Brand Strategy

Does DTC Branding Mean Legacy Brands are Dead Men Walking?

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Bill Winchester

PRESIDENT & CHIEF CREATIVE OFFICER

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The scene: A legacy brand CEO stands at the door of a huge tower and shuts the doors and turns off the lights, stands in the threshold for a second and sadly reminisces back to when people bought things in stores.

A little tear trickles down the CEO’s cheek and the scene dissolves to people wildly shopping on their phones and self-driving delivery trucks clogging the highways. Cut back to CEO, choking back acid reflux while walking down the street shopping on her phone for DTC organic antacid tablets called Lovefluxa.

Let’s face it, Direct-to-Consumer (DTC) brands are a giant challenge to legacy brands and the switch has happened fast enough to stun many organizations into inaction. So, the big question: Can legacy brands compete and survive the disruption coming from DTC branding efforts? At LSB, we’re in a unique position to give an opinion since we work with both Fortune 100 companies and VC startups and see the stark difference first-hand.

We’re going to go way out on a limb and say, “maybe.”

Why the equivocation? The problem is the attack from DTC is on so many fronts that it’s difficult to make a definitive statement.

Culture is key in a DTC Branding world

You can point to many causes of this disruption. The control DTC brands have over pricing, the shopping experience, customer service. Then there’s all that first-party data. The mobile device as a store. Or, the fact that legacy brands are letting their e-commerce team own their customers, data and product insights.

(By the way, for many legacy brands, this isn’t the first time this kind of whole-cloth disruption has happened. Anyone else remember the big box revolution and how flummoxing that was for so many brands?)

We believe the root cause is something that’s built into a legacy brand’s DNA and therefore much harder to change: Culture.

Basically, this comes down to the hairball that exists inside of most American corporations. To quote Gordon MacKenzie, the author of Orbiting the Giant Hairball, “A hairball is an entangled pattern of behavior. It’s bureaucracy, which doesn’t allow much space for original thinking and creativity. It’s the corporate tendency to rely on past policies, decisions, and processes as a formula for future success.”

All of this creates a Gordian knot of corporate normalcy — an entanglement that grows over time. As its mass increases, so does its gravitational pull. And what does gravity do? It drags things down. But hairballs can be effective. They provide a necessary stability. It’s not the job of the hairball to be vibrant, alive and creative.

Given this drag, are legacy brands dead men walking? It’s been the central question of several articles recently including pieces in Seeking Alpha and from the World Advertising Research Center. A lot has been written lately suggesting that may be the case.

But please, humor us for a moment as we take a more optimistic approach.

What can legacy brands do to escape the hairball? Here are some suggestions:

Does DTC branding mean legacy brands are dead men walking?1. Don’t focus on the consumer, focus on the consumer’s problems.

Focusing on the consumer puts you at risk of marketing to a set of demographics vs. actual people. Focus instead on the consumer’s pain. Solving their problem allows your brand to be found by other consumers suffering from the same thing.

Does DTC branding mean legacy brands are dead men walking?2. Recommit to product design.

Legacy marketing depends on intermediaries like retailers or showrooms to create shopping experiences that show your product off (hello end-aisle display). But in a world where products have to jump off an Instagram post, your product has to LOOK good. And in a world where product reviews mean everything, it has to BE good. Oh, and “unboxing” — that’s a thing. Packaging that reinforces your brand story and makes your product feel special is critical.

Does DTC branding mean legacy brands are dead men walking?3. Refresh your Brand Identity.

Most legacy brands’ brand identity systems were designed to be printed. DTC brand identities are designed to be viewed on a mobile screen. There are real implications for logo design, color choice, fonts, even brand name when designing for the smallest of screens.

Does DTC branding mean legacy brands are dead men walking?4. Adopt performance marketing strategies.

DTC brands don’t focus on reaching the MOST people, they focus on reaching the RIGHT people. Performance marketing allows you to start small, target precisely, learn in real-time and pivot quickly.

Does DTC branding mean legacy brands are dead men walking?5. Reward your people for taking risks.

Legacy brands reward their brand teams for incremental gains in sales, profit, awareness, brand affinity or any number of other metrics. A .05% incremental gain is reason for celebration. Conversely, DTC brands are much more dynamic. Large risks, large rewards. People who succeed actually thrive on the entrepreneurial chaos and risk that is baked into the system. Legacy brands need to change their pay structures to reward risk and creativity rather than stability and incremental gains.

Does DTC branding mean legacy brands are dead men walking?6. Throw out the idea of “minimum scale.”

Many legacy brands have a minimum scale for a brand or project before it’s deemed worthwhile. This policy is baked into the culture because it’s been successful for so long. The need for scale means the product requires broad awareness which, in turn, creates a reliance on big media. Scale works against placing small bets and kills entrepreneurial spirit. Scale creates gravity which pulls projects back into the hairball. Instead, focus on identifying a need. If it’s big enough, you can start incredibly small and build scale quickly from the bottom up.

Does DTC branding mean legacy brands are dead men walking?7. Become more agile.

Agility isn’t just a thing to talk about and wring your hands over, agility creates speed-to-market and is therefore a fungible asset. The problem, once again, is the legacy processes and bureaucracies which reward careful (read slow) decision-making. DTC brands move fast, fail fast and recover fast.

Does DTC branding mean legacy brands are dead men walking?8. Study DTC branding best practices.

I’ll admit this is kind of a “yeah, duh,” but this goes for everyone on your team — especially the most senior members. It’s important to be crystal clear about the differences in marketing a legacy brand vs. a DTC brand. You need to be sure everyone really understands what they’re signing up for. If legacy culture is the enemy of legacy brands, the only way to reach hairball escape velocity is to adopt a different cultural mindset.

To be fully free to create, we must first find the courage and willingness to let go:
Let go of the strategies that have worked for us in the past…
Let go of our biases, the foundation of our illusions…

-Gordon MacKenzie, Orbiting the Giant Hairball

 

 

**Note: LSB’s chief marketing strategist, Lindsay Ferris, contributed to this post. (See? Creative people and strategy people CAN get along.)

 

Bill Winchester

PRESIDENT & CHIEF CREATIVE OFFICER

Has actually won a bagpiping contest.

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