DTC marketing glossary—key words and terms brands need to know

The phrase “DTC brand” has become difficult to define ever since direct-to-consumer brands began entering retailers. Is Glossier still a DTC brand after entering Sephora? Is DTC a sales channel, a type of brand ... or both? And what do venture capital and Apple have to do with it all? Below, we attempt to clear up the murky waters of DTC industry jargon by compiling answers in the form of a DTC glossary with the help of input from direct-to-consumer brand and marketing experts. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here 3PL: Stands for third-party logistics and refers to a company that handles a DTC brand’s supply chain, order fulfillment, shipping, warehouse storage, etc. BFCM: Stands for Black Friday/Cyber Monday, which is the Super Bowl for DTC brands, many of which are now trying to sell on both e-commerce and physical retail channels during these discount holidays. CAC: Stands for customer acquisition cost. After Apple’s iOS 14 software update and privacy crackdown, rising CACs on Facebook, Instagram and more became a major issue for DTC brands that once relied on these platforms for sales. Also read: What DTC marketing will look like after retail closures Direct-to-consumer (DTC): The business model of selling products directly to customers without the assistance of any third-party retailers, whether that’s through an e-commerce website owned by the brand, or a physical store that is owned by the brand. DNVB: Short for a digitally native vertical brand, this term refers to DTC brands that start and grow primarily through online channels. These brands prioritize control over their manufacturing, marketing, and distribution channels to maintain a closer relationship with their customers, which can eventually include their own physical stores owned by the brand. Check out the latest DTC news here Dropshipper: A business that does not keep products in stock and waits for orders to come in before relying on a third party to create and ship the product. Not every DTC brand uses dropshipping. DTC brand: Any brand that initially came to market with direct-to-consumer as its only sales channel. For instance, although Glossier has now entered Sephora stores, it is still considered a DTC brand because it initially only sold its products online via its website and in its standalone Glossier brick-and-mortar stores. Some argue that for a brand to enter a separate retailer and remain a DTC brand, it needs to keep its DTC sales channel in use. Related: Why DTC brands are cutting back on agencies DTC 1.0 brands: DTC brands that were typically started before the pandemic, and often spent a longer time having DTC as their only sales channel before moving into third-party retailers. Examples include luggage brand Away, mattress company Casper and eyeglass brand Warby Parker. DTC 2.0 brands: Generally refers to DTC brands started post-2019, and often had a shorter time in-market selling DTC-only before entering a third-party retailer. Examples include olive oil company Graza, period care brand August and tinned fish maker Fishwife—all of which originally sold their products DTC-only, but quickly established partnerships with third-party retailers. View this post on Instagram A post shared by Aura Bora (@drinkaurabora) iOS 14 issue: In the context of DTC brands, this refers to the software update that occurred on Apple products during Apple’s 2021 data privacy crackdown that made it harder to track users and measure campaigns across apps including Facebook and Instagram—channels many DTC brands relied on for sales. IRL: Stands for “in real life,” which is often how DTC brands refer to their physical retail expansions and activations. LTV: Short for customer lifetime value, LTV is how much money a brand’s average customer spends during the span of their relationship with the brand. LTV is a particularly important metric for DTC brand marketers to know when making advertising decisions so they can maximize ad spend effectiveness. Venture capital (VC) scarcity: Initially drawn to DTC brands’ e-commerce innovations during the DTC 1.0 era, venture capitalists have shifted their focus to Web3 and AI ventures in recent years. The decrease in funding in recent years has caused DTC brands to adjust their marketing and growth strategies, as well as hiring practices. Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

DTC marketing glossary—key words and terms brands need to know

Featured Stories