Building a Challenger DTC Brand | Download the case study

ByLance T. Lee

May 25, 2022

For its first decade or so, the publication and watch retailer Hodinkee had no marketing budget, let alone a chief marketing officer. In fact, unlike many other online brands launched in the 2010s, Hodinkee never once paid for online ads, or deployed any of the other traditional direct-to-consumer tactics.

The company, founded in 2008 as a watch website, has cultivated an intensely loyal readership among watch enthusiasts. As the number of followers grew, the company turned to e-commerce, gradually creating a retail segment selling luxury watches from brands like Omega and Zodiac. It wasn’t until Hodinkee was ready to scale beyond its niche that it hired its first chief marketing officer, Carlos Rivera-Anaya, in April 2021.

During that same month, the field of digital marketing received a major blow. Apple introduced an update to its mobile operating system that prohibited apps from tracking user behavior without first obtaining user permission. As a result, brands’ ability to target customers with ads that match their interests has been severely reduced.

Meanwhile, a number of other hurdles that make it difficult for marketers to collect customer information have also emerged, including Google’s commitment to ban browser cookies and the continued roll-out by the Union EU General Data Protection Regulation. All of this means that digital ads are not only less effective than they were around five years ago, but also much more expensive.

Start with a blank slate

Not all brands were affected equally. With Hodinkee, Rivera-Anaya joined a direct-to-consumer business whose foundation had been built without the need for third-party customer data to drive sales. Essentially, he was starting with a blank slate as he helped bring Hodinkee into the world of paid marketing, albeit in a “very conservative” way, he said.

Like the other digital native companies featured in this case study – jewelry start-up Mejuri and sportswear brand Gymshark – Hodinkee shows how performance marketing strategies can be avoided in the early stages. of building an online business, unlike a wave of direct-to-consumer brands that relied primarily or entirely on paid advertising to attract customers and grow. Instead, all three companies have evolved by organically building their reputations as brands that aim to disrupt the status quo in their respective categories and encourage word-of-mouth marketing.

Each became a $100M+ brand by going back to the basics of brand building, while breaking the rules of their industries and creating new value propositions for consumers. In some ways, these companies developed positioning as “Challenger Brands,” a term strategist Adam Morgan coined in his seminal 1999 book, “Eating the Big Fish: How Challenger Brands Can Compete Against Brand Leaders.” Although Morgan’s book is over 20 years old, its themes couldn’t be more relevant today as direct-to-consumer brands grapple with the dramatic changes in the marketing landscape that are influencing the way brands can start and evolve.

“Many brands are now realizing that they need to go back to the old brand building,” said Quynh Mai, founder and managing director of digital agency Moving Image & Content.

All three companies have earned a reputation as challengers in their respective markets by refusing to follow convention. Mejuri has put her own spin on fine jewelry by marketing products to women who want to buy something nice for themselves rather than waiting for their partners to do so. Gymshark took on much larger sportswear brands by celebrating everyday exercisers rather than elite athletes, creating a sense of community among its bodybuilding enthusiasts. Hodinkee stands out from traditional menswear media with its super niche content, highlighting the power to cater to niche interests.

By analyzing their growth trajectories, this case study identifies four ideas that all brands can benefit from: the ideal size of a startup marketing budget; how to better understand customer profiles; the importance of being specialized and focused; and why breaking the rules can be a crucial step in finding the right position in the market.


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