Fueling these changing dynamics are shifts in consumer behavior, as shoppers increasingly expect tailored and cohesive experiences. To thrive in this competitive environment, brands are leveraging advanced technologies, activating customer data and exploring diverse sales channels.

In this new State of the Industry report, Digiday and Klaviyo surveyed 134 brands and agencies working in the DTC space to learn more about how their marketing strategies have changed since 2023, following Digiday and Klaviyo’s first installment of the state of DTC report. 

Our first survey, conducted in fall 2023, found that DTC marketers were generally leaning on influencers and digital channels, with an emphasis on video strategies. They were also striving to make their data work harder for them by improving data quality and accessibility.

Now, amid strategic budget shifts and revenue channel diversification, DTC brands and agencies are increasingly turning to AI, automation and other data-driven strategies to grow revenue and demonstrate ROI. As part of these efforts, tech stacks are becoming more sophisticated and cross-team collaboration is increasing — underscoring the need for deeper integration to unlock further opportunities.

“At a high level, a lot of today’s brands are operating in a very tough, lean environment,” said Elcee Vargas, lead product marketing manager at Klaviyo. “Acquisition costs have been rising for a while and reaching peak levels, while the return isn’t quite there and consumer confidence is more unpredictable.

“Teams are doing a lot more with fewer resources,” she said. “Compared to 2023, there is a shift from very scrappy, high-velocity, high-testing environments to becoming more intentional and focusing on strategies that drive ROI.”

While there is extra scrutiny on budgets, DTC brands and agencies continue to spend on digital marketing initiatives.

Among our respondents, 58% allocate at least 41% of their marketing budgets to digital channels such as social media, search engine marketing and display ads. This represents a slight dip from 2023, when 61% spent at least 41% of their marketing budgets on digital channels.

Meanwhile, 29% of respondents spend 41% or more on their in-store and out-of-home marketing channels. This is another shift from our previous survey, when just 4% said these channels comprised 41% or more of their budget allocation.

The largest increase here was in the 41%–60% range, with 28% of respondents spending that much on in-store or OOH channels, up from 2% in 2023. This underscores the renewed focus some brands and agencies are placing on physical retail and advertising media.

Revenue-wise, the majority respondents (52%) estimate 41% or more of their annual revenue will come from purchases and subscriptions on digital channels, like e-commerce and shoppable media. More than one-third (34%) of respondents forecast 41% or more of their annual revenue will come from in-store purchases, including pop-up shops.

The divide between digital and physical channels was even more dramatic in 2023, when 62% of respondents expected 41% or more of their annual revenue from online purchases and subscriptions, and 94% of respondents expected in-store sales to account for 40% or less of annual revenue.

“The brands increasing physical spend in 2025 aren’t doing so for reach — they’re doing it because it’s converting. But the ability to measure this effectively hinges on integrated data,” Vargas said. “Without that, OOH and retail can become expensive guesswork. With it, they become powerful complements to digital.”

To drive conversions, our respondents are leaning on a variety of digital channels throughout the year.

In the first half of 2025, DTC brands and agencies expect social commerce (53%), social media influencers (47%) and streaming TV (35%) to be the top three channels and tactics driving conversions. However, in the latter half of the year, respondents predict social media influencers (70%) and retail media (59%) to overtake social commerce (33%) as the top conversion-driving channels during this high-intent shopping time. Notably, social media influencers, streaming TV and retail media were the top channels driving performance according to our 2023 survey. 

While social media influencers and retail media saw jumps of more than 20% from H1 to H2 2025, owned-and-operated social media and linear TV are expected to see modest bumps in performance around the holiday season — perhaps suggesting seasonal channel strategy shifts. Email and SMS are expected to stay relatively steady in terms of revenue generation throughout 2025, driving at least one-fifth of sales.

“Since 2023, social commerce has gone beyond a brand awareness and discovery tool at the top of the funnel to mature into a primarily conversion tool. Overall, brands are being more programmatic with the use of social commerce and influencers,” Vargas said. “There are also matters of seasonality, when enthusiasm wanes depending on high-intent shopping periods. Brands will then revert to the channels that they control more tightly, like email and SMS.”

