NEW YORK — Digiday, which covers
the digital marketing world, is reporting
that direct-to-consumer (DTC) brands
are souring on Facebook advertising.
It says it spoke with 10 DTC companies, and all of them report their marketing mix has de-emphasized Facebook for
other digital alternatives — including
Facebook-owned Instagram — while
seven are expanding into traditional
Why? Prices are getting high for audience segments, and the feed has become
“We’re trying to move away from
Facebook as fast as we can,” Rich Fulop
founder of Brooklinen, a direct-to-consumer luxury bedding startup, told
Digiday.;Fulop said CPMs on the platform
are double what they were just a year
“We’re fighting in this little slip of
real estate with everyone else out there,
and it’s hard to cut through,” Fulop said.
“You’re paying for an impression-based
auction, so you are essentially bidding
against anybody and everybody that
wants to compete for that space, so it’s
become a hyper-competitive environ-
Four years ago, when Fulop started
Brooklinen, he said the customer ac-
quisition strategy was straightforward:
pour money into Facebook ads. Soon,
Brooklinen was spending up to 75 per-
cent of its ad budget on Facebook.
But, lured by micro-targeting segments, Brooklinen and other DTC
companies poured money into Facebook.
Simple economics took over: Facebook
ads became very expensive for DTC
brands like Brooklinen,;Thinx, Roman,
and Quip — all of which are now diversifying their spending to new channels,
including out-of-home, terrestrial radio,
and even print.
In January, Facebook changed its
news feed to prioritize user content over
branded or publisher content. That,
according to several companies, led to
increased competition for limited in-
ventory in the feed, while CPM prices
have increased dramatically, and ad im-
pressions have sunk. After the algorithm
change in January, CPMs on the plat-
form shot up 122 percent year-over-year
as the impression rate dipped, according
to AdStage data reported in Recode.
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