02

Amidst the thriving DTC model, hidden challenges lurk everywhere.

Acquisition Costs Exceed Thousands, Conversion Rates Fall Below 30%: Hidden Challenges Amidst the Thriving DTC Model

While DTC brands have risen rapidly with direct-to-consumer marketing strategies such as celebrity endorsements, influencer reviews, and grassroots campaigns, bringing tens or even hundreds of billions in market value, the significant increase in traffic costs has become a major obstacle to sustained growth.

Data from the market research platform PARKLU indicates that from 2018 to 2020, the average price increase for mid-tier and top-tier KOLs exceeded 18%, with the increase being even higher in niche areas like beauty. Additionally, a research report from Everbright Securities shows that acquisition costs for Alibaba's e-commerce platforms rose from 278 RMB per person in 2018 to 929 RMB per person in 2020, nearly a 234% increase in just two years.

As the traffic dividend diminishes, marketing costs for brands continue to rise, weakening their competitiveness. This presents growing challenges for new DTC entrants as well as established brands experiencing growth fatigue.

03

Gamified Marketing: Racing to Break Through

When user growth hits a bottleneck, more refined operational strategies become paramount. Interactive games, inherently entertaining, undoubtedly become the optimal choice to engage and enhance user value.

In recent years, internet platforms like Pinduoduo have launched various interactive marketing games. From straightforward prize wheels to the nurturing gameplay exemplified by Ant Forest, gamified marketing is gradually occupying a significant position in DTC marketing.

After seeing initial success with platform gamified marketing, major brands have also joined this trend.

Among them, we found an interesting case from Moses Technology: Adopt a Cow Cloud Ranch (hereinafter referred to as Cloud Ranch).

According to data released by Moxi Technology, it is evident that this new commercial model of gamified marketing holds tremendous potential in DTC marketing.

Moxi growth expert Allen explains that Cloud Ranch, based on the brand concept, core selling points, and marketing demands of Adopt a Cow, simulates the cow-raising process in a gamified manner. Users become dairy farm owners, raise cows, collect milk to earn points, and then exchange these points for limited-edition physical items and exclusive game coupons, continuously promoting order conversions.

2. Deeply focusing on brand selling points, accurately recreating the "Five Good Cow" breeding process

Adopt A Cow consistently adheres to the brand philosophy of "Good cows make good milk." Through meticulous breeding, they provide users with "well-born, well-fed, well-housed, well-working, and happy" cows.

In line with this selling point, Moses Technology projects real pasture facilities into the game, building gamified scenes such as maternity wards, cafeterias, dormitories, health check-ups, choirs, SPA medicinal baths, and dormitories. This accurately recreates the "Five Good Cow" breeding process, vividly showcasing the effort and dedication Adopt A Cow puts into their "Five Good Cows," allowing users to empathize with the experience.

Is the success of the "Adopt A Cow Cloud Pasture" an accident? Is "gamified marketing" applicable to all industry categories? From more cases by Moxi Technology, we have received a positive answer.

In deep collaboration with JD.com, Moxi Technology used a highly engaging and viral match-three gameplay as the core. Through the "Dongdong Loves Elimination" gamified marketing solution, they built a low-cost private traffic pool for the platform, driving new growth in brand performance.

From Moxi's multiple gamified marketing solutions, we can see that gamified marketing can effectively help brands rise quickly and realize the value of private traffic pools. So, how does gamified marketing capture the underlying logic of the DTC model and become the optimal solution of this era?

In fact, the underlying logic of the DTC model is to establish direct communication channels with users, allowing them to influence each other and create a commercial monetization path through a "trust chain + recommendation chain."

Gamified marketing meets users' natural entertainment needs, connecting brands with users through interest. This keeps users highly engaged and influences each other. By integrating brand elements into game scenes and setting up marketing tasks, gamified marketing helps brands achieve goals such as attracting new customers, promoting activity, increasing consumption, and shaping the brand.

Tracing back to the roots, since the fundamental purpose of DTC marketing is direct communication with users, what is the general consumer attitude towards "game operations"? Are they receptive or resistant?

We have validated this through relevant consumer willingness surveys on game operations.

From the data survey, we can see that over 80% of consumers are willing to engage with simple and easy-to-operate games to receive brand-related "physical rewards/coupons." Additionally, to gain more game opportunities/time, they are willing to follow brands/stores and invite friends, facilitating brand viral growth.

While receiving positive feedback from consumers, gamified marketing also attracts significant capital interest. Since its establishment, Moxi Technology has secured multiple rounds of financing from Hillhouse Capital, Matrix Partners China, Empower Investment, PreAngel Network, and Electric Soul Network, with a total funding amount nearing one billion RMB. This capital performance further validates the feasibility and correctness of the gamified marketing model.

Success comes to those who persevere, and progress to those who act. Gamified marketing is rapidly transforming the landscape of Chinese brands at an unimaginable pace. As a new wave of interactive marketing pioneers, it is quietly reshuffling the competitive ranks of brands. The year 2022 is poised to be a year of comprehensive development for gamified marketing, and we look forward to it bringing even greater breakthroughs and impact to the DTC industry.

References

1. PARKLU Data (KOL Relationship Management and Marketing Analysis Platform)
2. 36Kr - Focus, Selection, and Dilemma: The Past and Present of Private Traffic
3. NewtonFashionMBA - How to Successfully Build a DTC Brand?
4. In-depth Analysis: The Dilemma of Not Being DTC, Is It the DTC Way?
5. PingWest - Can Gamified Marketing Become the New Choice for Private Traffic Marketing?