Why brands spend too much on topline ?
I have doing a lot research on these D2C brands , these brands are burning VC cash in ads and influncer marketing. And what just for topline !! When will the focus or plan to focus on bottomline !! Are these guys playing for valuation game or they really want to build profitable business out of it ?? Please correct me if i m wrong , also paying influncers butt load money wothout knowing the ROI , i think influncer marketing is a bubble which is yet to burst and the next phase is influencer led sales !!!
My guess is as good as anyone else's but let me share my thoughts. D2C brands gain mind share a lot faster than traditional channels. How to reach the target market faster, lots of ads and marketing campaigns to grab attention in an already saturated advertisement market. How else are consumers gonna notice a company if not use celebrities. The product is untested in the market, it has no credibility. So only way to nudge consumers to try it to first get their attention.
Why influencers?
If you look at most of the surveys, research done by various agencies, it a common observation is that younger generation ( gen Z) are more likely to try a product if it comes from someone they relate to instead of celebrities. Gen Z apparently trusts someone like them, who has used product and now recommending it. Hence the spend on influencer marketing. I agree with you on the point that influencer marketing is a bubble. Once people realise that influencers are nothing but paid mouthpieces for the company and lack credibility, they will gradually move away. But, we aren't there yet.
Take example of boAt. During first few years, I think it sold substandard products with good marketing campaigns. They made their brand known. No one would have bought boAt earphones for its quality. Once they got visibility, they are now moving up to the higher price segment. It's classic example of marketing done right vs product done right IMO.
Ultimately it's a simple equation
Revenue= No of units sold × price per unit
Most D2C brands are not premium brands. So price per unit will always be less. Only way to jump up the revenue is by increasing no. of units sold i.e. number of customers. Hence, the overall focus on topline
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