This State of the Trade report, sponsored by Klaviyo, explores how DTC manufacturers and companies are responding to rising prices and tech complexity by renewing their deal with knowledge and ROI.
The direct-to-consumer panorama has developed considerably lately, with each established manufacturers and digitally-native gamers adapting to new market dynamics.
Fueling these altering dynamics are shifts in client habits, as consumers more and more anticipate tailor-made and cohesive experiences. To thrive on this aggressive atmosphere, manufacturers are leveraging superior applied sciences, activating buyer knowledge and exploring various gross sales channels.
On this new State of the Trade report, Digiday and Klaviyo surveyed 134 manufacturers and companies working within the DTC house to be taught extra about how their advertising methods have modified since 2023, following Digiday and Klaviyo’s first installment of the state of DTC report.
Our first survey, performed in fall 2023, discovered that DTC entrepreneurs had been typically leaning on influencers and digital channels, with an emphasis on video methods. They had been additionally striving to make their knowledge work more durable for them by bettering knowledge high quality and accessibility.
Now, amid strategic price range shifts and income channel diversification, DTC manufacturers and companies are more and more turning to AI, automation and different data-driven methods to develop income and exhibit ROI. As a part of these efforts, tech stacks have gotten extra subtle and cross-team collaboration is rising — underscoring the necessity for deeper integration to unlock additional alternatives.
“At a excessive degree, a variety of right now’s manufacturers are working in a really powerful, lean atmosphere,” mentioned Elcee Vargas, lead product advertising supervisor at Klaviyo. “Acquisition prices have been rising for some time and reaching peak ranges, whereas the return isn’t fairly there and client confidence is extra unpredictable.
“Groups are doing much more with fewer sources,” she mentioned. “In comparison with 2023, there’s a shift from very scrappy, high-velocity, high-testing environments to changing into extra intentional and specializing in methods that drive ROI.”
Whereas there may be additional scrutiny on budgets, DTC manufacturers and companies proceed to spend on digital advertising initiatives.
Amongst our respondents, 58% allocate not less than 41% of their advertising budgets to digital channels equivalent to social media, search engine advertising and show adverts. This represents a slight dip from 2023, when 61% spent not less than 41% of their advertising budgets on digital channels.
In the meantime, 29% of respondents spend 41% or extra on their in-store and out-of-home advertising channels. That is one other shift from our earlier survey, when simply 4% mentioned these channels comprised 41% or extra of their price range allocation.
The most important improve right here was within the 41%–60% vary, with 28% of respondents spending that a lot on in-store or OOH channels, up from 2% in 2023. This underscores the renewed focus some manufacturers and companies are putting on bodily retail and promoting media.
Income-wise, the bulk respondents (52%) estimate 41% or extra of their annual income will come from purchases and subscriptions on digital channels, like e-commerce and shoppable media. Multiple-third (34%) of respondents forecast 41% or extra of their annual income will come from in-store purchases, together with pop-up retailers.
The divide between digital and bodily channels was much more dramatic in 2023, when 62% of respondents anticipated 41% or extra of their annual income from on-line purchases and subscriptions, and 94% of respondents anticipated in-store gross sales to account for 40% or much less of annual income.
“The manufacturers rising bodily spend in 2025 aren’t doing so for attain — they’re doing it as a result of it’s changing. However the capability to measure this successfully hinges on built-in knowledge,” Vargas mentioned. “With out that, OOH and retail can change into costly guesswork. With it, they change into highly effective enhances to digital.”
02
Channels and methods
To drive conversions, our respondents are leaning on a wide range of digital channels all year long.
Within the first half of 2025, DTC manufacturers and companies anticipate social commerce (53%), social media influencers (47%) and streaming TV (35%) to be the highest three channels and ways driving conversions. Nevertheless, within the latter half of the 12 months, respondents predict social media influencers (70%) and retail media (59%) to overhaul social commerce (33%) as the highest conversion-driving channels throughout this high-intent purchasing time. Notably, social media influencers, streaming TV and retail media had been the highest channels driving efficiency in accordance with our 2023 survey.
Whereas social media influencers and retail media noticed jumps of greater than 20% from H1 to H2 2025, owned-and-operated social media and linear TV are anticipated to see modest bumps in efficiency across the vacation season — maybe suggesting seasonal channel technique shifts. E mail and SMS are anticipated to remain comparatively regular when it comes to income technology all through 2025, driving not less than one-fifth of gross sales.
