Pet Parent D2C Opps: BarkBox announces upcoming merger, IPO amid significant digital ad spend increase (Score 54)

Subscription startup BarkBox is reportedly merging with blank-check company Northern Star Acquisitions in a $1.6b deal. This move comes ahead of BarkBox's anticipated IPO, which is expected to raise $454m. The company boasts 1m+ subscribers and plans to reach $365m in revenue for the fiscal year ending March 31, 2021. Its new funds will support international expansion and product line enhancements.

The global pandemic has made the demand for pet supplies surge; spending on gifts for pets is up 21% YOY. Per a recent PricewaterhouseCoopers report, the increase on funds spent on gifts for pets exceeded the increase in money spent on gifts for people. Consumers under stay-at-home restrictions have spent more time than ever around their pets and are likely more in-tune with their pets' needs. BarkBox took advantage of the holiday season via limited-edition "Home Alone" toys, which celebrated the classic film and offered pet owners the chance to provide their pets with more toys to play with when staying at home alone.

This shift closely follows BarkBox's hire of CEO Manish Joneja in September 2020; Joneja previously served as global director at Amazon.

According to iSpot, BarkBox started utilizing national TV in Q4 2020; this leads me to believe it will continue investing in this channel in the future. During this quarter, the company spent an estimated $1.2m on commercials targeting millennials and Gen-X viewing programs such as Verified Videos, The Breakfast Club Power Hour, My Little Pony: Friendship Is Magic, Verified Videos: After Hours and The Breakfast Club.

In 2020, Pathmatics estimates the company earned 3.4b digital impressions via Facebook (59%), Instagram (28%), desktop video (10%), desktop display (2%) and mobile display (1%) ads. From January through the middle of December, BarkBox allocated around $26.8m toward digital ads, more than triple the roughly $7.7m allocated in all of 2019.

Additionally, Magellan approximates the company aired 10 podcast ads within the past year.

BarkBox's seriously increased digital ad spend and focus on paid social and podcast ad spend leads me to believe the company is primarily focused on a target demographic of Gen-Z, among whom subscription boxes are particularly popular. To reach this young audience, it likely also invests in OTT advertising. However, remember BarkBox is also targeting millennials and Gen-X via national TV. The company has additionally shown moderate recent interest in entertainment.

Agency & martech readers - This merger and IPO will both increase BarkBox's budget, potentially allowing the company to search for new agency partners. Reach out soon to remain top-of-mind.