Direct to Consumer E-Commerce Case Study

How Beach Lifestyle Brand Tower Leverages NoMiddleman.com

NoMiddleman Sponsorship Case Study on Tower

About Tower

Tower started as a direct to consumer paddle board brand based in Southern California. It was funded by billionaire Mark Cuban on ABC’s Shark Tank, and today Tower Paddle Boards is one of the most successful investments in the history of the show. Their profitability is healthy and their annual revenues have been between $5 Million and $8 Million the past 3 years.

Building on their success in the direct to consumer paddle board market, they have extended the Tower brand into many different beach related product categories. Their ultimate goal is to be the leading direct to consumer brand for all things beach lifestyle. Tower currently offers a variety of products including: paddle boards, SUP paddles, iSUPs, swim steps, wood sunglasses, surfboards, surf and SUP board bags, skateboards, dry bags, beach cruisers, and more thru a variety of websites including TowerPaddleBoards.com, TowerMade.com, and SunglassesByTower.com. Their products tend to be very premium products, but sold direct for about half what comparable products go for in retail. Today they continue to expand into other beach lifestyle related niches, and are currently in the final stages of development of electric bikes, which will be offered thru TowerElectricBikes.com.

How Tower Leverages NoMiddleman.com FOR FREE, FOREVER

Tower enjoys a comprehensive brand profile page on NoMiddleman.com for each of their existing three brands: Tower Paddle Boards, Tower Made, and Tower Sunglasses. NoMiddleman editors spend about 2-3 hours profiling each brand to build a comprehensive brand listing that includes all contact information, relevant links, social media links, brand imagery, brand video content, an original brand brief, an original extended brand story, and often times a brand’s executive interview in podcast or video format. Collectively, Tower 3 brands have a prominent presence in 36 unique product categories on NoMiddleman.com’s online showroom of vetted direct to consumer products. Tower Paddle Boards is in 8 product categories, Tower Made is in 16, and Sunglasses by Tower is in an additional 12. All this is free, forever. All sales leads are passed directly thru to Tower’s websites. NoMiddleman takes no cut of any transactions.

Their Tower Paddle Boards brand is listed in 8 product categories including:

Their Tower Made brand is listed in an additional 16 product categories including:

Their Sunglasses By Tower brand is listed in an additional 12 product categories including:

How Tower Sponsors Targeted Product Categories To Build A Sustainable Competitive Advantage

There is only one sponsorship available in each category. As that exclusive category sponsor, Tower’s product ads appear above and below all competing brands listed in the category. Tower also receives the top listing within the category, as well as the first right of refusal on category sponsorship renewal, so they can effectively lock out the competition perpetually from the sponsorship position.

Tower analyzed which categories they believe have great direct to consumer potential with the product selection they currently offer and decided to be a first mover in sponsoring the following 13 categories. Note, one category, “Swim Steps” didn’t exist among the ~3000 existing categories on NoMiddleman.com, so it was created for them under the “Anchor & Docking Gear” parent category. Additionally, they reserved one additional category, Electric Bikes (as they know it’s a massive market, there was no current category sponsor, and their website and products are still in development) at a reduced reservation fee that doesn’t come with any onsite advertising privileges, but it does buy them the 1st right of refusal on sponsorship going forward, so it effectively holds their place in line. Beyond this, they are actively scanning direct to consumer product voids in the beach lifestyle market for new product ideas. Here are the category sponsorships they decided upon (click on a category to see their product listing presence and top of category positioning):

Standard Category Sponsorships ($10K/yr minimum)

Micro Category Sponsorships ($3K/yr minimum)

Reserved Standard Categories ($3K/yr minimum)

Electric Bicycles

Combined, these 13 category sponsorships and 1 category reservation cost Tower $63,000 for the year. By taking the exclusive sponsorship in these 13 categories, Tower holds the marquee top position in each category and is the only brand with product listings in each category. Even more important to Tower, they enjoy the first right of refusal to own sponsorship of these categories forever into the future.

Why Tower Believes NoMiddleman Sponsorship is a Smart Investment

#1 – It will likely pay for itself today
Tower believe that if sales leads directly generated from the NoMiddleman website can increase Tower’s revenues by 2-3%, this investment will pay for itself. Any revenue growth beyond that is pure profit at full margin. In a year, they’ll have date to prove this one way or the other.

#2 – It’s a bet on a better, more profitable future
Tower looks at this as an investment of existing profits towards a thriving future for their direct to consumer business model. Tower is hoping that if many other direct to consumer brands also invest in category sponsorship and proceeds from those sponsorship dollars are used to help elevate the awareness of The No Middleman Project, the collective effect of the group (by working together) will ultimately translate into lower customer acquisition costs individually for Tower (and all other dtc brands). Furthermore, this effect has great potential to snowball over time.

#3 – It counters Amazon & Google’s rising dominance
Tower is facing a reality where their customer acquisition costs are rising at an alarming pace, in lock step with Amazon and Google’s monopolistic power. For the first 3 years of Tower’s existence, they operated purely on a zero acquisition cost model. They didn’t spend a dime on advertising and their search engine optimization focused, direct to consumer business model still empowered them to grow at breakneck pace ($265K in year 1, $1.3M in year 2, and $3.1M in year 3). Same thing with their first 3 years of extending their sales to include the Amazon marketplace – they didn’t advertise one dime and still grew their Amazon revenues at breakneck page ($250K in year 1, to $1M in year 2, to $2M in year 3). But today, as online competition grows and as Amazon and Google are seizing more and more control over monetizing all product search everywhere, Tower is finding itself becoming increasingly reliant on advertising on Google, Amazon, and to a lesser degree Facebook. Today, on a $600 Tower paddle board sale generated thru Amazon PPC advertising or Google Adwords, they are taking $200 off the top and effectively making more profit that Tower does. Couple that with the fact that organic sales are decreasing as more and more of customer acquisition is becoming pay to play. And this is an accelerating trend where they have been taking more and more over each of the past four or five years. Tower believe The No Middleman Project may just be the antidote to this all.

#4 – The more direct Tower is the better value they can offer
Ultimately, Tower believes that the best value proposition available will win out in the marketplace over the long term. Today, Tower makes nearly twice as much profit on any organically derived sales revenue. Thus, Tower is highly motivated to test anything that has good potential to increase the percent of their revenue that operates within a zero acquisition cost model. The more success they have in uncovering successful strategies there, the better value proposition they can offer to consumers, and the better their chance of surviving and thriving over the long term.

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