Buyer Beware: 3 Things to Consider Before Working With Walled Gardens
For D-to-C brands entering the market, it’s easy to rely on third-party platforms like Amazon.com, Google, Facebook, and Instagram for easy access to millions of ready-to-shop consumers.
However, with this strategy, brands can quickly find themselves stuck in a perpetual state of customer acquisition, facing constantly rising costs, pricing pressure, and less frequent repeat purchases ... lowering customer lifetime value and profits. These costs aren’t all financial, either. Brands are facing the commoditization of their products and a disintermediation from their desired end customer. With marketplaces pitting brands against each other, consumers are forced to make their decisions solely based on price and convenience rather than any personal connection to the brand’s mission or products.
The D-to-C landscape is rapidly evolving, hypercompetitive, and no approach is one size fits all. Brands should understand the barriers of working with walled gardens to properly assess if the risk matches the reward before going all in. As you begin planting your seeds within the walls of the garden, keep the following in mind:
1. Optimize for customers, not conversions.
“Digitally native brands” have found success by finding a key commonality between themselves and their customers — being digitally native. Today’s buyers are accustomed to creating meaningful relationships online, be it through interacting with friends on social media, identifying directly with influencers, or even finding romantic partners on dating apps. This inherent trust of online relationships requires brands to be customer-centric in order to build connections and sustain long-term growth.
With the rise of online marketing channels, brands initially solved for conversions, optimizing everything they could to increase acquisition. As a result, creative became hyperpersonalized, keywords became creepily accurate, and buyers began to distrust online experiences (as illustrated by privacy laws such as GDPR and CCPA).
Successful brands have been able to use this to their advantage, leveraging the best of personalization and optimization technology to create curated experiences that customers expect without scaring them away. Your approach to your buyers shouldn’t be different than your approach to an interpersonal relationship: observe what they’re interested in, begin a dialogue, exchange information, and tailor your conversations and actions based on past behavior.
In order to do so, you must build a holistic view of your customer. You can’t have siloed data or be dependent on walled gardens, or else your customer experience will feel disjointed and thoughtless. Combine data to better understand who your customer is, what they care about, and how your values overlap. Only then can you build a meaningful relationship with your customer.
2. Weigh the costs a walled garden approach has across your entire marketing strategy — not just acquisition.
When retailers rely too heavily on any one platform to drive sales, customer interactions happen in isolation, creating a disjointed view of the customer journey. This leaves brands without a consistent source of experience data across all digital touchpoints like email, on-site campaigns, online ads, and more.
The savviest of brands, both D-to-C and traditional, are rethinking their reliance on these seemingly helpful platforms. Away, the revolutionary D-to-C luggage brand, has successfully built a lifestyle around its product through connected content, social influencers, and strategic marketing — never opting to place its products on Amazon. Similarly, after two years, Nike decided to pull its products off Amazon due to lack of revenue and an inability to differentiate itself.
Both brands have found success in making their channels work for them, be it through creative content pieces like Away’s lifestyle magazine, or personalized experiences like the Nike Training Club mobile application. By understanding who their customers are, they’re both able to create impactful, efficacious marketing initiatives that drive brand affinity, which is far more meaningful than a one-time sale on a third-party platform.
Don’t forget, these walled gardens withhold the data necessary to glean key customer insights, preventing retailers from measuring campaign success over time or determine which components of their strategy need to be optimized. Consequently, they cannot improve or deliver the shopping experiences that resonate with their customers and can therefore be easily replaced by another competitor that shows up in the right place at the right time.
3. Use walled gardens for discovery, but nurture customer loyalty through other channels.
Channels like Google and Instagram contract with thousands of retail brands, some of which they own. For example, Amazon currently owns or has licensing rights with 450 exclusive brands, which obviously creates a conflict of interest. These platforms inevitably glean and apply data insights from your own customer interactions to optimize for their benefit, or, even worse, the benefit of the highest bidding competitor.
Customers will come back to buy from brands that give them a great experience from end-to-end. Retailers looking to surprise and delight their customers after acquisition must explore new technologies to advertise and engage customers in a unique way — e.g., digital shopping assistants, augmented reality, or even customized text messages. Think outside of online. Loyalty programs, unique packaging, referral programs, free shipping, rewards ... these are all easy ways to differentiate your brand’s customer experience and set up your business for long-term success.
For inspiration, look to brands like ThirdLove, a bra retailer that has established itself as an advocate for the modern woman through compelling, inclusive multichannel marketing campaigns. ThirdLove has successfully created a lifestyle around its brand. The brand strategically advertises on social channels like Facebook and Instagram to share its brand values and connect with women on a personal level. However, it also invests in tailored content across different media, both online and offline, to add continuity to the customer journey and not just close a one-time transaction.
Jason Finkelstein is SVP of marketing at AdRoll, an artificial intelligence-driven digital marketing and growth marketing platform.