Product Managers Start To Go Directly To Their Customers

Ad product managers think that they have found a new market
Ad product managers think that they have found a new market
Image Credit: United Nations Development Programme

Advertising product managers are always looking for the next “big thing”. The advertising market has its ups and downs as customer’s needs, wants, and moods change seemingly overnight. These product managers have the responsibility to keep their eyes open all the time searching for the new ways that they can expand their product development definition and help the firms that manufacture goods get their message in front of their next customer. Right now what these product managers are doing is turning their attention to what they hope will be the next new engine of growth for the industry: direct-to-consumer marketers.

Say Hello To Your Customer

The product managers for direct-to-consumer (DTC) businesses, which offer everything from toothbrushes to mattresses to home workouts, start by cutting out middlemen such as physical retail distributors. From there they focus on measures such as the cost to acquire a new customer—while relying on advertising, usually on social media, as the main way to grow.

Now ad product managers hope that the booming DTC business can become a major new revenue source for the industry, complementing big, established categories like insurance, pharmaceuticals and tech. Unlike those standbys -whose spending is well-known and already part of ad sellers’ expectations -DTC brands play in an apparently unlimited range of products and could have rapid future expansion ahead.

DTC companies look especially promising to product managers in traditional media, such as television. As DTC companies mature, often eventually opening stores or going on shelves at national retailers, they’re devoting more marketing dollars to traditional venues to expand their customer base and implement longer-term strategies such as a brand building.

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 vary, but all indicate rapid growth. A collection of DTC companies that are spending on advertising had their spending increase 35% last year to $378 million, and is likely to grow another 30% this year and 25% next year. And they’re spreading out from their usual advertising locations such as social media. The 13 brands’ national TV spending soared 42% in 2018 to $137 million, for instance, and is expected to rise 34% this year and 25% in 2020. Growth like that would look good on anyone’s product manager resume.

The New World Of DTC Advertising

The reason that ad product managers are so excited by the DTC opportunity is because it represents potential significant growth. Pharmaceutical advertising, the fastest-growing established category last year, grew 22% in 2018 to $10 billion, following a 2% decline in 2017. Finance rose 15% and tech increased 11%. Auto, entertainment and personal-care advertising all declined. For another measure, the number of DTC advertisers across TV increased to 76 last year from 48 in 2017. They aired commercials 409,617 times, up 63.3%. By the first quarter of this year, DTC buyers on TV numbered 108. DTC advertisers as a whole increased ad spending on TV last year to $3.8 billion. That’s still just a slice of the roughly $70 billion TV ad business, but it’s 60% higher than the year prior.

For some DTC brands, diversification is partly about protection. Two years ago, for instance, Bombas LLC decided to move a big chunk of its marketing budget away from Facebook and increased it in more-traditional outlets. The online sock marketer feared its strategy could be hurt if the social network unexpectedly changed an algorithm or shifted a policy. The company is nonetheless spending more to advertise—both on Facebook and overall. Diversification is also a matter of taking growth to another level. DTC brands are reaching the scale where they want to talk to the mass market, to consumers everywhere in the country, not just the trendsetters.

The chase is on for DTC ad dollars, and media companies are courting clients in the sector. Social media, the traditional DTC home ground, is also making efforts to court the companies. Alphabet Inc.’s Google in April convened a daylong meeting of its new DTC Council, with 15 executives from companies. What was heard from these leaders is that they are focused on performance metrics, such as driving new customer acquisitions, subscriptions and purchases. Subway, bus and other advertising outside the home is DTC brands’ favorite channel after social, but sales teams aren’t taking that for granted. 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

Ad product managers are always under a great deal of pressure. They are looking for new customers and they are looking for new ways to use their product manager job description to get their customer’s message in front of their customers. That’s why these product managers get so excited when they discover a new market segment. This is what appears to have happened when the direct to consumer companies started to advertise.

Direct to consumer (DTC) companies cut out the middle man and then focus on getting their products in front of their customers, generally by using advertising. The DTC market is rapidly expanding and this is what is getting product managers excited. DTC companies have started to become a major driver in spending on traditional media. One of the fastest growing areas of DTC ad spending is on television. Traditionally DTC companies advertise using social media, but as they grow they want to diversify and protect themselves from changes in the online social media market. DTC companies are all about the performance of their ads and product managers need to realize this.

It is always exciting when a new type of customer suddenly shows up. The ad product managers have become excited by the arrival of DTC firms because they are successful and they are interested in buying ad space on traditional media outlets. DTC represents a new avenue of growth for ad product managers. As long as they are going to be able to show the DTC companies a return for their investment, then this may be the start of a beautiful new relationship.

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

Question For You: How can ad product managers collect the performance data that DTC customers require?

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What We’ll Be Talking About Next Time

You would think that being a burger product manager would be a fairly simple job: you get the burger, you make the burger, you sell the burger. However, once upon a time it might have been that simple; however, these days it has become much more complicated. If you can ignore for a moment the fact that you are facing a great deal of competition, it now turns out that your customer’s tastes are changing. Burger product managers have a challenge on their hands and they are going to have to get creative and change their product development definition.