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Marketing insights from labels, marketing companies, managers and merchandise specialists

Written by Eamonn Forde.

  1. Marketing insights from labels, marketing companies, managers and merchandise specialists

    Marketing insights from labels, marketing companies, managers and merchandise specialists

D2C (direct-to-consumer marketing and retail) when done well can drive a huge amount of sales and build lifelong relationships between artists and fans; done badly, that all either evaporates in a shrug of apathy or, at the very worst, permanently taints how artists are viewed by consumers.

We spoke to a range of people – labels, marketing companies, managers and merchandise specialists – to gauge where the D2C business is today, what is working, what actions risk disaster and how the entire sector has to prepare for its next leap forward.

A common theme – and one that cuts through much of what follows here – is the need to treat D2C as the strategic core of a campaign and not just something that customers are sporadically steered towards to quickly boost sales. It should underpin the totality of a campaign rather than appear erratically.

Tom Dani, marketing manager at Warp Records, says D2C has helped shape many campaigns for acts on their roster.

“When we work with new artists, it's one of the first things we discuss”
– Tom Dani, Warp

“And with artists coming back, D2C is something we're frequently bringing into their campaigns. Not all artists are going to engage with it on the same level or even have the audience to do that, but it's a part of every campaign now. I don't see that going away.”

Darren Hemmings
Darren Hemmings, Motive Unknown

While some labels are running this as standard practice now, Darren Hemmings, MD of strategic digital marketing consultancy Motive Unknown, suggests this tends to be the exception rather than the rule across the industry.

“Often with D2C, I don’t think labels strategise around it quite as much as they could,” he says. “It can vary. Some people will very much make it the focal point and will try wherever possible to be driving D2C sales; whereas others at the far end of the scale will put it in for the superfans but they don't really make it the first port of call.”

The give and take of D2C

Within this is a need to establish regular marketing contact with fans and consumers – be that through direct mailing or on social media – and not just subject them to a flurry of unexpected email blasts. Contact needs to be regular and gentle rather than sporadic and noisy. Related to this is what Hemmings calls “the give and take” strategy.

Here acts must earn the right to ask fans to buy or listen to something (the “take”) by creating content regularly that is pushed out for free as both an altruistic gesture and also as a way to keep an act in the line of vision of their fans (the “give”).

“Every band has a licence to give and take,” he proposes, proffering examples of acts Motive Unknown work with by way of illustration. “They give music. In the case of Run The Jewels, they give music away; in Robbie Williams's case, he puts a record out. The take is they are offering stuff for you to buy."

"At some point the balance can tip. If you take too much by constantly asking people to buy whatever you're selling, then you're getting the balance wrong.”
– Darren Hemmings, Motive Unknown

He continues, “I’ve seen it before with artists where they go a bit too far on selling but they haven't really given people what they want – which is music. It can create a negative feeling because fans will be sat there going, ‘Why should I buy another fucking T-shirt? How about you give me an album?’”

Price sensitive: knowing how much to charge and when

There is, naturally, a commercial relationship here and understanding how to segment D2C consumers based on not only what they are likely to buy but also how much they are prepared to pay for a product is critical.

Tersha Willis, Terrible Merch
Tersha Willis, Terrible Merch

Tersha Willis is co-founder of Terrible Merch which, as the name suggests, deals in merchandise – for sale both online and on the road.

“Pricing is really key to how fans purchase and that will really determine the kind of product [you can sell],” she says. One of the acts she works with are Black Country, New Road and they put a cap of £15 on their T-shirts which are produced in limited runs (more of which below) as they know this is how much their younger fans can afford.

“That's what the fans have got to spend and that's what they'll spend – so that's what the band sell their T-shirts for,” she explains. “And they sell them out every single time because they're selling the exact right thing for their exact audience at the right price point.”

While frugality defines some fans, others are willing to spend more if they feel they are getting something special or unique – and this cuts into bundling online where a multitude of products can be offered together.

