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Industry Trends
December 10, 2021
min read
Daniel Conn

DTC through COVID, has the storm been weathered?

A lot has been said about DTC (Direct to Consumer) brands and their rise in popularity in recent years. They have consistently been major users of sponsorship in their marketing mix and through analyzing their sponsorship strategies from Q1 2019 through Q2 2020 we can see just what the trends of growth were YoY pre-COVID and how the pandemic impacted growth. 

In this study, we have analyzed 50 DTC brands covering a number of different segments and business models.

For the purpose of the analysis we will be focussing on the clothing segment, (e.g. Bombas, Everlane, Fabfitfun) accessories segment (e.g. Felix Gray, Vincero, The Ridge) and the home segment (e.g. Brooklinen, Casper, Simplisafe). We will be splitting the business model analysis along the lines of Subscription vs Single Purchase.

The media under review, as always with ThoughtLeaders, is Podcast, YouTube, Newsletter and Blog sponsorship. 

What was happening Pre-COVID?

For much of the world, the social and economic impact of COVID-19 kicked in late March 2020 meaning that very little if any marketing decisions were taken that were realized in spend run in Q1 2020. So the first thing to look at is Q1 2020 and how it compares YoY to Q1 2019.

The above table indicates that from Q1 2019 to Q2 2020 amongst the 50 brands studied there was a 37% increase in the number of creators engaged (run at least one sponsorship with).

The trends are not as consistent when broken up into segments:

Or by business model:

From this data, we can see that there was a flattening growth path for subscription business models while single purchase products were growing extremely fast. In terms of segments clothing, accessories and home products were all at similar levels of creator engagements in Q1 2019 but the major growth YoY was in the Home segment, nearly doubling the total number of creators.

There is a missing piece in this data to understand the engine of growth, as in the number of new tests with creators that brands undertook in the quarters Q1 2019 and Q1 2020. 

Clothing was the most aggressive testing segment on average in Q1 2019 and remained so in Q1 2020 although Home was catching up. The test data overall suggests that across the segments there was a standard practice of making between 10-20 new creator tests per quarter which represented a steady growth strategy with the effect of compounding. The reason why home grew so quickly overall from Q1 2019 to Q1 2020? More of the channels they ran with were successful so the compound effect was more dramatic.


When we add the Q2 2020 data in, the first COVID quarter numbers we have (bearing in mind there is still one week left and we may see it rise slightly) we can see that the total number of creators engaged has gone down from the peak of Q1 2020 by around 10% but has not dropped precipitously and remains well above the Q1 2019 numbers.

Breaking down the data by segment we can see that the effect is not even. Clothing, perhaps unsurprising given we are all wearing only the top half of our outfits these days, saw the largest decline in creator engagements amongst the segments while accessories actually grew. For home the largest growth sector over the previous year there was a stall if not a major drop.

When analyzed across business models we can see that the effects of COVID were not even at all with subscription businesses sliding significantly in their overall investments. There was an overall decline from Q1 2019 to Q1 2020 for this segment but a slight one, COVID seems to have accelerated the decline in sponsorship.

Single purchase products continued to grow through the pandemic hinting that people had the economic confidence to buy small items of comfort but not make the commitment of monthly payments.

Overall the DTC-ship stayed remarkably steady given the initial worries about the impact on COVID on all sectors.

What we can clearly see signs of though is a slight risk aversion still across all DTC marketers which is reflected in the new tests data for Q2 2020. Marketers seemingly were more than happy to continue their existing relationships with creators but were being far more selective over the quarter about new tests to initiate. 

Given that overall numbers have not declined significantly despite the worst economic crisis in years we expect that in Q3 there will be a return to testing on pre-COVID levels and a return to the growth path laid out by the previous year.

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