​​By 2024, Insider Intelligence predicts those dollar amounts will rise to nearly $161b and $52b, which isn’t a surprise considering almost 64% of consumers made regular purchases directly from brands last year.

DTC brands are responding by investing heavily in traditional and digital ad formats, although the uncertain economy is putting pressure on many of them, including those at SmileDirectClub, who decreased spending by 7% YoY through May. 

Overall, DTC brands spent nearly $4.3b on ads through May 2023, representing a 13% decrease from the same time last year. Meanwhile, the number of DTC brands buying ads fell by 5% to 760.

Despite decreases in spending every month of 2023, some DTC brands are still opening their wallets.

It’s a 50-50 Split for DTC’s Top Advertisers

Technology is the lifeblood of the DTC industry, with a click on a phone or computer often the only thing separating consumers and their intended goods or service. Despite that, DTC advertisers are still embracing the non-digital side of the advertising world. 

Through May, DTC advertisers spent 53% of their dollars on digital formats (down by 14% YoY to $2.2b) and 45% on TV (down by 11% YoY to $1.9b). They also spent on print ads, which dropped by 38% YoY to $70mm. 

Five DTC advertisers stood out—Casetify, DraftKings, The Farmer’s Dog, MapleBear (Instacart), and Wix.com—who combined to spend more than $443mm through May or 10% of the investment from DTC companies.  

Advertisers for Casetify (owned by Casetagram), for example, increased spending by 168% YoY on the heels of the launch of Flexi Band for Apple and Samsung watches, its first “Style Lab” Pop-Up Experience, and becoming the official tech accessory partner of Coachella. 

The big spending from advertisers at Casetify comes in the wake of rapid growth—since launching 12 years ago, Casetify has sold more than 15mm phone cases. We can attribute a good chunk of that growth to its investment in advertising, much of which lives inside social media channels. Through May, 99% of Casetify’s ad dollars went to social media channels, with a big focus on video formats. 

Meanwhile, advertisers for DraftKings increased spending by 23% YoY, with the bulk of spending (79%) going to TV ads across cable (up by 393%) and broadcast networks (up by 69%). 

While the traditional-heavy strategy isn’t new—440 gambling advertisers allocated 69% of their ad dollars to TV and print ads through October 2022—it flies in the face of the industry’s quest for profitability. 

After years of flashy campaigns, including a fleet of Ubers that look like chariots and betting in space, the industry has collectively prioritized profit—or so it seemed. 

David VanEgmond, a former FanDuel and Barstool Sportsbook executive, said, “You’ve seen the industry pull back and say, ‘Wow, fighting for market share got pretty ugly in terms of losses.”

The ongoing investment in traditional ads instead of their more measurable digital counterparts could indicate that companies aren’t marching toward performance and efficiency at quite the expected pace.

Advertisers for MapleBear (brand name: Instacart) also spent big, increasing their investment by 127% YoY. Similar to their contemporaries in the gambling realm, advertisers for MapleBear spent 80% of their dollars on TV, many of which went to a Super Bowl ad. 

For MapleBear, spending comes not only as Instacart fights for more of the eCommerce grocery pie, but they bolster their digital ads business and capitalize on the rise of retail media.  At the heart of this initiative is Instacart Marketing Solutions, which aims to help retailers create marketing campaigns that “attract, engage, and drive affordability for customers on Instacart-powered eCommerce websites and apps.” 

“We know affordability is top of mind for consumers across the country right now. It’s also top of mind for our retail partners, who are looking for more ways to help their customers save when accessing the groceries and goods they need,” said Chris Rogers, Chief Business Officer at Instacart.

He went on to say, “With the launch of Instacart Marketing Solutions and our expanded loyalty programs, we’re developing new technology tools that empower retailers of all sizes to create strategic digital campaigns and unique loyalty programs that engage their customers, grow their business and, ultimately, help customers find more savings at checkout.”

Instacart also recently partnered with Roku to help advertisers measure the impact of TV ads on eCommerce purchases via first-party data. 

The big moves from MapleBear and Instacart aren’t surprising, considering nearly 30% of Instacart’s revenue comes from advertising. In fact, eMarketer predicted that Instacart’s digital ad revenues would grow faster than TikTok, Amazon, and Apple in 2023. 

This intense competition from the likes of Walmart, Kroger, and Amazon (Amazon Fresh, Amazon Pantry, and Whole Foods delivery and pickup), as well as the push for more ad revenue, will continue to influence how MapleBear promotes Instacart. 