In terms of strategies and tactics, our respondents are turning to influencer marketing, video content, testing and analytics to fuel strong performance across channels.

In 2024, brand and agency respondents found their most effective strategies focused on data analytics and reporting to refine their marketing strategies (46%), video content (46%) and high-quality content on their owned-and-operated channels (42%). 

This year, our respondents expect to drive positive DTC marketing outcomes through mobile optimization (53%), influencer content (49%) and analytics and testing (45%). All three of these strategies show growth from 2024.

“In an uncertain economy, brands are investing in what they know delivers measurable returns: owned channels, structured data and lifecycle strategies that maximize every touchpoint,” Vargas said. “Flashier tactics like social commerce and influencers are still on the rise, but when it comes to revenue growth, brands are leaning on what they know works. That includes tightening their stacks, relying on first-party data and investing in channels they control, like web, email and SMS.”

To activate their DTC marketing strategies, brands and agencies are relying on robust tech stacks. Sixty percent of our respondents have at least 10 tools in their marketing tech stacks, including 37% who have 15 or more.

The tools most commonly found in our respondents’ tech stacks include social media management tools (66%), mobile app development/push notification tools (63%), search engine optimization tools (60%) and customer support software/customer feedback tools (57%).

At least 4 in 10 respondents include social proof and review tools (49%), a CRM (46%) and an SMS marketing platform (44%) in their tech stacks, while 40% use customer data platforms, analytics and reporting tools and email marketing software.

However, only 18% of respondents have a marketing automation platform. This marks an untapped opportunity for DTC brands and agencies, which can use these platforms to personalize customer journeys at scale, driving revenue and building loyalty.

“Without automation, personalization doesn’t scale. Owned channels like email and SMS deliver some of the highest ROI, but only when they’re powered by timely, relevant, behavior-driven logic,” Vargas said. “Marketing automation is also what turns your data into action. It connects signals with messaging, removes manual processes and drives consistency across touchpoints. It’s the backbone for doing more with less.”

While marketing automation platforms are underutilized by some respondents, brands and agencies are incorporating automation and AI elsewhere in their workflows and offerings.

Three-quarters of marketers use AI-powered audience segmentation, while 74% use AI chatbots and virtual assistants and 69% have implemented automated flows and triggers. Nearly half (46%) use AI and automation for social listening and sentiment analysis.

“It’s also worth noting that more brands are starting to treat service as a growth lever, not just a cost center, and it shows in how marketers use automation and AI,” Vargas said. “When you can connect support with purchase behavior or automate post-purchase engagement, it opens up new revenue pathways.” 

Additionally, less emphasis is placed on automation for content generation and personalization, with about 3 in 10 respondents also using this technology for campaign creative generation (32%) and A/B testing automation (31%).

“A lot of marketers today are using AI for surface-level tasks, like writing subject lines or responding to support tickets, but very few are unlocking the full potential of AI,” Vargas said. “Features like predictive analytics and personalizing your email and SMS messages based on historic data are more impactful.

“But this is only really valuable if the data is there to support it,” she said. “The barrier today is integration with other tools. AI is only as good as the data behind it, so anything that is fragmented and messy limits the impact of AI.”

As marketers’ tech stacks adapt to changing environments, 91% of respondents report their marketing elements are at least “somewhat” well integrated in 2025, up from 88% in 2023. Notably, the share of respondents that describe their martech stacks as “very well integrated” more than tripled, from 4% in 2023 to 13% in 2025.

And while the majority of brands and agencies find their tech stacks to be at least somewhat well-integrated, challenges remain, primarily related to cost management (66%).

This is a significant change from 2023, when only 19% of respondents cited cost management as a tech-stack-related challenge. This change may point to how constrained marketing budgets have become since 2023 amid continued economic uncertainty. 