“Since 2023, social commerce has gone past a model consciousness and discovery software on the prime of the funnel to mature right into a primarily conversion software. General, manufacturers are being extra programmatic with the usage of social commerce and influencers,” Vargas mentioned. “There are additionally issues of seasonality, when enthusiasm wanes relying on high-intent purchasing intervals. Manufacturers will then revert to the channels that they management extra tightly, like e mail and SMS.”
When it comes to methods and ways, our respondents are turning to influencer advertising, video content material, testing and analytics to gas sturdy efficiency throughout channels.
In 2024, model and company respondents discovered their simplest methods targeted on knowledge analytics and reporting to refine their advertising methods (46%), video content material (46%) and high-quality content material on their owned-and-operated channels (42%).
This 12 months, our respondents anticipate to drive optimistic DTC advertising outcomes by way of cellular optimization (53%), influencer content material (49%) and analytics and testing (45%). All three of those methods present development from 2024.
“In an unsure economic system, manufacturers are investing in what they know delivers measurable returns: owned channels, structured knowledge and lifecycle methods that maximize each touchpoint,” Vargas mentioned. “Flashier ways like social commerce and influencers are nonetheless on the rise, however with regards to income development, manufacturers are leaning on what they know works. That features tightening their stacks, counting on first-party knowledge and investing in channels they management, like internet, e mail and SMS.”
To activate their DTC advertising methods, manufacturers and companies are counting on sturdy tech stacks. Sixty p.c of our respondents have not less than 10 instruments of their advertising tech stacks, together with 37% who’ve 15 or extra.
The instruments mostly present in our respondents’ tech stacks embrace social media administration instruments (66%), cellular app growth/push notification instruments (63%), search engine marketing instruments (60%) and buyer assist software program/buyer suggestions instruments (57%).
No less than 4 in 10 respondents embrace social proof and evaluate instruments (49%), a CRM (46%) and an SMS advertising platform (44%) of their tech stacks, whereas 40% use buyer knowledge platforms, analytics and reporting instruments and e mail advertising software program.
Nevertheless, solely 18% of respondents have a advertising automation platform. This marks an untapped alternative for DTC manufacturers and companies, which may use these platforms to personalize buyer journeys at scale, driving income and constructing loyalty.
“With out automation, personalization doesn’t scale. Owned channels like e mail and SMS ship among the highest ROI, however solely after they’re powered by well timed, related, behavior-driven logic,” Vargas mentioned. “Advertising and marketing automation can be what turns your knowledge into motion. It connects indicators with messaging, removes handbook processes and drives consistency throughout touchpoints. It’s the spine for doing extra with much less.”
Whereas advertising automation platforms are underutilized by some respondents, manufacturers and companies are incorporating automation and AI elsewhere of their workflows and choices.
Three-quarters of entrepreneurs use AI-powered viewers segmentation, whereas 74% use AI chatbots and digital assistants and 69% have carried out automated flows and triggers. Almost half (46%) use AI and automation for social listening and sentiment evaluation.
“It’s additionally price noting that extra manufacturers are beginning to deal with service as a development lever, not only a price heart, and it exhibits in how entrepreneurs use automation and AI,” Vargas mentioned. “When you may join assist with buy habits or automate post-purchase engagement, it opens up new income pathways.”
Moreover, much less emphasis is positioned on automation for content material technology and personalization, with about 3 in 10 respondents additionally utilizing this know-how for marketing campaign inventive technology (32%) and A/B testing automation (31%).
“Lots of entrepreneurs right now are utilizing AI for surface-level duties, like writing topic traces or responding to assist tickets, however only a few are unlocking the complete potential of AI,” Vargas mentioned. “Options like predictive analytics and personalizing your e mail and SMS messages primarily based on historic knowledge are extra impactful.
“However that is solely actually worthwhile if the info is there to assist it,” she mentioned. “The barrier right now is integration with different instruments. AI is barely nearly as good as the info behind it, so something that’s fragmented and messy limits the affect of AI.”
04
Tech stack integration
As entrepreneurs’ tech stacks adapt to altering environments, 91% of respondents report their advertising components are not less than “considerably” nicely built-in in 2025, up from 88% in 2023. Notably, the share of respondents that describe their martech stacks as “very nicely built-in” greater than tripled, from 4% in 2023 to 13% in 2025.
And whereas the vast majority of manufacturers and companies discover their tech stacks to be not less than considerably well-integrated, challenges stay, primarily associated to price administration (66%).
It is a important change from 2023, when solely 19% of respondents cited price administration as a tech-stack-related problem. This alteration could level to how constrained advertising budgets have change into since 2023 amid continued financial uncertainty.
