Photo credit Innovation Department
In the direct-to-consumer startup world, many founders’ origin stories sound like this: “I was buying this product and I got poor service and the product was flawed. I thought I could do it all better so I created a business plan, raised outside capital, and that’s how this company was born.”
Now a company called Innovation Department has done it differently. Starting with the assumption that the scarcest resource is consumers’ attention, Innovation Department set out to develop a template for getting consumers to pay attention across a broad range of topics and products. Their theory was that developing great products was critical but not the only thing necessary to ensure success. They believed that if a company doesn’t have an effective and efficient means of reaching a broad audience, great products won’t be enough to succeed. In a world where Instagram, Facebook and Google are so expensive as a marketing tool, their thinking is dead right.
Innovation Department’s founder, Alex Song, was previously a banker and investor with no experience creating direct-to-consumer companies. But he understood that the company needed to attract consumers before it ever sold its first product. Song developed several separate strategies. First, he created 10 websites with content that was focused on specific areas of interest. He posted and aggregated new content regularly to keep consumers coming back and he invited consumers to subscribe to notifications about new content that might interest them. In all, Innovation Department built 10 websites on topics ranging from wellness to tech and gaming to travel and other topics. Each of the sites is now a business of its own, generating content, traffic and advertising.
Then Song created an entirely new kind of company called DojoMojo. DojoMojo is a marketplace for websites and media companies to connect to share marketing costs. The websites and media companies collaborate in creating contests and sweepstakes for consumers to win prizes and money just for entering their email addresses. Today over 8,000 media companies pay a monthly subscription fee to DojoMojo to run contests that reduce the cost of acquiring new email addresses they can market to. DojoMojo says their customer acquisition cost is under $10. I’ve never seen a lower cost than that for online businesses.
And finally, Innovation Department created a twofold Amazon strategy that works with Amazon and not against it. First, it focused on getting thousands of consumer reviews on Amazon which is so important for young brands. Second, it developed a process to overcome an obstacle that so often thwarts startups. Here’s the problem: when Amazon sells a product to a consumer, it doesn’t share detailed customer information with the brand. That prevents young brands from being able to remarket to consumers for repeat purchases without going through Amazon. Innovation Department gets around that problem by taking the minimal information Amazon shares and matching it to its large databases so that it can figure out who bought what on Amazon. It uses that information to market directly to consumers whether they bought the product on Amazon or not. Repeat business is critical for success of almost every consumer product business. Innovation Department is able to use the efficiency of Amazon logistics but still keep the direct-to-customer relationship it needs to facilitate and build repeat sales.
Together, these strategies drive consumer interest and give Innovation Department the opportunity to repeatedly market to relevant consumers at a very low cost. Even for products with great reviews, being able to communicate with customers without breaking the bank is critical to successful marketing.
With all that in place, Innovation Department starting putting its products through its system. The first set of products was a range of nutritional supplements (one is pictured above) called Wellpath. Today Wellpath has almost 100,000 followers on both Instagram and Facebook and its products are rated #1 on Amazon for numerous categories including stress, stress relief, anxiety, multi-collagen, brain supplements for memory, acv gummies and other classifications. It has the top-selling stress product and one of the top-selling collagen products on Amazon. The structure of Innovation Department has enabled it to launch one brand per year for the next three years and more after that.
What’s Really Happening Here
It’s no longer the product that defines the company. It’s a combination of the product and the company’s ability to bring it to market in a cost-effective way that’s necessary for success. Innovation Department has a unique business model and that allows it to have a unique way of reaching its consumers and stand out. The takeaway is that we will see more companies that create an unconventional strategy for reaching consumers in order to have their own unique voice.