Other significant challenges include compliance and security concerns (51%), integration complexity causing data silos and hindering a unified view of customers (46% and 43%, respectively), as well as a lack of automation (43%).

While several roadblocks have remained rather steady over the last two years, other obstacles have seemingly eased, most notably limited unified views of customers (down 30%), fragmented reporting (down 35%) and slow load times (down 30%).

“The more systems you use, the harder it is to track impact across the journey. First, simplify your stack, centralize your data, define your north-star KPIs and align across teams,” Vargas said. “Second, move away from siloed reporting. ROI isn’t about platform performance in isolation — it’s about how well the ecosystem works together. Brands doing this well are using automation platforms to tie together data, execution and outcomes.”

As Vargas explained, marketing automation platforms have the potential to address several of the above challenges by reducing both redundancy and complexity in tech stacks. Instead of several tools handling loosely related tasks, one streamlined platform owns the customer journey from start to finish. That consolidation lowers costs, reduces data silos and helps teams move faster.

Data is an essential part of fully activating teams’ tech stacks and fueling digital marketing efforts. 

In 2025, 92% of our respondents predict that first-party data will play the most significant role in generating strong outcomes for their campaigns. This is a dramatic shift from 2024, when 54% of respondents reported that third-party data had the most significant impact on DTC marketing outcomes. 

Although Google ultimately announced in April 2025 that it will continue using third-party cookies in Chrome, marketers have still lessened their reliance on third-party data, which is often collected through third-party cookies or other identifiers. In fall 2023, 84% of respondents told us that third-party data plays an outsized role in their marketing outcomes. By spring 2025, only 4% of respondents said the same.

While DTC brands and agencies are less reliant on third-party data, half of our respondents have “very sufficient access” to this data to help them generate positive marketing outcomes.

Except for zero-party data, which is information a user intentionally shares with an advertiser, the majority of respondents have at least somewhat sufficient access or better across the remaining data types — first-party data (82%), second-party data (70%) and third-party data (84%).

“When done right, zero-party data is a goldmine for audience segmentation, content relevance and campaign timing,” Vargas said. “But adoption remains low, and even when brands collect it, activation is inconsistent. The ones doing this well are embedding data capture into loyalty programs, quizzes and onboarding — and then using it immediately in automation flows.”

This inconsistency in activation is reflected in the data-related challenges our respondents continue to face as they work to implement DTC marketing strategies.

Despite having access to a wealth of data, the leading challenge among brand and agency respondents is data quality and accuracy (63%). This is up slightly from 2023, when data quality and accuracy topped the list of challenges at 62%.

Since 2023, most data-related challenges have remained flat or lessened. However, 19% of respondents cited siloed data across teams and departments as a pain point, up from 10% in 2023. 

While data siloes was at the bottom of the challenge list in both 2023 and 2025, this is perhaps indicative that brands and agencies are doing a better job of integrating external data within specific departments, while cross-team collaboration remains a sticking point.

“Teams say their stack is ‘well integrated,’ but also cite data accuracy and silos as top challenges,” Vargas said. “This is the perception vs. reality gap. APIs don’t solve everything — true integration requires a shared data model and centralized visibility. How quickly you can operate on this data is a key point of success.”

When it comes to the most important KPIs measuring their digital DTC marketing efforts, our respondents are primarily sales- and retention-oriented.

Conversion rate topped the list at 75% for 2024 campaigns, followed by customer acquisition cost (63%) and customer lifetime value (54%). 

One KPI that has become more significant among our respondents since 2023 is AOV, up from 41% to 50%. Others — including social media engagement metrics, online reviews and website traffic — seemingly have less value to our respondents than they did in 2023.

“This reflects a clear pivot from visibility metrics to profitability metrics,” Vargas said. “CAC, conversion rate and AOV tell you how efficient your funnel is — not just how many people saw your content.

“It also speaks to growing sophistication in measurement,” she said. “Brands that rely on owned channels and structured data can track these KPIs more reliably. Without clean, centralized data, it’s easy to miss the real drivers of growth.”