Different important challenges embrace compliance and safety considerations (51%), integration complexity inflicting knowledge silos and hindering a unified view of shoppers (46% and 43%, respectively), in addition to a scarcity of automation (43%).
Whereas a number of roadblocks have remained quite regular over the past two years, different obstacles have seemingly eased, most notably restricted unified views of shoppers (down 30%), fragmented reporting (down 35%) and gradual load occasions (down 30%).
“The extra methods you utilize, the more durable it’s to trace affect throughout the journey. First, simplify your stack, centralize your knowledge, outline your north-star KPIs and align throughout groups,” Vargas mentioned. “Second, transfer away from siloed reporting. ROI isn’t about platform efficiency in isolation — it’s about how nicely the ecosystem works collectively. Manufacturers doing this nicely are utilizing automation platforms to tie collectively knowledge, execution and outcomes.”
As Vargas defined, advertising automation platforms have the potential to handle a number of of the above challenges by lowering each redundancy and complexity in tech stacks. As a substitute of a number of instruments dealing with loosely associated duties, one streamlined platform owns the shopper journey from begin to end. That consolidation lowers prices, reduces knowledge silos and helps groups transfer quicker.
Information is a vital a part of totally activating groups’ tech stacks and fueling digital advertising efforts.
In 2025, 92% of our respondents predict that first-party knowledge will play probably the most important position in producing sturdy outcomes for his or her campaigns. It is a dramatic shift from 2024, when 54% of respondents reported that third-party knowledge had probably the most important affect on DTC advertising outcomes.
Though Google finally introduced in April 2025 that it’ll proceed utilizing third-party cookies in Chrome, entrepreneurs have nonetheless lessened their reliance on third-party knowledge, which is usually collected by way of third-party cookies or different identifiers. In fall 2023, 84% of respondents instructed us that third-party knowledge performs an outsized position of their advertising outcomes. By spring 2025, solely 4% of respondents mentioned the identical.
Whereas DTC manufacturers and companies are much less reliant on third-party knowledge, half of our respondents have “very ample entry” to this knowledge to assist them generate optimistic advertising outcomes.
Apart from zero-party knowledge, which is info a person deliberately shares with an advertiser, the vast majority of respondents have not less than considerably ample entry or higher throughout the remaining knowledge sorts — first-party knowledge (82%), second-party knowledge (70%) and third-party knowledge (84%).
“When accomplished proper, zero-party knowledge is a goldmine for viewers segmentation, content material relevance and marketing campaign timing,” Vargas mentioned. “However adoption stays low, and even when manufacturers gather it, activation is inconsistent. Those doing this nicely are embedding knowledge seize into loyalty applications, quizzes and onboarding — after which utilizing it instantly in automation flows.”
This inconsistency in activation is mirrored within the data-related challenges our respondents proceed to face as they work to implement DTC advertising methods.
Regardless of gaining access to a wealth of knowledge, the main problem amongst model and company respondents is knowledge high quality and accuracy (63%). That is up barely from 2023, when knowledge high quality and accuracy topped the listing of challenges at 62%.
Since 2023, most data-related challenges have remained flat or lessened. Nevertheless, 19% of respondents cited siloed knowledge throughout groups and departments as a ache level, up from 10% in 2023.
Whereas knowledge siloes was on the backside of the problem listing in each 2023 and 2025, that is maybe indicative that manufacturers and companies are doing a greater job of integrating exterior knowledge inside particular departments, whereas cross-team collaboration stays a sticking level.
“Groups say their stack is ‘nicely built-in,’ but additionally cite knowledge accuracy and silos as prime challenges,” Vargas mentioned. “That is the notion vs. actuality hole. APIs don’t clear up every part — true integration requires a shared knowledge mannequin and centralized visibility. How rapidly you may function on this knowledge is a key level of success.”
06
DTC measurement and outcomes
In relation to a very powerful KPIs measuring their digital DTC advertising efforts, our respondents are primarily sales- and retention-oriented.
Conversion fee topped the listing at 75% for 2024 campaigns, adopted by buyer acquisition price (63%) and buyer lifetime worth (54%).
One KPI that has change into extra important amongst our respondents since 2023 is AOV, up from 41% to 50%. Others — together with social media engagement metrics, on-line critiques and web site site visitors — seemingly have much less worth to our respondents than they did in 2023.
“This displays a transparent pivot from visibility metrics to profitability metrics,” Vargas mentioned. “CAC, conversion fee and AOV let you know how environment friendly your funnel is — not simply how many individuals noticed your content material.
