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As DTC brands move into wholesale, analytics platforms follow

A new MikMak tool shows multichannel brands how ads drive purchases and where customers want to shop.
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Artwork hand printed by Hannah Cousins, exclusively for Vogue BusinessArtwork hand printed by Hannah Cousins, exclusively for Vogue Business

Key takeaways:

  • Brands are struggling to measure the efficacy of their online marketing dollars as more platforms come into play and customer acquisition costs rise.

  • Analytics firms are taking note and providing attribution tools as direct-to-consumer and wholesale brands look to balance the distribution mix.

  • MikMak’s new analytics dashboard lets brands better attribute their marketing spend by letting customers choose where to shop.

New York cosmetics brand Winky Lux started as a direct-to-consumer company in 2015. After two years, it expanded from selling only through its e-commerce site into retailers including Sephora, Macy’s, Ulta, Amazon and Nordstrom.

As it made that transition, it found connecting the dots between online ads and e-commerce sales at multi-brand online retailers to be a challenge. While Winky Lux could still measure clicks and engagement on social platforms, it was largely in the dark when it came to which types of ads or platforms drove customers to which retailers. For multichannel brands, allocating marketing spend that sends customers to specific retail partners can be a guessing game.

Software and analytics providers recognise this as an opportunity as more brands strive to balance their distribution between direct and wholesale channels. MikMak, which started in 2015 to help brands create and measure online shoppable videos, last week introduced a new analytics dashboard that shows how a brand’s digital media is performing in various channels and to which retailers customers are going to shop.

Brands can attach MikMak software to any online media, including TikTok, email, Instagram and static display ads. When a customer swipes up on a MikMak-enabled Instagram Story promoting YSL lipstick, for example, they can select if they want to check out at Sephora, Nordstrom or YSL’s own site. They are then directed to the retailer’s site and can place the item in their cart. MikMak is able to collect data at each step. Customers get to choose where they checkout and retailers can draw conclusions on marketing strategies based on those preferences.

“When we think about how we attribute marketing dollars, it can be a bit of a black hole,” says Winky Lux CEO Natalie Mackey. “You really have no transparency into the conversion if you don't own the site. A lot of people who are in the DTC world would say, ‘We'll only put money behind it if it's converting back to our site,’ and that's great, but your conversion will be lower. People like checking out on Amazon, and they like checking out on Ulta or Sephora.”

Measuring after the “swipe up”

MikMak founder and CEO Rachel Tipograph began transitioning MikMak into an enterprise software business in 2017 after realising that its shoppable video clients were invested in the data and insights it could provide. MikMak clients include L’Oréal, Unilever, P&G and Estee Lauder, and more recently, former DTC brands who introduce wholesale to build brand awareness and attract new customers.

“Once you hit $20 to $50 million in DTC revenue, you will plateau, and your cost per customer acquisition will become so high you'll be forced to look at alternative distribution, which is why you see all these indie beauty brands end up on the shelves of Sephora, personal care brands on the shelves at Target, or fashion and lifestyle brands at Nordstrom,” Tipograph says.

This helps brands optimise media spend at a time when paid acquisition has become increasingly competitive, Winky Lux’s Mackey says. “In the old world where you could buy underpriced real estate on Facebook and Instagram, that's a bygone era. Now, you're competing against heavily funded, very sophisticated companies. There's been a ton of money pumped into DTC, and at some point, it becomes very pricey to acquire a customer just through DTC channels.”

Google Cloud vice president of retail and consumer Carrie Tharp says that as tech advances, so do the number of data points captured in a shopping journey, and DTC brands have the advantage of building their tech stack “from the ground up”. Tharp says that retailers including John Lewis and All Saints use Google’s “cloud data warehouse” BigQuery to import vast datasets. Google recently paid $2.6 billion for data visualisation provider Looker, used by Dollar Shave, Glossier and Bonobos, illustrating the potential value in tools that help brands collate, and make sense of, customer data.

MikMak allows consumers to swipe up on an ad, select a preferred retailer, then add an item to their cart; it is then able to share relevant insights with brands.

MikMak

Complexities at scale

This gives brands information about what’s happening off of their own sites, which Tipograph believes is a challenge to be solved. “They no longer own the customer. They didn't know what happened after the click, after the swipe up,” Tipograph says.

The more places brands sell their products, the more complicated it is to keep track of managing metrics like product placement, pricing comparisons and content quality attached to product listings, says Gartner senior research director Jason Daigler.

Relationships can also get complicated. A key feature for Winky Lux is the ability to let customers select from which retailer they want to shop. This absolves the brand from deciding whether to promote its own site or a retailer like Sephora or Ulta when choosing one might risk alienating the other. Tipograph calls this “fair and equitable distribution”.

Skincare brand Peter Thomas Roth recently began working with MikMak to better track money spent driving traffic to Sephora, where the brand spends considerable marketing dollars, says head of digital and e-commerce Jennifer Carlson. Before, the brand could only see how often someone clicked the link in its ads.

“As an obligation to our relationship with Sephora, we need to drive a certain amount of eyeballs and traffic to their site. We're still sticking to that, but we want to test the waters a little bit with what it looks like if we were to give the consumer a choice.” The brand will soon also be adding Ulta as an option, Carlson says.

A new approach to attribution

MikMak’s technology can also shed light on whether or not a brand’s influencer partnerships are driving purchase consideration. “In many ways, we call BS on influencers. When you're these big brands and you're investing in influencer marketing, you have no visibility into the end checkout and no idea how it impacts the bottom line,” Tipograph says. Often, a brand will discover that a few specific influencers are the ones driving the bulk of conversion.

Influencers have become “their own medium”, eMarketer principal analyst Andrew Lipsman says. “You need to start thinking about it as a media channel. But if you think of it in those terms, it is kind of a black box. So they're pulling in intelligence to understand how influencers drive sales within a specific channel and allow them to optimise strategies based on that.”

Instagram is building out analytics tools that provide more transparency on influencer relationships, but platforms’ self-reported data isn’t necessarily trustworthy. “The walled gardens want all of that measurement, analytics and optimisation to happen within the confines of their walls so that you're incentivised to only spend within that platform,” Lipsman says. “Any brand marketer is thinking beyond a single platform. And so they want tools that work across the key channels.”

The last piece is tracking how many people bought something in-store after seeing an ad online. Tipograph says MikMak can offer this by narrowing down insights to geographic locations. A brand might be able to see, for example, that a certain product is particularly popular among online customers in the Chicago metro area, and when they click to shop, they are choosing to do so at Macy’s. This can help brands get an early read on which products should be allocated to which physical retail regions and merchants. “Brands are able to see where purchase consideration is happening,” Tipograph says. “If [a customer] walks into Macy's and MAC isn't available, that's such a huge missed opportunity.”

“Everything old is new again — a lot of really cool brands partner with retailers now,” Mackey, of Winky Lux says. “[DTC brands] are really accustomed to, ‘How do I determine what I'm going to spend’? I want to know what every dollar goes to. And that's not something retailers are used to talking about.”

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