Direct-To-Consumer Firms Rethink Facebook Advertising

Direct-to-consumer advertising on Facebook has reportedly hit a rough patch, with spending by brands decreasing there. The trend comes at a time when brands are facing other changes on the social media site.

Ten direct-to-consumer companies recently surveyed by Digiday all said their marketing plans are relying less on Facebook, as focus and dollars shift to other online marketing channels — and that includes Instagram, owned by Facebook. “The reason: Prices are getting high for audience segments and the feed has become a very cluttered space.”

Higher Prices

Brooklinen stands as one example of the trend. The luxury bedding company, which sells direct to customers, told the publication that the company’s marketing strategy revolved around a focus on Facebook advertising, with up to 75 percent of the firm’s ad budget going to that social media operator. The micro-targeting of potential customers was an especially attractive proposition.

However, the ads started to become too pricey — some direct-to-consumer companies said prices started increased by up to 50 percent. Those price increases followed an earlier change by Facebook to make content more important than branded content in users’ news feeds. Less inventory reportedly then led to higher prices.

“We’re trying to move away from Facebook as fast as we can,” said Brooklinen Founder Rich Fulop, who said CPMs on Facebook have doubled in price in a year. “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.”

Unwanted Transparency

That’s not the only recent news that involves brand and Facebook. Late last month, the social media operator said that under a new disclosure policy, consumers can click on brands’ Facebook pages and, according to a report, “see every ad it is currently promoting on the social network as well as Instagram, Messenger and the broader Facebook ad network.” That move came as the social media said it would bring more transparency to political ads running on Facebook.

The new disclosure for brands is not welcome by all direct-to-consumer companies. "There is definitely some out there with concern," said Sheryl Sandberg, Facebook’s chief operating officer, when announcing the new policy. "Mainly concerns that their competitors are going to then see all of their ads, and just making it easier for their competitors to see what kind of ads they're running."

There have reportedly been some stumbles already in the wake of push for transparency. An ad from Procter & Gamble, along with an ad from Walmart, were put into what Ad Age called the Facebook “penalty box” because “they struck political notes but lacked a ‘paid for by label.'” The Procter & Gamble ad was about LGBTQ pride and inclusion, while the Walmart ad touched upon the theme of “bringing jobs back to America.”

“This is not a political ad," P&G spokeswoman Tressie Rose told Ad Age. "We're disappointed by the decision, and working with Facebook to understand how to navigate their new policy.”

These developments about brand advertising on Facebook came before news this week that the social media operator granted 61 companies including AOLNikeUPS and dating app Hinge a “one-time” six-month extension to comply with its policy changes on user data. Facebook had said it had restricted access to such data back in 2015.

No matter what happens with this latest data-sharing revelations, it seems likely that direct-to-consumer companies face a new world when it comes to Facebook advertising, and will have to revise their marketing strategies to reflect the new reality.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.