Virtual influencers, strong customer loyalty, The TikTok Case | D2C Digest

Hey there, great people of the D2C community who are building fantastic things! This is your host Berkay writing. 

Take a 5-minute break and dive into D2C Digest for a quick overview of what’s happening in the D2C market worldwide!

🤖 The Rise of Virtual Influencers

Virtual influencers like Lil Miquela, Shudu, and Kyra are transforming brand marketing.

Lil Miquela collaborates with high-profile brands like Prada, while Shudu and Kyra have worked with Balmain and L’oreal, respectively. Interestingly, these influencers are AI-generated.

And numbers say their impact is growing: 35% of U.S. consumers have purchased products endorsed by virtual influencers, and the market, valued at $4.06 billion in 2022, is projected to expand 26% by 2025. Brands value virtual influencers for their control over campaigns, cost-effectiveness, and reduced risk of scandal.

However, the lack of authenticity from not having real-life experiences could deter some consumers. As the influencer space becomes saturated, virtual influencers offer a novel alternative, raising questions about the future balance between human and AI-driven endorsements.

💪 Consumer Loyalty Remains Strong but Price Still Matters

Even as economic challenges tighten budgets globally, consumer loyalty to brands, particularly Direct-to-Consumer (DTC) subscriptions, remains robust, according to ChannelSight’s recent report.

Surprisingly, 60% of consumers report that rising costs and supply chain issues haven't swayed their loyalty to their favorite brands, with only 30% stating these factors have impacted their loyalty negatively.

However, price continues to play a crucial role. Nearly half of the consumers (49%) said lower prices could motivate them to purchase DTC. So there is still a very delicate balance brands must maintain between fostering loyalty and staying competitive on pricing.

🥊 TikTok Will Fight Back

Well, the TikTok Case has been huge over the last couple of months - and the news keeps coming.

Last week, we shared the House of Representatives has passed legislation - President Biden's support - potentially leading to a nationwide ban unless TikTok's Chinese owner, ByteDance, sells the app (read more here).

Now, TikTok CEO Shou Chew announced that the company is prepared to challenge a potential U.S. ban in court. In a recent video, Chew criticized the new law signed by the President, which includes a nine-month delay, ostensibly to allow for a sale before any ban would take effect.

Chew expressed confidence in TikTok's legal position, citing previous court victories, including a 2020 federal ruling against a Trump-era ban attempt and a recent Montana case where a state-level TikTok ban was overturned. He emphasized that TikTok plans to continue operating and defending the rights of its users in court, leveraging the constitutional protections of free expression.

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