might make it too early to say that it’s any harder. It’s just that the way people thought might be easier probably isn’t all that viable.