Article co-founder and CMO Andy Prochazka will speak at AdExchanger’s upcoming Industry Preview conference on Jan. 23-24, 2019 at the Grand Hyatt New York.
Direct-to-consumer furniture startup Article takes data seriously. Founded by four engineers, every team within the Vancouver, Canada-based company, including its marketing team, is built around a measurement culture.
“We’ve focused on a commitment to the scientific method, and the desire to be better by proving yourself wrong,” said co-founder and CMO Andy Prochazka.
Article occasionally finds out it’s ahead of the curve. Prochazka recently attended a marketing forum and couldn’t find anyone to discuss tips for incremental lift analysis for email campaigns. “It was crickets. I was shocked and dismayed,” he said. (He’s still looking for someone to talk to about study design and cohorts for email marketing analysis).
That said, the ability to isolate the effectiveness of a channel is only as good as a marketer’s attribution capabilities, Prochazka cautioned. For that reason, he tends to look at how marketing channels can work together and amplify each other, vs. viewing performance in silos.
“The panacea of multi-touch attribution, which gives certainty into an individual channel performance, is a very difficult prospect to get right,” he said. “What is important is not so much the channel, but reaching the right person with the right message, and doing it efficiently.”
Article’s focus on data and constant iteration may be behind its rapid growth. Revenue topped $100 million in 2017, when the company told Forbes it would do $200 million in revenue in 2018.
Prochazka spoke with AdExchanger.
AdExchanger: Furniture isn’t the most intuitive direct-to-consumer choice. Why have you been successful?
ANDY PROCHAZKA: There are certain prerequisites to success: great product, great price and great service. We are relentless in our pursuit to be at the forefront of style trends, but not sacrifice on quality. And efficiency of supply chain to meet price commitments – that’s one of the main benefits of DTC and the Internet. We can get into peoples’ homes reliably, consistently and efficiently, and we’re relentless about optimizing.
How has Article’s marketing mix evolved?
We started 100% digital, with Google and Facebook and Instagram. And very, very cautiously we built out from there. Even on those platforms, we manage in house. It’s constant iteration and tweaking to get them to work right, and lots of attribution measurement. And then easing into the more traditional channels.
Some people say social media is only good for lower-funnel marketing. What role does social media play in brand building?
Having spent most of our time on the digital side, and just starting TV in the past year, we don’t have a lot of comparative data to draw conclusions. We see a mix. Some is undeniably low funnel. You fire up those channels and you see response immediately, within hours and days. Google and Facebook offer DTC brands a very rapid entry point into the market, where they can hit that out of the gate scale like never before
But if you look at [impact] across a longer horizon – and some tools allow you do that, in other cases, you need your own in-house tool – you can certainly see a long-term branding effect.
Agencies are reorganizing to bring media and creative closer together, so they can mimic the close collaboration of in-house marketing teams. How do your media and creative teams work together?
It’s all about the feedback loop you set up. If you’re focusing on the real-time performance of a channel (and the wonderful thing about digital channels is you get it instantly, though it can sometimes be flawed if you act on it too quickly), you can yell over to whoever is in control of that particular asset, and iterate right away.
Even better, you can start the campaign with several iterations out of the gate, to front-load your work, and start knocking off the underperformers while you build more [ad creatives]. The time to optimize is reduced further.
Performance agencies are going to have to reorganize to react in the same way. We in-house whenever possible. There is nothing like having direct control over the process and process improvement.
As you mentioned earlier, Facebook and Google make it incredibly easy to spin up a DTC brand today. Is there enough room for everyone, or will the space look smaller a few years from now?
What wins at the end of the day is the offering and customer experience. Companies that fixate on fantastic, high-quality products will win. They will find channels to reach their customers. If those channels become crowded, they will optimize them and use them efficiently.
To speak to the second part of the question, there are DTC brands that are heavily venture capital-backed, and they dominate display ads. They’re inescapable online. I wonder sometimes how much it costs to get that marginal reach, and how that diminishes the returns they see on those channels.
How do you think the VC-funded DTC companies will fare compared to the bootstrapped ones?
There are organizations, maybe VC-backed or bootstrapped, that have a commitment to the performance of the organization. Some of those will buy their way into a position of leadership. But in the VC area, there will be a high fallout rate, which will lend itself to market consolidation.
On the bootstrapped side, consolidations are occurring that are somewhat unconventional, like the La-Z-Boy acquisition of Joybird, or Simmons with Tuft & Needle.
You get the marrying up of a strong customer-facing brand with a strong operations-driven manufacturing capacity. Something that is conspicuously absent in that equation is a strong brick and mortar footprint, at least in those two. The liabilities in traditional retail seem to be making DTC companies more attractive.
This interview has been condensed and edited.