“Bundling needs to be really relevant to the audience, for bigger acts, they can bundle heavier-priced items in there because they're dealing with an audience that has a disposable income and that have been fans for a long time and are therefore willing to spend £50 on a football shirt.”
– Tersha Willis, Terrible Merch

Bundles of joy: selling in bulk

When it comes to bundling, Hemmings believes that – to quote De La Soul by way of 1970s US children’s show Schoolhouse Rock! – three is the magic number. The D2C consumer should ideally be offered a trinity of packages within distinct price bands.

“You want a fairly low and accessible tier; then you do one in the middle that costs a bit of money but is not outrageous; and then you do a top-level one that probably is more outrageous,”
– Darren Hemmings, Motive Unknown

“Some people almost do a top one that's deliberately a bit of a piss take because, actually, it's a psychological trick to make the next tier down [look affordable].”

Willis comes at it from a slightly different angle, but makes a similar point. “For bundles, there must be different variations in the price point,” she says. “There has got to be something for superfans that are willing to financially invest in the artist wholeheartedly; there has got to be something that is really affordable where someone is starting to like a band and they are getting engaged with them; and then there's got to be something that's an ordinary bundle, like a T-shirt and a record.”

From this is springing new thinking around bundling and how to make it all more alluring on a D2C store.

Gareth Jones, Anjunabeats
Gareth Jones, Anjunabeats

Gareth Jones, label manager at Anjunabeats, gives the yoga-themed Flow State album and project by lynchpin act Above & Beyond as a perfect example of this.

“With Flow State, we were doing a bundle of a vinyl record and then the yoga mat or the yoga outfit that you get with it,” he says, suggesting this will help push the D2C world into a new and interesting area.

“Things will shift a little bit more to lifestyle brands. There is an avenue of music being bundled with more things like clothing, yoga mats and so on.”
– Gareth Jones, Anjunabeats

Warp took a fittingly experimental approach with Aphex Twin, using the Collapse EP as the starting point for a dizzying burst of D2C activity. This included a product line where each item was inspired by classic Aphex Twin videos and which saw them selling ‘Windowlicker’ umbrellas, ‘Donkey Rhubarb’ teddy bears and (heavily tongue-in-cheek) ‘Come To Daddy’ kids’ clothing

It coincided with the opening of real-world pop-up stores in both London and Tokyo, where products were available first before then appearing on Aphex Twin’s D2C store.

“We wanted fans to get this stuff – not anyone else who might try and shift it on for extra money online.”
– Tom Dani, Warp

"We revisited this idea around Aphex Twin's Coachella performance with an additional pop-up store in Los Angeles."

Unique boutique: getting exclusives right

Dani says of the need to prioritise fans and reward their loyalty rather than opening it up to opportunists. “We told fans to sign up to a mailing list and they would receive the opportunity to buy the items before anyone else. We found that was a really powerful thing.” What really connects with fans, of course, are exclusives; but how to apportion them out between an act’s own D2C store and wider retail partners can be tricky at best and politically combustible at worst.

“It's down to what your setup is and what your strategy is,” proposes Hemmings. “If, for example, by selling directly you're saving money because you're not paying that extra margin to the retailer, then you have a very good reason to try and focus your sales through that store. That incentivises a lot of people to do special editions on their site as well. Equally, there have been others where they'll just do enough for everyone. So Rough Trade still gets an exclusive version and there might be a super-deluxe version on the web. It's the strategies you choose to follow.”

He continues, “Some people get scared in the face of that because they look at it and say, 'We don't want to piss off Rough Trade so we're not going to do an exclusive version.' Others take a more pragmatic approach and say, 'We'll give indie stores a special edition but there will just be a different edition on our own store.’”

Stephen O’Reilly, ie:music
Stephen O’Reilly, ie:music

Stephen O’Reilly, director at ie:music whose management clients include Passenger and Robbie Williams, prefers to ensure that major releases are spread across all retailers; but that certain releases are confined to the act’s store (as they did with Passenger’s The Boy Who Cried Wolf album in 2017 and Robbie Williams’s Under The Radar series).

“We hugely value our third-party retailers,” he says. “We try to create products, if our partners want them, that are unique to the platform."

