If they don’t know who you are, they won’t buy your brand. Establishing brand awareness can be a startup brand’s biggest challenge. It is important to budget adequate funds for establishing brand awareness and managing your profitability. How have recent startups managed this? Let’s explore.

In the ever-evolving landscape of direct-to-consumer (DTC) brands, digital advertising has become essential to establishing brand awareness. Unfortunately, for startup fashion brands, these marketing expenses can be high, and have a negative impact on initial profits.

Recent startup fashion brands like Warby Parker, Allbirds, and Olaplex have faced this cost versus profit dilemma. Their knee-jerk reaction was to slash digital advertising costs; however, while it helped profitability, it hurt their brand awareness.

They needed to somehow find a better balance that could expand brand awareness and still increase profits. These startup brands have made significant strides in this direction, but they now face a new challenge: how to increase brand awareness without compromising their paths to profitability.

In this blog, we’ll explore how they developed a strategy to solve this issue.

The Dangers of Cutting the Marketing Budget:

Pulling back on online ads has proven to be an effective tactic for improving the bottom line. This approach also comes with limitations, particularly in terms of reach. Recent earnings reports from top DTC players have highlighted lower customer growth and lagging demand, signaling a need for a shift in strategy.

Warby Parker's impressive growth in profitability underscores the potential benefits of reducing digital advertising spend. Unfortunately, the marginal increase in active customers points to the need for a more balanced approach. 

Allbirds reduced its initial losses, but experienced a 10 percent dip in sales. This reveals the complexity of the challenge at hand. Olaplex has also faced similar hurdles.  When they cut their ad spending, they experienced a dip in brand demand.

Alternative Strategies: 

The cost-cutting shift away from heavy reliance on digital ads resulted in declining demand and sales. This has prompted these startup brands to refocus on brand awareness by using more traditional marketing channels. 

Strategies such as increasing television ads, international expansion, wholesale partnerships, and brick-and-mortar stores have become central to their growth initiatives. 

Olaplex is testing joint partnerships and physical sampling programs. Their innovative sampling program in partnership with Sephora demonstrates the power of third-party collaborations. 

By placing samples in Sephora stores, Olaplex has not only increased brand visibility but also boosted new customer growth. This joint partnership sampling program has resulted in a significant surge in traffic to Olaplex's site. 

Warby Parker faces a pivotal decision in its pursuit of brand awareness. While the reduction in digital ad spend has led to cost savings, the sluggish growth of new customers and a decline in online sales signal the need for a strategic shift. 

The company's decision to invest in television advertising that targeted an older demographic represents a calculated move to diversify its customer base. This can expand reach at the same time it increases brand awareness. 

Expanding Reach vs. Profit Orientation:

Both profitability and brand awareness are essential for a new brand to survive. The pressure for marketing strategies to yield positive results is huge. Simply cutting costs can only take a brand so far if it does not also actively drive sales growth. 

It is critical to find the sustaining balance between controlling costs while at the same time expanding reach and brand awareness. It is important to increase sales, revenue, and profits and at the same time build brand awareness and consumer desire for your brand. 

Recent startup brands like Warby Parker, Allbirds, and Olaplex are good examples of companies trying to find the delicate balance between cost efficiency and sustainable growth. Navigating this terrain requires a strategic blend of traditional and innovative approaches to growing brand awareness while still remaining profitable. 

You must spend money to make money. Finding this delicate balance becomes a challenge of testing innovative strategies, and reacting to the results.  It’s essential to always be testing because how your customers react to your marketing programs holds the key to your successful launch and growth as a startup fashion business. 

What’s your breakthrough fashion concept? If you feel you have an idea that may have some promise, schedule a free strategy call and let's talk about it. You may have discovered a niche and a fashion product that could become a successful start-up and the fashion business of your dreams.

Stuck on product Production? At V.Mora we can help you through the entire production process from designing, to sourcing and so on through our Production Development services. If you are in need of the following Development and Production services: 

• Sourcing 

• Technical sketches   

• Pattern Making

• Prototype making 

• Sample Making

• Fittings 

• Digitizing and Grading

• Marker Making

• Manufacturing

Please contact us at: vmorainquiry@vmora.com

About the Author

Fashion expert, Allison Howmann, graduated from the Fashion Institute of Technology where she majored in Fashion Design and Minored in International Trade and Marketing. She has spent over 6 years in the NYC Fashion Industry utilizing her Design and Marketing skills. Allison has worked with several successful brands to help create their winning fashion development, small business operations, and sales and marketing strategies. You can find her creating original content on the V.Mora blog and the V.Mora Instagram.