That strategy will continue to evolve, but it’ll likely include podcast ads, which increased by more than 1,000% YoY to more than $2mm as MapleBear invested in primary pre-roll ads on popular podcasts such as Fantasy Football Today Podcast, Make Me Smart with Kal and Molly, and Happier with Gretchen Rubin. 

Finally, advertisers for Wix.com and The Farmer’s Dog increased spending by 174% YoY and 109% YoY, respectively. For The Farmer’s Dog, much of that spending went to a Super Bowl spot, Forever, telling the story of Ava and her Labrador retriever, Bear, as they grow up.

Jonathan Regev, co-founder and CEO of The Farmer’s Dog, told PEOPLE that he hopes the ad encourages people to make healthy changes in their pet’s life to increase their happiness and longevity. Advertisers for The Farmer’s Dog also invested in TV ads across reality, sitcoms, movies, and action/drama shows.

An Industry Primed for Ad Spending 

Brands like Allbirds, Casper, and Warby Parker ushered in the DTC revolution years ago and revolutionized the consumer world in the blink of an eye. 

But established brands are catching up. Since 2011, Nike has grown DTC sales from 16% of revenue to 35%, while Adidas outlined plans for DTC sales to make up 50% of its revenue by 2025. Under Armour has also expressed a desire to grow its DTC model. 

The continued emergence of established brands will push an already rapidly growing industry even further—and as they do, ad dollars will follow to keep companies one step ahead of the competition. 

For more insights, sign up for MediaRadar’s blog here.

Direct-to-consumer (DTC) brands are transforming every aspect of the consumer world.

Warby Parker ushered in the DTC era more than a decade ago, paving the way for companies like Bombas, Allbirds, and Harry’s to thrive. 

At the same time, legacy players, like Nike and Adidas, have evolved to meet the shift in shopping behavior. 

Since 2011, Nike has grown DTC sales from 16% of revenue to 35%, while Adidas outlined plans for DTC sales to make up 50% of its revenue by 2025.

The competition for consumers’ attention and wallets is also forcing the hands of DTC advertisers. 

Here’s how DTC advertisers spent in 2022 and what we can expect from them this year.

MediaRadar Insights on DTC Advertising in 2022

In 2022, direct-to-consumer (DTC) advertisers, including Squarespace, Chime, and Bombas, spent $11b on ads, representing an 8% YoY increase from 2021. 

In Q1, advertisers spent $3.2b, a 24% YoY increase from Q1 2021. January saw $1b in spend, a drop of 6% from the previous year. 

The decrease was likely due to the uncertainty surrounding surging Omicron cases and advertisers’ desire to feel out consumer sentiment around the looming recession. According to Reuters, U.S. consumer confidence dropped slightly in January. 

While DTC advertisers spent billions for the remainder of 2022, they did so with caution, evident by their consistent quarter-of-quarter decreases (QoQ).

In Q2 and Q3, advertisers spent $2.8b and $2.5b, respectively, representing YoY increases of 12% and 4%. That said, Q2 spending dropped by 13% QoQ, while Q3 did so by 12%. 

In Q4, advertisers spent nearly $2.6b, a 7% decrease. But spending increased by 3% QoQ from Q3—a modest increase considering the busy holiday shopping season.

In 2022, consumers spent more than $211b online during the holiday season. Many of those purchases undoubtedly went to digital-native or digital-first DTC brands. 

Drivers in DTC Advertising

Advertisers in retail, media & entertainment, technology, finance, and apparel drove DTC ad spending in 2022, collectively spending $7.6b or 69% of the investment from DTC brands. (These are the same top categories for January 2023.)

Retail

Retail DTC advertisers increased spending by 8% YoY to nearly $2.2b. 

Food and drug DTC retailers were at the heart of the increase, investing $583mm or 19% of the investment from retail DTC advertisers. Big names, like Maplebear (Instacart), Uber and DoorDash, combined to spend more than $496mm or 85% of the food & drug DTC retail ad spending in 2022. 

For these food-related advertisers, the increase comes amid lingering pandemic concerns and millions of people refusing to give up the work-from-home life. People also grew fond of these services over the past few years, ingraining them into society.

In Q2 2021, DoorDash’s revenue almost doubled, despite restaurants reopening. Meanwhile, Uber’s Q4 2021 report touted $25.9b in gross platform spend, up by 51% YoY. 

That said, consumer cutbacks on restaurant spending could cap advertiser’s budgets.