"We would always make sure that everybody has product. For a big frontline record, we'd never make it all exclusive to the shop because we always have to support our retail partners.”
– Stephen O’Reilly, ie:music

Jones, however, says the policy at Anjunabeats is normally to push the customer to their store as a matter of priority. “We direct people to our store, pretty much with any pre-order, rather than an iTunes download a lot of the time,” he says. “Our links will always go to the Anjuna Music Store first – and it works as a one-stop hub for where you can get the information on the music.” He also says that Anjuna Music Store will regularly carry exclusive releases. “That will allow us to incentivise people to use the store a bit more and give fans exclusive products that they’re just not going to find anywhere else,” he says.

“If you sell 50 copies of a 12-track digital compilation direct on the store, you are probably going to make more revenue than sticking it on Spotify where it is just going to sit there and get a couple of thousand plays.”
– Gareth Jones, Anjunabeats

Dani says Warp will, depending on the release, go with a Warp/Bleep exclusive or try to ensure all third-party retailers are catered for. “It can get very complicated when you've got an exclusive for the indie store, an exclusive for the label store, an exclusive for the artist store – and they're all just varying different colours of vinyl – and we do try and avoid that,” he says. “But it depends on what the limited product is. For Aphex Twin on the Collapse EP, we had a limited-edition version of the 12-inch which came with a unique mirri-board sleeve design and was exclusive to the Aphex and Bleep stores. With Flying Lotus, it was similar. There was a version of the record where you opened it and the inner sleeve actually popped up. These were things that we were not making in large quantities, so it's difficult to seed through multiple sources rather than being in one place that is close to the core audience.”

Top of the drops: the power of the new product

Relating to the need for maintaining regular contact with consumers, this also applies to the actual products that are being offered on D2C stores. O’Reilly says ie:music takes inspiration from sportswear and streetwear companies like Adidas, Nike and Supreme with regard to what they call “the drop” – namely ensuring a regular series of product launches that keep a consumer’s eyes on you.

“We're going to see more and more of that in the music space,” he suggests. “So it's not just going to be that your album is the big drop. What can you do every month or every quarter to satisfy your fans and keep them happy? Fans don't like waiting around two years to buy a record. They want to actually have things put in front of them. This concept of a monthly or quarterly drop of a new product is something we're going to see a huge amount of in the future in the music industry. As CD sales inevitably diminish over time, we have to replace the formats that are disappearing with products that people want.”

Willis says this “drop” strategy also avoids the problems of bottlenecking products – where too many arrive at the same time and confuse the messaging.

“I think always limiting numbers and doing low-volume makes people want to come back – and doing small drops as well,” she says.

“Not releasing ten products at once, but maybe doing two or three. Then people have something new to come back and look at. I think that always encourages more activity.”
– Tersha Willis, Terrible Merch

Willis also notes how Black County, New Road have turned limited-edition runs of T-shirts into an event for both their tours and D2C. “They make 50 of every T-shirt and that's it,” she says. “They do 50 of the T-shirt and it won't be made again. Both online and at shows, that works really well. As soon as they release anything, everyone buys it because they know they won't be able to get it again. Unique items that fans can only get in this one opportunity is the key to make it exciting.

Tom Dani, Warp
Tom Dani, Warp

Dani says the Aphex Twin campaign was Warp’s biggest deployment of the drop strategy to date – and the scale of it meant that it had to happen on his own D2C store. “Aphex has been the biggest multi-faceted campaign drop we've done, offering lots of different products,” says Dani. “The rollout of that had to be kept under wraps. It wasn't possible with the timeframe to seed that out through independent retail. We did have our own physical retail there [with the pop-up stores]."

"With an artist of that scale, you're able to be the full ecosystem around it all.”
– Tom Dani, Warp

Campaigns, as D2C operators start to understand their consumers in deeper and richer ways, should start to become more personalised – taking the notion of the general drop and refining it for specific audience sub-groupings.

“Especially in the music industry, fans are accustomed to things like Spotify and they want something that's highly personalised and recommended,” suggests Elena Seitz, sales manager at email marketing and CRM company ActiveCampaign. “If I'm interested in a specific artists or a specific genre, then actually showing me something that's relevant to that [is important] where I am more likely to purchase as a result.”

