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Foreword

In the rapidly evolving landscape of digital marketing, the disconnection between brands and their customers has become a growing concern. As entrepreneurs with a passion for creating meaningful connections, we observed the challenges faced by e-commerce brands in engaging their audience through traditional social media platforms. Our journey began with personal experiences that shaped our understanding of the importance of authentic interactions in building brand loyalty.

My name is Giovanni, and my entrepreneurial spirit was ignited by watching my parents manage their businesses. Throughout my adolescence, I delved into the realms of marketing, sales, and automation, seeking to understand the intricate dynamics of customer relationships. Simultaneously, I struggled to connect with people in my immediate surroundings, leading me to explore online communities where I found like-minded individuals who shared my interests and passions. This experience profoundly influenced my perspective on the power of communities in fostering genuine connections.

My name is Anton. At a young age , I discovered a keen interest in videography, marketing, and business. Originally from London, I moved to Madrid in late 2021, where I applied my marketing and videography skills to the restaurant sector. Like Giovanni, I faced challenges in connecting with people who shared my interests and hobbies during my teenage years. This search for meaningful connections eventually led me to enroll in the same entrepreneurial university as Giovanni, where our paths crossed.

Our shared passion for business and our vision to create a project with a significant impact brought us together. From February to April 2024, we embarked on a journey to Finland, aiming to immerse ourselves in one of Europe's most dynamic startup ecosystems. During our time there, we engaged with angel investors, venture capital directors, and the youngest partner of a venture capital fund in Europe. Through these interactions and the podcasts we recorded, we repeatedly heard about the rising prominence of digital communities as a medium for brands to connect with our Generation Z.

This revelation, combined with our personal experiences and the insights gathered from e-commerce founders, highlighted a critical pain point: the increasing cost of social media ads and the superficial nature of interactions on these platforms. We listened to stories of heavy investments yielding minimal engagement and the frustration of relying on third-party platforms for visibility. The success of online communities presented a clear solution: a dedicated digital space where brands could engage directly with their customers, provide valuable content, and foster genuine connections without the reliance on costly ads.

The macro problem

In recent years, there has been a marked shift in the way users interact online, reflecting broader trends in digital engagement and consumer behaviour. Traditional social media platforms like Facebook and Instagram, once dominant forces in the online landscape, have seen a decline in user engagement, particularly among younger demographics. For example, a study by the Pew Research Center found that only 51% of teens in the United States use Facebook, down from 71% in 2015 . This trend is mirrored globally, with users increasingly seeking more authentic and meaningful interactions online with growing scepticism towards user-generated content (UGC) and influencers, with only 49% of consumers now trusting influencer recommendations.

One significant consequence of this shift is the rising cost of digital advertising. As more businesses compete for attention on these platforms, the cost-per-click (CPC) and cost-per-impression (CPM) have steadily increased. According to WordStream, the average CPC for Facebook ads across all industries rose by 17% between 2020 and 2021. This increase places a significant financial strain on businesses, which may lack the substantial budgets necessary to maintain effective advertising campaigns.

Moreover, the issue is not just about rising costs. There is a growing sentiment among consumers that traditional social media ads are intrusive and less trustworthy. A report by Edelman revealed that 74% of consumers globally are concerned about fake news being spread on social media platforms . This erosion of trust in social media ads contributes to declining ad effectiveness, as users become more selective about the content they engage with.

Globally, these trends are equally evident. According to a report by Zenith, global investment in digital advertising reached $455 billion in 2021, an increase of 15.6% compared to the previous year. However, despite this growth, there is a clear demand for more authentic and less intrusive marketing approaches. The same report highlighted that 42.7% of internet users worldwide utilise ad-blockers, reflecting widespread dissatisfaction with traditional online advertising.

Furthermore, the rise of online communities presents a compelling alternative. These communities offer spaces where users can engage deeply around shared interests and values, free from the noise and commercial pressures of mainstream social media. A study by GlobalWebIndex found that 60% of internet users are active members of online communities, indicating a strong preference for these more intimate and focused forms of digital interaction .

