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A new Interactive Advertising Bureau study finds that companies like Warby Parker, Blue Apron and Casper are not just fads, but are growing in response to an “enduring shift" in the way the consumer economy operates towards personalized, custom brands. 

Why it matters: Americans are shifting consumption habits to brands centered on direct-to-consumer relationships. These distributors have nimble supply chains and are flexible enough to serve consumer needs in real-time. 

Major brands are being cannibalized by the rise of direct-to-consumer newcomers. And while most of these direct brands are small, the impact on incumbents has been "pronounced and severe,"  says IAB President Randall Rothenberg, who presented data about this at the IAB's annual conference in California Monday. 

  • In the men’s grooming category Gillette’s share of the U.S. men’s-razors business fell to 54% in 2016, from 70% in 2010 and most of the market share has shifted to Dollar Shave Club, Harry’s, etc.
  • In the mattress category, dozens of mattress companies selling direct-to-consumers online (many through social media) garnered more than 5% of the market in 2016 – and on their way to doubling share in 2017.
  • Grocery store revenue growth is projected to be about 1% annually through 2022. But over that same period, the market for meal kits is expected to grow by a factor of 10x. 

Sensing a shift to direct, brands are trying to reinvent their marketing strategies  to serve customized audiences. 

  • 95% of advertisers use demographic data, including personal data, location information, and interests, to target prospects they know almost nothing about, according to a new report from Salesforce.
  • 66% of digital advertising spend next year will go to the most customized targeting platforms on the web: Google Search, YouTube, Facebook, and Instagram — and those figures don’t even include additional platforms or display advertising exchanges owned by their parent companies.

The media industry also has to take into consideration how this trend will affect their ability to make money. 

  • TV advertising is becoming more personalized, but as we've detailed before, adoption of automated TV marketing has been very slow, with less than 10% of the $70 billion TV advertising market being sold digitally today. 

Our thought bubble: Customization and agility is everything in the new consumer economy.  Brands and news organizations need to rewire their supply chains around this trend, or they're toast. 

Go deeper

2 hours ago - Politics & Policy

Group of 20 bipartisan senators back $1.2T infrastructure framework

U.S. Senate Majority Leader Chuck Schumer (D-NY) arrives for a meeting with Senate Budget Committee Democrats in the Mansfield Room at the U.S. Capitol building on June 16, 2021 in Washington, DC. The Majority Leader and Democrats on the Senate Budget Committee are meeting to discuss how to move forward with the Biden Administrations budget proposal. Photo: Samuel Corum / Getty Images

A group of 10 Democratic and 10 Republican senators (the "G20") tasked with negotiating an infrastructure deal with the White House has released a statement in support of a $1.2 trillion framework.

Why it matters: Details regarding the plan have not yet been released, but getting 10 Republicans on board means the bill could get the necessary 60 votes to pass.

DOJ drops criminal probe, civil lawsuit against John Bolton over Trump book

Photo: Jabin Botsford/The Washington Post via Getty Images)

The Justice Department has closed its criminal investigation into whether President Trump's former national security adviser John Bolton disclosed classified information with his tell-all memoir, “The Room Where it Happened," according to a source with direct knowledge.

Why it matters: The move comes a year after the Trump administration tried to silence Bolton by suing him in federal court, claiming he breached his contract by failing to complete a pre-publication review for classified information. Prosecutors indicated they had reached a settlement with Bolton to drop the lawsuit in a filing on Wednesday.

Fed may raise rates sooner, as inflation is higher than expected

Feb chair Jerome Powell. Photo: Susan Walsh/Getty Images

The Federal Reserve kept rates unchanged at its latest policy meeting, but a shift in sentiment emerged as to how soon it should begin raising rates.

Why it matters: The Fed's rock-bottom rates policy and monthly asset purchases helped the U.S. markets avoid a meltdown during the COVID-19 crisis last year. But as the economy recovers, a chorus is growing for the Fed to at least consider a timeline for pulling back its support before things get overheated.

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