More DTC brands increased their marketing budgets in 2021 than saw direct revenue gains

Direct-to-consumer brands have high revenue hopes and even higher marketing budgets.

A new study outlines the changing marketing landscape for DTC brands, as well as changing revenue expectations. In a recent survey, Modern Retail and Glossy asked 88 self-proclaimed direct brands to look back and look forward. Their responses paint a telling picture of the DTC ecosystem, that brands are increasingly increasing their marketing budgets, even if revenue growth is never guaranteed.

According to the survey, 59% of DTC brand respondents said they had increased their marketing budgets over the past year. Meanwhile, 54% said they saw an increase in direct retail revenue, and only 48% reported an increase in wholesale revenue.

Recent reports reflect this marketing blitz. Earlier this year, furniture brand DTC Floyd told Modern Retail that it increased its smart TV budget last year and plans to increase it even more this year.

According to the company, a large part of these marketing allocation changes are due to changes in digital privacy. “Like all good things, Facebook’s conversion has plummeted, especially since rolling out iOS 14,” said Racheal Brown, vice president of marketing at Floyd.

As a result, brands spent more money on a variety of channels over the past year. And it looks like this trend will continue. According to the survey, 75% of respondents said they plan to increase their marketing spend over the next 12 months.

Brands also believe this 2022 marketing blitz will lead to better results. Although only 54% of brands say they saw an increase in direct retail revenue in 2021, 84% said they expect an increase in direct revenue in the coming year.

But it’s not just direct revenue that DTC brands set up their sites on. Indeed, more and more companies are turning to wholesale trade as an engine of growth. An example of a DTC brand increasingly betting on wholesale is Allbirds. It has seen bumpy revenue growth over the past two years. To try to invigorate sales even further, executives told investors the shoe brand plans to ramp up its wholesale business this year.

This most recent survey reflects Allbirds’ strategic shift: 64% of respondents said they expect wholesale revenue to increase.

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