What makes ‘disruptor brands’ stand out?
What connects brands like Drizly, Harper Wilde, Peloton, Warby Parker and Birchbox?
They are all ‘disruptor brands’, according to the Interactive Advertising Bureau (IAB), and they now feature in the shopping habits of 48 percent of all US customers.
These digitally-savvy new kids on the block are born from the UX precedents of the likes of Uber, and the subscription empire led by Spotify and Netflix. Under the bonnet, they are data-led and agile, focused on low-cost, flexible supply-chains, and direct dealings with their customer base.
They cater to on-demand culture (an expectation of consumers today), delivering everything from fitness tracking, craft beer, shaving kits, and makeup, but ultimately, they strive to offer customers an experience they can’t get from incumbents.
The disruptor brand model
In its Disrupting Brand Preference report— based on a survey of more than 3,000 consumers— the IAB said that familiar household brands across most consumer markets— think Kellogg’s, Del Monte, Hershey’s— have enjoyed the stability of first-mover advantage.
These ‘indirect brands’ have created their value by dominating in TV advertising, building capital-intensive supply chains and extracting value through a “series of third-party handoffs”, such as to other publishers and brands.
In the last decade, emerging disruptor brands, on the other hand, have opted for flexible, leased or rented supply chain facilities, and strive to create in their value in the direct relationships they have with customers.
Maintaining lifetime value
This barebones but direct approach is working. Disruptor brands are attracting a younger demographic of shoppers who consciously choose their brands as a means of self-expression.
They embrace the ability to contribute ideas and feedback and engage with brand communities— and expect 24/7 omnichannel access.
According to the IAB, successful disruptor brands are building loyalty and lifetime value from these users through cross-channel interactions, with search, shopping, and social media sites are approaching parity with TV for brand discovery.
Influencers are the “advertising” of the modern consumer economy, the report added, and wield their greatest power during initial purchase consideration and further down the purchase funnel.
Building brand communities
“Unlike many traditional brands, direct brands and those disrupting the disruptors, have embraced consumers and built community,” said Randall Rothenberg, CEO at the IAB. “Today’s consumer expects access and input into the companies they support.
“This deeper relationship not only shows up in loyalty but actually perpetuates two-way value for both consumer and brand—in the creation of self-as-a-brand and building brand awareness through influence.”
The advertising body cautioned brands and retailers not to discredit the social activities of younger consumers as ‘incidental’ or ‘frivolous’.
“The differences between disruptor brand consumers and incumbent-only shoppers are stark. For disruptor brand consumers, social behaviors are calculated and deliberate, feeding their need for self-expression,” said Sue Hogan, the IAB’s Senior Vice President of Research and Measurement.
While clear differences exist between disruptors and incumbent brands, however, it’s not to say consumers are mutually exclusive to one or another. While 52 percent of incumbent-only shoppers do not buy any direct brands, all disruptor brand buyers still buy from incumbents.