First published June 7th, 2018
Four years ago, when Rich Fulop founded Brooklinen, the direct-to-consumer luxury bedding startup, the customer acquisition strategy was straightforward for DTC brands: pour money into Facebook ads.
Soon, Brooklinen was spending up to 75 percent of its overall ad budget on Facebook. But Brooklinen and other DTC companies, and marketers of all stripes, were pouring money into Facebook’s giant ad machine, lured by micro-targeting segments. 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 fuddy-duddy outlets like out-of-home, terrestrial radio and even — heavens — print.
“We’re trying to move away from Facebook as fast as we can,” said Fulop, who said CPMs on the platform are double what they were a year ago. “We’re fighting in this little slip of real estate with everyone else out there and it’s hard to cut through. You’re paying 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 environment.”
Digiday spoke with 10 direct-to-consumer companies, and all of them report their marketing mix has de-emphasized Facebook for other digital alternatives — including Facebook-owned Instagram — but seven of them also say they are expanding into traditional vehicles. The reason: Prices are getting high for audience segments and the feed has become a very cluttered space.