Advertisers in another retail category, home furnishings, accounted for 14% ($304mm) of the total spending. Unsurprisingly, online marketplaces accounted for 13% or nearly $273mm of the category’s spending as people opt for online shopping instead of brick-and-mortar locations.

Media & Entertainment 

Media & entertainment advertisers, including those promoting fantasy sports leagues, book subscription boxes, game titles, and gambling apps, increased spending by 14% YoY.

Advertisers for gambling apps—DraftKings, Flutter Entertainment (FanDuel) and MGM Resorts International—find themselves in a unique situation. 

After years of funneling billions into non-traditional tactics to earn market share—Caesars made a fleet of Ubers in Arizona look like chariots—gambling advertisers are readjusting their sights as they prioritize profitability. 

David VanEgmond, a former FanDuel and Barstool Sportsbook executive, said, “You’ve seen the industry pull back and say, ‘Wow, fighting for market share got pretty ugly in terms of losses.’”

As gambling companies switch their focus from customer acquisition at all costs to profitability, ad dollars will flow to digital channels that allow advertisers to measure their campaigns and maximize returns.  

Technology 

Technology DTC advertisers increased spending by 27% YoY to $1.5b. Most of this spending (83% or $1.2b) came from advertisers promoting software, consumer electronics and information technology. 

One of the biggest spenders, Squarespace, dedicated 85% of its January spend to video ads and made a big splash at Super Bowl LVI by teaming up with Zendaya. 

“Our belief is that the new internet economy will be fueled by the imagination of a new breed of creators and entrepreneurs, constantly exploring and experimenting with all the possibilities behind their idea,” said Kevin Nabipour, Squarespace’s director of strategy, content and partnerships. 

Squarespace is no stranger to teaming up with celebrities and creators, which lends light to its target demographic—younger generations—and where its ad dollars will go in 2023. 

Squarespace wants to embolden the next generation of creators to build their empires on its platform. To reach them, the company’s in-house creative team launched a three-spot campaign.

To show their commitment to Millennials and Generation Z, they’ll also invest in podcasts, but that’s nothing new to the company.

In a post-customer survey years ago, Squarespace found that a third of its new subscribers came from its audio ads. Advertisers have invested heavily in podcasts ever since. 

In 2015, the company spent 2.5x more on podcast ads than the next highest company. At one time, its ads were responsible for a third of all revenue for the podcast ad placement platform, Midroll.

It seems inevitable that podcast ads will play a role in Squarespace’s strategy and other DTC brands in 2023 and beyond. 

Finance 

Finance advertisers invested $1b in 2022, representing an 8% YoY increase from 2021. Banks, credit cards, and accounting/taxes were the top drivers for financial institutions, combining to spend more than $481mm. 

Chime and Experian were two big spenders. Chime leaned heavily into TV ads in January 2023, with 64% of its budget going to the traditional format.

Spending from Chime, Experian, and other finance DTC advertisers makes sense as millions of people put a premium on healthy financial habits after a turbulent few years. In fact, nearly 40% of people who had emergency savings before March 2020 said they dipped into those funds during the pandemic.

Meanwhile, roughly half of non-retired adults said the economic consequences of the coronavirus outbreak will make it harder for them to achieve their financial goals.

Ongoing layoffs will continue to put pressure on people and increase financial anxiety. As that happens, financial advertisers will find their products and services in more demand than ever. 

Apparel 

Apparel DTC advertisers increased their budgets by 23% YoY in 2022 to more than $892mm.  

Accessories DTC advertisers played a big part in that surge, spending over $340mm (38%) of this spend. 

Meanwhile, apparel advertisers, including those from Bombas, Mejuri (fine jewelry), and Stitch Fix, invested nearly $161mm. 

While advertisers weathered 2022’s uncertainty, the tides may be turning. 

Despite spending $134mm in January—Bombas invested 61% of its ad dollars in online video ads—cost-cutting measures will almost certainly extend into ad budgets.

Wayfair laid off 870 employees in August 2022, while Stitch Fix cut 35% of its workforce in two rounds of layoffs. The RealReal is also treading water, with a recent announcement of layoffs citing “profit imperative.” 

DTC Advertisers Won’t Ride the Spending Wave in 2023

Most DTC advertisers had a big 2022, but early indications show that the recession and less consumer discretionary spending will put them in a tough situation.  

While ad spending won’t completely stop in 2023, it’ll be hard to justify flashy campaigns and big ad investments when so many employees are starting their job search. 

For more insights, sign up for MediaRadar’s blog here.