In summary, the macro problem facing brands today is twofold: the increasing cost and decreasing effectiveness of traditional digital advertising, and the growing consumer demand for more genuine and trustworthy online interactions. Addressing these issues requires innovative approaches that prioritise authentic engagement and community-building over conventional, ad-driven strategies.

Sinking brands

The macro problem has had profound negative impacts on e-commerce brands, influencing their operational strategies and customer engagement approaches. One significant consequence is the increased difficulty in maintaining consumer trust and loyalty amidst a saturated digital marketplace. As traditional advertising methods struggle to resonate with modern consumers, brands face challenges in establishing meaningful connections and building long-term relationships.

Moreover, the shift towards online community engagement highlights a growing consumer preference for authentic interactions and peer recommendations. According to a report by Stackla, 86% of consumers say authenticity is important when deciding what brands they like and support. This preference underscores the struggle for e-commerce brands relying on conventional advertising channels to connect meaningfully with their audience.

Another critical impact of the macro problem is the erosion of brand credibility due to the proliferation of fake reviews and influencer marketing controversies. A BrightLocal survey found that 91% of consumers aged 18-34 trust online reviews as much as personal recommendations. However, the authenticity of these reviews has been increasingly questioned, affecting consumer trust in e-commerce brands that rely heavily on them for social proof.

In addition to these challenges, e-commerce brands face increasing difficulties with ad account bans. Platforms like Facebook and Google have become more stringent in their advertising policies, leading to sudden and often unexplained account suspensions. According to a survey by Tinuiti, 35% of advertisers reported having their accounts banned or suspended at least once, causing significant disruptions in their marketing efforts . This unpredictability makes it difficult for brands to maintain a consistent advertising presence and necessitates exploring alternative engagement strategies. Ad fatigue is also becoming a major issue, with 74% of consumers saying they get annoyed with repetitive ads, which diminishes their effectiveness and further complicates advertising strategies.

Furthermore, the macro problem exacerbates the challenges of customer retention and acquisition for e-commerce brands. As consumers become more discerning about the content they engage with online, brands must navigate a landscape where traditional advertising methods may no longer yield the same returns. This shift requires e-commerce brands to explore innovative strategies that prioritise transparency, customer-centricity, and genuine community engagement to maintain relevance and competitiveness.

In essence, the macro problem's impact on e-commerce brands extends beyond financial considerations to encompass broader challenges in consumer trust, brand credibility, and effective engagement strategies. Addressing these impacts requires adaptive strategies that align with evolving consumer preferences and leverage emerging digital trends to foster lasting customer relationships.

The age of reconnection

The macro problem has profoundly impacted e-commerce brands, exacerbating several critical challenges in today's competitive digital landscape. Rising digital advertising costs and declining trust in traditional social media platforms have created significant hurdles for direct-to-consumer (DTC) brands.

Online communities offer a compelling solution to these challenges. In recent years, there has been a notable shift in user behaviour, with traditional social media platforms losing appeal as users seek more authentic connections. A significant 64% of online community visitors in the U.S. now frequent these spaces more than in previous years, highlighting their growing importance.

For DTC brands, community-building addresses the struggle to create genuine connections with customers. These communities provide a space where users can engage authentically around shared interests, free from the transactional nature of traditional advertising platforms. Research indicates that 66% of online community users participate to connect with like-minded individuals, fostering deeper relationships and enhancing customer loyalty.

Moreover, online communities revive meaningful conversations that are increasingly rare on traditional social media. Users appreciate the respectful and engaging environment of communities, where they feel valued and understood. This environment not only promotes higher engagement but also builds trust, a critical factor for brand-consumer relationships. Brands that actively participate in these communities as genuine members can establish trusted relationships with consumers, significantly enhancing brand credibility and loyalty.

Additionally, the shift towards online communities underscores their role in improving business decision-making. A substantial 64% of community professionals believe that these platforms enhance organisational decision-making processes, leveraging member insights to refine products and services.

In conclusion, leveraging online communities allows e-commerce brands to navigate the challenges posed by rising ad costs and declining trust in traditional platforms. By fostering authentic connections and meaningful engagements, brands can not only mitigate these challenges but also cultivate a loyal customer base and drive sustainable growth in the competitive digital marketplace.

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