Number crunching: the data revolution

Underpinning all of this is the data, but the industry is moving at different speeds here in terms of how it is not only gathering this data but also making sense of it and, most importantly, acting on it. For O’Reilly, D2C data is all about artist empowerment.

“We've been trying to educate our artists about the ownership of their data and knowing who your customers are – and it also helps to future-proof their business, this is the artist's data.”
– Stephen O'Reilly, ie:music

Elena Seitz, ActiveCampaign
Elena Seitz, ActiveCampaign

Willis feels that, even with so much data to hand, there is still huge room for improvement in terms of how it is used and acted upon.

“I think every band has access to information but they are not fully using it – they just go on instinct,” she suggests. “I think everyone is saying, 'Oh great. We can see all these graphs and look at all these cool things.' But they're not thinking about what those people want and how they can connect with those people and build relationships with those people. They have got the data now but I don't think it's really being looked at or even anecdotally applied to what artists can do with it.”

Seitz says that data on how much – or how little – someone engages with messaging really needs to be dictating the tone and frequency of marketing emails. “If somebody is spending a certain amount, maybe it's a bundle or otherwise, that is identified as a very loyal customer,” she says. “You should be able to send them something relevant and then see it increase conversion for them in terms of other purchases.

"If somebody has only made very small purchases or bought small bundles, it might not make sense to send them something that's outside of their budget or what they might typically do.”
– Elena Seitz, ActiveCampaign

She adds that messaging needs to be able to calibrate itself according to an individual’s purchasing behaviour. “If somebody's not consistently engaging with emails, you should automatically be able to either switch up the content or turn that down a little bit,” she proposes. “If somebody is only opening once a month or only buying once a year, let's try to make that personalised to them. I think that sort of approach of not over-spending or over-communicating if you're not getting that back – that give and take – is super important.”

Future sounds: D2C’s next leap forward

As for the future, Hemmings feels that not only will print on-demand change things, artists need to start thinking beyond what they have commonly considered to be “merch”. “We've done a lot of testing with [printing on-demand] in the last 12 months and it's almost indistinguishable from a proper screen print – but it's a significant difference because it removes any need for warehousing and it removes a huge amount of risk,” He says. “I wouldn't be at all surprised if you just hit this stage where screen printing is an out-of-date way of doing it and everything just gets printed on demand. When that happens, it will be great for artists because it just means that they'll have systems in place that minimise risk and still open up plenty of profit. And as the world of print on-demand grows, it would allow them to really diversify what they can offer as well.”

As for going beyond merchandise as the core of D2C, he cites the example of Run The Jewels and how they have approached things here.

“A very interesting side of D2C at the moment is that people are increasingly cottoning onto the fact that you're not just doing merch"
– Darren Hemmings, Motive Unknown

"And by merch I just mean the T-shirts and hoodies that you buy at a gig venue,” he says. “Run The Jewels have done duvet covers and lunch boxes; they’ve never been afraid to explore other stuff. They did a limited-edition statue of the band as their playable characters in Gears Of War IV. They sold out in about an hour – because people want that.”

Seitz feels that the next leap forward for marketing will be in how AI technologies help realise all the dreams of hyper-personalised marketing that will be responsive in real time. “Everybody is looking to be able to send the right message at the right time to the right audience without having it be this cumbersome process that requires a ton of people and a ton of staff to run it on a day to day basis,” she says before giving an example of how this could work in practice. “We are building a data model that will have an algorithm running to say, ‘Elena usually opens her emails on the train every morning, so if she gets entered into that cart abandonment automation, only send that email at that time. Wait to send it until the time that she usually opens emails."

The old retail maxim – usually attributed to Joseph Cohen, founder of the Tesco chain of supermarkets – of “pile it high and sell it cheap” has never been less fitting for any sort of online retail that wants to convert anyone into a lifetime shopper rather than a sporadic buyer.

Customers need to be gently coaxed and rewarded, where that idea of “the give and take” strategy and the carefully crafted “drop” exists as a part of retail’s DNA rather than a desperate measure pulled out of the hat by the short-sighted short-termist. Data and segmentation allow customers to be understood by their differences and not their homogeneity. Everything is finally aligning and D2C is coming alive to the possibilities here.

Marketing Focus

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