Melody Koh
Digital-native brands usually start with a very small performance marketing budget (D) that can be scaled nimbly, instead of high rent and retail staff costs (B) which are hard to flex incrementally.
Since D can be targeted, it’s usually a better bargain than B. However, with more and more emerging brands and startups chasing after the same inventory in D, basic supply and demand (and users’ limited attention span) are driving up everyone’s unit costs.
This is why some people have been saying that “CAC is the new rent.” What used to feel like efficient performance marketing dollars has increasingly felt like blocks of cash that you throw at various channels and hope for the best.
A new approach
Even when you’re still a relatively young brand, think about your marketing channel mix including offline/brand marketing-type channels as well as physical retail.
This is easier said than done.
The beauty of D (and to a lesser degree C) is that you need to commit very little. Low on cash? Just turn off some Instagram ads tomorrow. Flexibility and optionality are valuable, especially when you’re a young company with an uncertain future.
