Product Managers Start To Get Direct With Their Advertising

Advertising only works if your customers see it
Advertising only works if your customers see it
Image Credit: Nick Amoscato

Every product manager wants to be responsible for a successful product. In order to make your product be a success, you are going to have to get people to buy it. In order for that to happen, first people are going to have to know about your product. That is where advertising comes in. Right now the world of advertising is undergoing a major transformation that may impact how you can use it to reach your potential customers. Are you going to be ready?

Say Hello To The New Way Of Advertising

Advertising product managers are turning their attention to what they hope will be the next new engine of growth for their industry: direct-to-consumer (DTC) marketers. Direct-to-consumer businesses, which offer everything from mattresses to toothbrushes to home workouts, start reducing their costs by cutting out middlemen such as physical retail distributors. And these firms relentlessly focus on measures such as the cost to acquire a new customer – while relying on advertising, usually on social media, as their main way to grow.

Now ad product managers hope that the booming DTC business can become a major new revenue source for their industry, complementing big, established categories like insurance, pharmaceuticals and technology. Unlike those existing standbys – whose spending is well-defined and already baked into their revenue expectations – DTC brands play in an apparently unlimited range of products and could be ready for rapid expansion ahead. The DTC companies look especially promising to product managers in traditional media, such as television. As DTC companies start to mature, often eventually opening stores or going on shelves at national retailers, they’re devoting more of their marketing dollars to traditional venues in order to expand their customer base and implement longer-term strategies such as a brand building.

Product managers realize that DTC has been a driver for digital spending for several years, and for the last two years, it’s been a driver for traditional media as well. Measures of DTC activity tend to vary, but they all indicate rapid growth. Spending has increased 35% last year to US$378 million and is likely to grow another 30% this year and 25% the following year. And these firms are spreading out from their usual advertising havens such as social media. National TV spending soared 42% four years ago to $137 million, for instance, and is expected to rise 34% this year and 25% next year.

Its All About Diversification

DTC product managers as a whole increased their ad spending on TV last year to $3.8 billion. That’s still just a slice of the roughly $70 billion TV ad business; however, it’s 60% higher than the year prior. For some DTC product managers, diversification is partly about protection. Some firms are moving a big chunk of their marketing budget away from Facebook and increasing it in more-traditional outlets. They fear their strategy could be hurt if the social network unexpectedly changed an algorithm or shifted a policy. Facebook is down from about 85% of some companies ad spend to about 30% or 35%.

Product managers realize that diversification is also a matter of taking growth to another level. DTC brands are reaching the scale where they want to find ways to talk to the mass market, to consumers everywhere in the country, not just the trendsetters. After a certain point for a DTC brand, increasing spending in the same place will begin to produce diminishing returns. The chase is on for DTC ad dollars, and product managers are courting clients in the sector.

Product managers are trying to become more flexible, to better mirror the digital platforms where DTC brands grow up. To give them openings to experiment without having to shell out for a pricey prime-time commercial, the product managers are deploying a machine-learning tool that analyzes scripts to find spots where ads could appear next to relevant scenes in more affordable programming. How far the DTC spending and diversification go, and for which brands, remains to be seen. Some DTC companies, for instance, will likely retain their focus on social media.

What All Of This Means For You

Advertising product managers are always on the lookout for ways to generate more revenue. They have advertising space that they want to sell and they are looking for firms that are willing to buy it. They have their old standbys – firms in the insurance, pharmaceuticals and technology industries. However, in order to keep growing they need more customers. They think that they may have found a new market: DTC.

Direct-to-consumer (DTC) businesses, reduce their costs by cutting out middlemen. And these firms relentlessly focus on measures such as the cost to acquire a new customer – while relying on advertising as their main way to grow. DTC brands play in an apparently unlimited range of products and could have rapid expansion ahead. The DTC companies look especially promising to product managers in traditional media, such as television. DTC has been a driver for traditional media sales. DTC firms are starting to move away from online advertising to more traditional advertising methods in order to diversity. The size of some of the DTC firms is also causing them to seek new ways to advertise. Product managers also have to become flexible in order to land this new type of customer.

The need to grow the market for the advertising that they have to sell drives advertising product mangers to always be looking for new types of customers. The DTC market is starting to look like a novel new market for them to go after. They need to take the time to understand this market and then adjust what products they offer in order to meet their unique needs. If done properly, the advertising product managers may have just discovered a major new market.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How can advertising product managers convince DTC firms to switch from social media to traditional media?

Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

When we think about how we want to present our products to our potential customers, I think that we can all agree that we’d like to make the product look as attractive as possible. No matter if we are using words, pictures, or even video, our goal is to make the product look like something that our customers would desire to get their hands on. However, is it possible that we’ve been getting this all wrong? Is there another way that could allow us to be even more successful?