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The Journal Gazette

Sunday, February 10, 2019 1:00 am

Digital startups put new spin on brands

Direct-to-consumer ads strive to connect on an emotional level

Janine Wolf | Bloomberg

Gone are the days when the only goal of a company was to persuade you to buy its product.

Now, making you feel kinship with a brand – even love – takes precedence.

At least, that's what a group of influential startups believe. Eyewear-maker Warby Parker, makeup seller Glossier, mattress retailer Casper – all of these companies are direct-to-consumer brands largely born on the internet.

Sure, advertising has been about identity since before there was a Marlboro man. But these “digital native” retailers, known for indulgent niche products at accessible prices, have given an entirely new meaning to the phrase “brand affinity.”

From luggage seller Away inviting customers to walk through a pretend airport security line to Seamless using its own data for a cute subway ad campaign, digital native brands have created a new algorithm. The traditional buy-sell model doesn't fly anymore, said Americus Reed, a marketing professor at the University of Pennsylvania's Wharton School. Younger generations weaned on the web demand a new kind of interaction – and much more attention.

“Retailers in the physical space are going to have to provide something that is more experiential, that is going to draw people in to hang out and do stuff,” Reed said.

But they'll have to move fast. Nearly 7,000 physical stores were shut down by the end of 2017, according to research and advisory firm FGRT. In the same period, e-commerce builder Shopify powered more than 600,000 online businesses, with 73 percent of purchasing traffic coming from mobile devices. The ability to instantly feed customer data back into a business model is perhaps the most critical change.

The growth of direct-to-consumer retailers is most apparent when it comes personal products for men.

IAB notes that Gillette's share of the U.S. men's razors business, for example, dropped to 54 percent in 2016, from 70 percent in 2010, while the combined U.S. share of shaving upstarts Harry's and Dollar Shave Club rose to 12.2 percent, from 7.2 percent, in 2015 alone.

For men's startup Hims, founder Andrew Dudum said making a sale (at least in the short run) ranks lower than building a long-term customer relationship.

Like many of his peers, the 30-year-old said he's trying to do more than just sell products, which in the case of Hims means generic versions of Viagra and skin-care items for men.

The San Francisco company hopes to create an “emotional trust” that will encourage men to talk openly about health issues without feeling embarrassed.

“It's so easy to build a brand – get it live and throw up Instagram ads – that I think building a serious depth of trust with your consumers involves so much more than that,” Dudum said. “When they need something, we're here to help them.”

It may sound a bit precious, but responsiveness with a veneer of loyalty can make a startup stand out in a world where anyone with a phone can call themselves an entrepreneur. A company's brand – the feeling, image or story consumers immediately recognize when they see it – is now everything.

Hims' play on innuendo, from cheeky cactus visuals to eggplant emoji, became a way for the company to inject humor into the men's health space. Emoji, what Emmett Shine – co-founder of Manhattan branding firm Gin Lane – calls the “universal language of millennials” and a useful tool to break the masculine ice, also became a big part of the marketing strategy.

“People are expecting their brands to be more intelligent, to know who they are, to speak to them as you would expect another human to speak to you,” Shine said.

Hims has about 60 employees and, with a line of prescription products and medical services in some states, a network of more than 124 licensed physicians. The company has raised $97 million from such investors as Institutional Venture Partners, Forerunner Ventures and Josh Kushner's Thrive Capital.

The latest round valued the company at $500 million, according to data firm PitchBook.

And since the brand's launch 15 months ago, the numbers show that they might be on to something: Hims said it booked $1 million in sales during its first week, and that sales have climbed ever since.

“This is the playbook for the future,” Shine declared.