“It additionally speaks to rising sophistication in measurement,” she mentioned. “Manufacturers that depend on owned channels and structured knowledge can monitor these KPIs extra reliably. With out clear, centralized knowledge, it’s simple to overlook the true drivers of development.”
A spot between 2024 expectations, courting again to the autumn 2023 survey, and precise 2024 outcomes presents a revealing look into which metrics grew to become kind of vital throughout an unsettled 12 months in DTC. As an example, buyer acquisition price and common order worth had been each extra important than anticipated, suggesting extra of a deal with short-term efficiency or rising prices.
Notably, proving the affect or ROI of digital DTC campaigns has change into much more of a problem for manufacturers and companies.
When requested what challenges are commonest to their digital DTC advertising efforts, 65% cited proving affect/ROI, up from 57% in 2023. This echoes our earlier findings that manufacturers and companies nonetheless wrestle with constant knowledge high quality and accuracy, which in flip makes it tougher to exhibit ROI.
Different important challenges embrace choosing the best channels to achieve clients (64%, up from 53%) and a scarcity of price range/buy-in to check new channels and approaches (54%, down from 68%). Roadblocks like privateness compliance and inconsistent market analysis appear to have eased since 2023.
07
Collaboration and future DTC alternatives
One of the vital noteworthy developments since our 2023 survey is the extent to which our model and company respondents now depend on exterior groups to handle their digital DTC advertising.
In 2023, solely 4% of respondents reported turning to exterior groups in any respect. In 2025, 79% of respondents are working with exterior companions on their digital DTC advertising to some extent, together with 65% who’re working with a mixture of inside and exterior groups.
“Search for thought partnership, not simply software program,” Vargas mentioned. “The very best distributors right now are those who present frameworks, benchmarks and training alongside their instruments.
“Consider partnerships primarily based on pace to worth, ease of integration and inside adoption,” she mentioned. “Search for integrations that strengthen lifecycle advertising: loyalty applications, product critiques, subscription billing and buyer assist. These give entrepreneurs extra indicators and extra moments to interact.
“It’s additionally price investing in integrations that shut the loop between advertising and operations: stock, success, service knowledge. The quicker you may flip suggestions into motion, the extra agile your advertising turns into.”
For a lot of DTC manufacturers and companies, collaboration between advertising and customer support groups can be essential. Amongst our respondents, 68% have their advertising and customer support groups working collectively on automating buyer engagement and assist.
Different collaboration priorities between these two spheres embrace managing buyer critiques and social listening (57%), sharing buyer insights for personalization and concentrating on (53%) and aligning messaging throughout channels (49%). Lower than 2 in 10 respondents (19%) should not have their DTC advertising crew collaborate with customer support.
Waiting for 2026, our respondents are most optimistic concerning the continued integration of automation/AI instruments and methods (66%) as an space of alternative.
That is adopted by elevated entry to rising applied sciences, equivalent to AR and digital try-ons, and improved privateness and knowledge compliance, each at 57%.
Sturdy, efficient partnerships and integrations will enable manufacturers and companies to unlock the complete potential of those upcoming alternatives and exhibit their affect on the underside line.
“Within the coming 12 months, anticipate continued consolidation, smarter use of automation and a return to experience-led advertising,” Vargas mentioned. “Manufacturers and companies will scale back software sprawl, double down on first-party knowledge and deal with orchestrated, worthwhile development.
“Those who win will transfer quick, combine deeply and deal with knowledge as a differentiator,” she mentioned. “In a world the place tech budgets are scrutinized and belief is forex, simplicity, measurability and buyer closeness will outline the following wave of leaders.”
As DTC manufacturers and companies look to do extra with much less amid an unsure financial local weather, centralized knowledge and simplified stacks might be key to driving efficiency. Entrepreneurs will even proceed emphasizing owned, measurable channels — together with e mail and SMS — in pursuit of profitability over visibility.
“Should you’re making an attempt to construct a resilient, sustainable model the place it’s not identical to development in any respect prices, it’s important to construct a enterprise that’s resilient,” Vargas mentioned. “You’re going to need to know as a lot as you may about your clients and to show as a lot of your present buyer base into your most loyal clients.”
About Klaviyo
Klaviyo (NYSE: KVYO) is the one CRM constructed for B2C manufacturers. Powered by its built-in knowledge platform and AI insights, Klaviyo combines advertising automation, analytics and customer support into one unified answer, making it simple for companies to know their clients and develop quicker. Klaviyo (CLAY-vee-oh) helps relationship-driven manufacturers like Mattel, Glossier, Core Energy Yoga, Each day Harvest and 167,000+ others ship 1:1 experiences at scale, enhance effectivity and drive income.
