Why You’re Buying Products From Companies You’ve Never Heard Of


One thing economist John Maynard Keynes failed to predict was that in a mature economy, everyone is employed either at a mattress startup or as a podcaster advertising them. I’m kidding, of course, but there are more than a dozen different online mattress brands vying for your attention across every medium you can think of.

Mattresses are just the tip of the iceberg. Everywhere you look, and especially on Instagram and

Facebook
,

an explosion of different “microbrands” for gadgets, apparel, cosmetics, furniture and food are now targeting us with uncanny precision. Some, like Casper Mattresses and Kylie Cosmetics, have become overnight successes. But have you ever heard of Homesick Candles? Or Rowing Blazers?

What’s made this possible is a combination of new technologies and techniques. Marketers can test an audience with a mockup or a prototype before a product even exists, then turn to overseas factories for rapid manufacturing, while outsourcing everything from payments to shipping.

The microbrand trend is changing who launches products, how they’re funded, manufactured, advertised—even how they are conceived in the first place. Traditional brands from Gillette to J. Crew to

Tempur Sealy

are, in response, forced to copy microbrand innovations—from trends these upstarts identified to subscription models to free delivery. Some, like Serta Simmons, acquire a competing microbrand.

Not to be left out, Amazon has launched an initiative it calls “Our Brands,” in which brands that agree to exclusivity with Amazon can get tracking tools, marketing support and better placement on the service.

“There’s a new ‘brand stack’ emerging, just like the tech stack before it,” says Scott Belsky, a startup investor and chief product officer at Adobe, referring to the Dagwood sandwich of layered components that allow the development and delivery of any given product.

A Brand Is Born

To understand the new brand stack enabling the microbrand explosion, it’s helpful to imagine launching a product. So I recruited a small, experienced posse of microbranders to form the hypothetical advisory board for my fake startup, Uplift Coffee.

Tired of cold brew? Over your morning pour-over? Try Uplift Coffee, the first bottled coffee made with the revolutionary Warm Brewing™ process and infused with a patented melange of brain-enhancing nootropics!

The first step in launching my microbrand is to match some stock photography with a little ad copy, then spend a few hundred—or maybe a few thousand—dollars to put a test ad on Instagram and Facebook, says Jesse Horwitz. He’s a microbrand startup adviser and founder of online direct-to-consumer contact-lens company Hubble Contacts, which has raised $73.7 million. My product doesn’t have to exist yet, but just by measuring how often people tap on my ad, I can begin to get a sense of the demand for my concoction.

These tests are essential, says Katya Constantine, chief executive of DigishopGirl Media, an online marketing firm that has helped propel microbrands like Cali’flour pizza crusts to the top of Amazon’s sales rankings. One of Ms. Constantine’s clients would post ads for various garments on Instagram. If the click rate on the ad was high enough—and preorders collected in great enough abundance—a factory in China could immediately start pumping out the garment, she says.

One potentially creepy enabler of the rise of microbrands is the way in which marketers can target us through complex, artificial-intelligence-powered algorithms that not even their makers fully understand. Marketers aren’t merely aiming their ads at affluent 18- to 34-year-olds who live in urban areas, but are finding, through these targeting algorithms, “lookalike” audiences—people who have clicked on or purchased similar products.

Once upon a time, heavily advertised brands signaled the products we could reliably buy, again and again. But unfamiliar microbrands get attention and build trust in other ways. The highest response rates coincide with brands that have the most polished graphics and video, says Mr. Horwitz. It also helps that low prices and hassle-free delivery encourage people to try new brands more frequently, he adds.

Makin’ Coffee

Once we have enough preorders for Uplift Coffee—an elixir that will make you as sexy and fun as the tastefully tattooed young people in our 60-second promo video—it’s time to manufacture it. This is less expensive and difficult than it used to be, because automation in factories has become much more flexible. Computerization allows manufacturing lines to quickly switch between different products, says Joe Zembas, senior manager of engineering at J.M. Smucker Co., which sells many food items produced in its own factories as well as some outsourced to contract manufacturers.

It’s now more economical for contract manufacturers to produce a single product for just a few days out of every month. A given line may produce dozens of different products over a period of weeks, with down time between items measured in minutes, Mr. Zembas says.

Taking payments, handling inventory and shipping goods used to be nightmares in their own right. But all of these tasks—and pretty much everything else a consumer packaged-goods company used to do—can now be outsourced to a raft of companies large and small, says Mr. Belsky. For e-commerce as a service, there’s

Shopify

; for custom packaging, Lumi; for shipping and fulfillment, UPS, Deliverr and many others.

All of this infrastructure has come about as a result of consumer—especially young consumer—demand. “Consumers don’t want to go to

Macy’s

anymore and find brands there,” says Ms. Constantine. “Younger people are in their [social media] feeds and they click on things and then buy them.”

Not everyone is convinced that microbrands are effective—or all that new. Before the internet, upstart fashion and lifestyle brands appeared in the backs of magazines, or in shops in the mall like

Urban Outfitters

and Hot Topic, says Tom Morton, head of U.S. strategy at advertising firm R/GA. While there’s now more of an ecosystem for new brands, the environment that makes a brand easy to start can also hamper its sustainable growth.

“The businesses are certainly in growing categories but the products are interchangeable. There’s a sponsored-post ad break on Instagram every five photos, so you can see four identical T-shirt startups in a couple of minutes scrolling,” he says.

The future of brands is just like everything else on the internet, where big things get bigger than ever, while a long tail of other options finds their own niche markets. If a brand is too niche, it might well die from lack of audience. But if a microbrand gathers followers who feel the drive toward tribal identification, it might end up dropping its “micro” status.

Case in point: Forbes recently valued Kylie Jenner’s Kylie Cosmetics at $800 million.

Write to Christopher Mims at christopher.mims@wsj.com



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