DTC and Digitally Native Brands Find Bright Spots in Linear TV

Digitally native brands—diversifying away from performance platforms like Meta and Google—are finding success in a decisively analog, famously brand-building medium: linear television. Five-year-old direct-to-consumer diaper brand Coterie started investing in linear television in fall 2022, said Ankur Goyal, vice president of growth at the company. The channel boasts a cost per acquisition that is competitive with, if not beating, Facebook, as measured by post-purchase surveys. “When you shut [linear] off, you feel it the next day,” Goyal said. While Coterie still spends the majority of its advertising budget on Meta and Google, linear TV is taking a larger share of incremental media spend, and it commands significantly more investment than streaming television, as CPMs (cost per thousand impressions) for linear TV can be 70% cheaper than the cost of streaming, Goyal said. Marketers Navigate an Uncertain Fourth Quarter Mired by Ad Softness Digitally native DTC brands thrived in the past decade, in part due to advertising on Meta and Google, where it was cheap to find the right customers. In the past couple of years, this playbook has been scrambled by increased competition and ad prices and, critically, Apple’s App Transparency Tracking framework, which made it harder to find the right people to serve ads to. DTC brands over the past two years have been diversifying ad spend to channels outside of Meta, including connected TV. While not a digital medium, linear TV offers performance-oriented brands an opportunity to reach audiences that might not be on social platforms, three ad buyers told Adweek, and inventory that can be cheaper. And as brands mature, marketing objectives expand beyond pure performance plays. Linear viewership has been declining and will fall below 40 million viewers next year—not to mention a typically older demographic using the medium—while CTV’s viewership is on the rise and will approach 55 million viewers next year, according to Insider Intelligence. Cheaper inventory, unique reach, less targeting For Coterie and digital agency Markacy, linear TV drives performance because it's often cheaper than streaming television, therefore leading to more efficient buying. Linear remnant CPMs tend to run between $5 and $6, compared with $20 to $30 on CTV, although there can be more variance in streaming inventory, said Chris Rigas, vp of media at Markacy, whose clients have been spending on linear since 2019. Linear television’s cost per session is roughly 20% to 30% lower than that for streaming, Rigas estimates. Streaming offers better targeting than linear, but the savings and reach of linear ameliorate those differences, he said. Linear, by its unsophisticated targeting, is reaching people that algorithms wouldn't touch. Ankur Goyal, vp of growth, Coterie Not all buyers find that linear TV is always cheaper. At performance media ad-buying company Icon Media Direct, CTV is sometimes cheaper than linear TV, but it depends on the time of day, said Nancy Lazkani, the company’s CEO. For Michael Lisovetsky, co-founder of digital agency Juice, the same quality placement is typically more expensive on linear TV than streaming, although linear buys can be more cost-effective by buying remnant and lower-quality inventory. “A lot of clients end up investing more in linear if it works, and they bundle their streaming spend into their digital budget,” he said. Regardless of price, linear can reach people CTV cannot, Goyal said. “My logic is that CTV and Meta are using similar signals to identify people in-market, with Meta having a huge edge in its sophistication,” Goyal said, adding that linear outperforms CTV in terms of incrementality and first-touch cost per action. “Linear, by its unsophisticated targeting, is reaching people that those algorithms wouldn't touch.” DTC diversifying earlier Some digitally native brands’ unlikely embrace of linear television was not a foregone conclusion, previously only reserved for blockbuster DTC successes like luggage brand Away or sneaker firm Allbirds. As Meta Stumbles, Major Advertisers Are Finding Other Platforms Do the Job Just as Well “[TV] wasn’t even in the [DTC] conversation,” Lisovetsky said. "The biggest difference is the threshold at which people pursue TV,” he added, noting that brands now start to diversify outside of platforms like Meta and TikTok after reaching a few million dollars in revenue. Of course, for all of the benefits of linear, CTV is still growing faster with both advertisers and users. “Long-term, only having a linear TV capability is a strategic weakness," Goyal said. "We're going to need to crack CTV at some point. But it seems like the order of operations—for us, at least—is cracking linear TV first and then moving to CTV, versus the other way around.”

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DTC and Digitally Native Brands Find Bright Spots in Linear TV

With a different audience and sometimes favorable pricing, the old medium is seeing new converts

Catherine Perloff

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Catherine Perloff