A gap between 2024 expectations, dating back to the fall 2023 survey, and actual 2024 outcomes offers a revealing look into which metrics became more or less important during an unsettled year in DTC. For instance, customer acquisition cost and average order value were both more significant than expected, suggesting more of a focus on short-term performance or rising costs.

Notably, proving the impact or ROI of digital DTC campaigns has become even more of a challenge for brands and agencies.

When asked what challenges are most common to their digital DTC marketing efforts, 65% cited proving impact/ROI, up from 57% in 2023. This echoes our earlier findings that brands and agencies still struggle with consistent data quality and accuracy, which in turn makes it more difficult to demonstrate ROI.

Other significant challenges include selecting the most effective channels to reach customers (64%, up from 53%) and a lack of budget/buy-in to test new channels and approaches (54%, down from 68%). Roadblocks like privacy compliance and inconsistent market research seem to have eased since 2023.

One of the most noteworthy developments since our 2023 survey is the extent to which our brand and agency respondents now rely on external teams to manage their digital DTC marketing.

In 2023, only 4% of respondents reported turning to external teams at all. In 2025, 79% of respondents are working with external partners on their digital DTC marketing to some extent, including 65% who are working with a mix of internal and external teams.

“Look for thought partnership, not just software,” Vargas said. “The best vendors today are the ones who provide frameworks, benchmarks and education alongside their tools.

“Evaluate partnerships based on speed to value, ease of integration and internal adoption,” she said. “Look for integrations that strengthen lifecycle marketing: loyalty programs, product reviews, subscription billing and customer support. These give marketers more signals and more moments to engage.

“It’s also worth investing in integrations that close the loop between marketing and operations: inventory, fulfillment, service data. The faster you can turn feedback into action, the more agile your marketing becomes.”

For many DTC brands and agencies, collaboration between marketing and customer service teams is also critical. Among our respondents, 68% have their marketing and customer service teams working together on automating customer engagement and support.

Other collaboration priorities between these two spheres include managing customer reviews and social listening (57%), sharing customer insights for personalization and targeting (53%) and aligning messaging across channels (49%). Less than 2 in 10 respondents (19%) do not have their DTC marketing team collaborate with customer service.

Looking ahead to 2026, our respondents are most optimistic about the continued integration of automation/AI tools and strategies (66%) as an area of opportunity.

This is followed by increased access to emerging technologies, such as AR and virtual try-ons, and improved privacy and data compliance, both at 57%.

Strong, effective partnerships and integrations will allow brands and agencies to unlock the full potential of these upcoming opportunities and demonstrate their impact on the bottom line.

“In the coming year, expect continued consolidation, smarter use of automation and a return to experience-led marketing,” Vargas said. “Brands and agencies will reduce tool sprawl, double down on first-party data and focus on orchestrated, profitable growth.

“Those that win will move fast, integrate deeply and treat data as a differentiator,” she said. “In a world where tech budgets are scrutinized and trust is currency, simplicity, measurability and customer closeness will define the next wave of leaders.”

As DTC brands and agencies look to do more with less amid an uncertain economic climate, centralized data and simplified stacks will be key to driving performance. Marketers will also continue emphasizing owned, measurable channels — including email and SMS — in pursuit of profitability over visibility.

“If you’re trying to build a resilient, sustainable brand where it’s not just like growth at all costs, you have to build a business that is resilient,” Vargas said. “You’re going to have to know as much as you can about your customers and to turn as much of your existing customer base into your most loyal customers.”

About Klaviyo

Klaviyo (NYSE: KVYO) is the only CRM built for B2C brands. Powered by its built-in data platform and AI insights, Klaviyo combines marketing automation, analytics and customer service into one unified solution, making it easy for businesses to know their customers and grow faster. Klaviyo (CLAY-vee-oh) helps relationship-driven brands like Mattel, Glossier, Core Power Yoga, Daily Harvest and 167,000+ others deliver 1:1 experiences at scale, improve efficiency and drive revenue.