how digital native brands are harnessing the power of experience
We live in an “I want it now” reality. Consumers can have what they want, when they want it. Instant gratification has become an expectation rather than an exception.
This habit of impatience is apparent in most industries. People can order groceries to their doorstep within the hour, watch commercial-free on-demand shows, hop into a cab in minutes, and get on a date with a simple swipe. “Uberization” has disrupted industries globally and has become arguably one of the most popular buzzwords of our time. The pandemic has given rise to an explosion of direct-to-consumer (DTC) businesses and the on-demand economy, which meets the needs of providing instant access, convenience and personalized experiences to next-generation consumers.
Millennials make up about half of on-demand consumers, which means business and growth are likely to persist. According to PwC Researchthe on-demand economy is estimated to skyrocket to $335 billion by 2025. Additionally, millennials are the first generation that would rather stay than go out, which has helped spur this trend.
From URL to IRL
From Stichfix and Bloom & Wild to Monzo and Gousto, what these companies have in common is that they are digital natives. Born and raised online, these “faceless” challenger brands are growing up and discovering the same truth we all do as we age: sometimes those who came before us had the right idea.
Initially, these types of brands were filled with venture capital, aggressive marketing via paid online advertising in order to stifle competition. This catapulted many to success, helped by the pandemic, which invited some of the highest sales, as people were forced to shop online while physical stores closed.
However, the cost of acquiring customers online has skyrocketed, coupled with the anti-tracking headaches these brands now face. As a result, many are “going back to the drawing board,” turning to the IRL brand experience to acquire new consumers and build brand equity.
That’s what people want
While the pandemic has seen a huge surge in DTC sales, those levels of success are beginning to plateau as people embark on digital detoxes, seeking to return to a higher level of real-world ‘normalcy’. . In-person product research is one of them, with around 82% of millennials believing it’s important for a brand to have a physical store, according to a report from eMarketer.
With consumers’ growing concerns about screen addiction and the desire to seek tangible, real-life experiences post-pandemic, brands have an opportunity to harness the multidimensionality and multisensory possibilities of physical spaces in new and imaginative ways – at every stage of the consumer journey.
Create IRL experiences that drive acquisition, equity, and retention
As digital acquisition costs skyrocket, we see brands attracting new IRL consumers through responsive, hyper-local activation teams – especially in the food and grocery delivery sectors. In a crowded digital sphere, it’s an effective way to raise awareness and stand out from the fierce competition. It adds a personal touch to the recruiting process, providing memorable and loyalty-building experiences.
According to an ICSC study, when a digital native brand opens a physical store, overall web traffic to their site increases by up to 45%, resulting in a halo effect. As such, we are seeing a trend towards the expansion of click-to-bricks, with interaction, experimentation and play helping to raise awareness and foster deeper emotional connections with consumers – using intelligent technologies that unify data. Digital giant Amazon is leading the way, translating its seamless online customer experience into physical stores, with smaller brands such as Made.com now also offering sensory shopping experiences.
The pop-up store, although not new, has become the go-to testing solution. In 2021, self-storage brand MakeSpace launched an Instagrammable space in New York’s SoHo, offering in-store appointments and a meditation space for consumers – a move that made them stand out in an advertising ecosystem increasingly crowded digital. “A lot of people think we’re crazy,” said Miriam Kendall, senior vice president of marketing, adding that MakeSpace found that customers wanted an in-person experience based on their feedback. “Why would you open a physical store during a pandemic when ‘retail is dead’? But we think differently.” Stores have become a form of media – immersive billboards that drive awareness and sales.
These digital-native brands also produce exceptionally creative experiential moments to win earned media and build brand love. To position itself as the sleep experts, online-native mattress brand Casper organized a glamping trip during the last total solar eclipse and even set up a paid nap hotel called the Dreamery.
(Casper: The Dreamery lets customers book a nap while testing the brand’s mattress)
Swedish payment provider Klarna creates dynamic, shareable experiences that bridge the gap between digital and physical. Klarna produced a three-story museum in London where visitors can follow mankind’s financial journey through the ages (to highlight competitors’ antiquated credit model), hosted an Instagrammable pop-up in Manchester to helping consumers realize when they’re being sold at and has collaborated with some of the UK’s favorite brands to launch The House of Klarna. It’s these kinds of curated experiences—ones that cut through and engage on a deeper level—that can help brands build lasting relationships with consumers.
(Klarna: pop-up museum in London’s Soho)
As they mature, digital native brands realize that the consumer journey is not linear. This is an ongoing cycle, in which businesses cannot sustain growth through digital marketing alone. As Diageo CEO Ivan Menezes explains, “It’s not about doing ‘digital marketing’; it’s about marketing effectively in a digital world.”
Here are some key principles for brands considering including IRL experiences in their marketing efforts in the coming year:
- Think idea first, media second – having separate budgets for ‘digital’ and ‘non-digital’ is obsolete. Plan your marketing strategy by ditching the D-word
- Zig when others zig – in a world plagued by blanding, it’s worth finding new and innovative ways to connect with audiences beyond the screen
- Take a 360° approach – real-world experiences can be used strategically to recruit consumers, as well as to retain them on an ongoing basis
- Team up – find like-minded brands to collaborate with to expand reach and build credibility to play in new creative arenas
- Test and learn – consider testing locally before rolling out larger scale plans with confidence, ensuring cultural nuances are considered by market to ensure resonance
- Combine URL and IRL to maximize success – use technology and the vast level of data available to create a seamless customer experience between the online and physical worlds
- Know what success looks like – be clear about your KPIs and ensure you have a comprehensive evaluation plan in place before you get down to work
Hayley James is vice president of brand experience agency Sense New York.