🗞️ Another Massive Industry Update — The DTC World Is On Fire

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In today’s edition:

• The Incoming DTC Storm

• AI Is Getting Out Of Hand

• New Attribution Settings In Meta?

& More. But first, here's a word from today’s sponsor: me! 👇

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Welcome back, everyone!

Hope you had a great weekend! To start, here’s a fantastic clip of Rory Sutherland talking about the pitfalls of performance marketing. He says performance leads us into ‘an efficiency-driven race to the bottom rather than an opportunity race to the top.’ Rory is undoubtedly one of the best!

That’s all for the update from me. I hope you enjoy this week’s edition!

Happy learning,
Cory Dobbin

THERE’S A STORM BREWING IN DTC

You’ve felt it, too, right? Ads managers are bugging, reporting metrics are broken, conversion rates are sliding - it feels like there is a storm brewing in the DTC world.

Regardless of seasonality, the ad platforms many brands are built on are becoming more and more challenging to rely on. As seen in the tweets below from some industry vets, Meta Ads Manager, the backbone of many brands, has been about as unreliable as ever. Plagued with bugs, broken AI optimizations, and a refusal to acknowledge or bear responsibility for pushing incomplete features and adjustments, the Meta Ads Manager is in a rough spot.

First, there’s this tweet from David Herrmann about how it’s in the worst state he’s ever seen it—and I agree with this entirely.

Next, Harry Molyneaux tweeted about ads landing on broken landing pages. This is obviously a huge problem, but Meta hasn’t acknowledged the issue nor issued refunds for it (as far as I know).

Lastly, this post from Barry Hott on LinkedIn shows a series of broken AI recommendations being pushed in paid ads without consent or approval, even after explicitly turning this feature off. Not only is this a huge violation of Brand Safety guidelines for many companies, which Meta claims to care deeply about, but there is also still no note from Meta acknowledging the issue or offering compensation.

Ad platforms aside, the entire DTC industry seems to be struggling as it grapples with a rise in "zombie brands"—companies caught between growth and failure. Feat Clothing exemplifies this trend, going from a $75 million valuation to a quiet acquisition. This pattern repeats across the sector, with brands like Outdoor Voices and Foxtrot struggling post-near-bankruptcy experiences.

Factors contributing to this phenomenon include inflated early valuations, challenging economic conditions, and founder fatigue. Many are opting to sell rather than continue pursuing elusive turnarounds. Cost-cutting measures and product line reductions are common tactics but often prove insufficient.

The industry is seeing a mix of discreet bankruptcies, internal restructuring efforts, and founders facing difficult decisions about selling at reduced valuations. As one expert noted, we may be at "peak zombie in DTC land," leaving many to wonder which brands will survive and which will fade away in this evolving retail landscape.

ModernRetail published this great article recently on this topic, which is well worth checking out:

All in all, it’s tough times out there, people. We’ve always seen the ebb and flow of seasons of growth and contraction in the industry, so I don’t doubt we will weather this storm, but for now, it might make sense to keep our heads down and focus on stability over growth.

DON’T DISCOUNT VIEW-THROUGH

As you may or may not have seen, I recently posted on X about how ‘view’ has value. Often direct response advertisers discount view-through attribution as it’s hard to assign credit to these actions directly. That said, though, it doesn’t mean there’s no value in view-through.

To that end, Maurice Rahmey from Meta posted a great thread on LinkedIn discussing this topic. He covers why view is important, and adds some case studies where Meta found that it provided lift.

Does this mean you should optimize for view today? Maybe not. But it does illustrate the importance of view in the conversion funnel. Check out his post below for more info.

SHOPIFY’S NEW AI

Shopify's upping its game with the rollout of Sidekick, an AI assistant designed to streamline merchant operations. This clever helper, part of Shopify's Summer '24 Edition, can tackle tasks from creating discount codes to suggesting blog topics. Currently, Sidekick is available to thousands of English-speaking North American merchants, with plans to expand globally. Shopify's AI push doesn't stop there - they're also introducing AI-powered product categorization and smart reply suggestions for customer chats. Plus, their AI image generator is now available on mobile apps, giving merchants more flexibility in their day-to-day tasks. Check out this update on Techloy below for more info.

A NEW ATTRIBUTION UPDATE FOR META ADS (!!)

Meta has introduced a game-changing update to its Ads platform, giving advertisers more information on conversions. The new attribution settings allow users to distinguish between all conversions and first-time conversions, addressing a long-standing issue of data discrepancies. This update could significantly impact how businesses measure customer acquisition costs and overall ad effectiveness. You can access these new options in Ads Manager under Attribution settings. To learn more, check out SearchEngineLand’s article below.

GA4 GETS A FEW NEW UPDATES

Google has finally introduced some much-needed upgrades to Google Analytics 4 (GA4) as the Universal Analytics shutdown looms on July 1, 2024. The new features include expanded cross-channel reporting, integrating data from platforms like Pinterest and Reddit, and AI-powered insights to explain data trends in plain language. GA4 will also introduce advanced planning tools, including a projections report for cross-channel budgeting. Privacy remains a priority, with support for Chrome Privacy Sandbox APIs and enhanced conversions. Google emphasizes GA4's adaptability for the evolving measurement landscape and urges users to complete their migration from Universal Analytics, reminding them to download historical data before the shutdown. For more info, check out the article below.

IG REELS IS BIGGER THAN NETFLIX

New Omdia research reveals YouTube's continued dominance as the top global video service, with Instagram surpassing Netflix and TikTok in the USA. YouTube boasts 2.7 billion active users in 2024, while Instagram has 1.5 billion and TikTok 2.3 billion globally. Interestingly, Saudi Arabia leads in YouTube consumption per capita. Free Ad-Supported Streaming Television (FAST) channels are gaining popularity, especially in the USA and Brazil, outpacing traditional pay TV. FAST revenues are projected to reach $12 billion by 2028, with $10 billion from North America. Overall, this study is packed with information about how the industry is evolving, so it’s definitely worth checking out below.

• ZUCK TALKS AI: Mark Zuckerberg sat down for an interview recently where he talks about how Meta is thinking about AI, what they’re working on, and more. It’s very interesting to hear how he thinks about this emerging market.

• X CAN’T MAKE UP ITS MIND: It looks like X is testing a handful of new features that conflict with one another. On one hand, they are testing the addition of downvote buttons, while on the other hand, they are testing removing all engagement buttons altogether.

• YOUTUBE’S HYPE TEST: YouTube is currently testing a feature that allows viewers to ‘hype’ a new video, giving it a better chance to hit more home page feeds.

• LINKEDIN LAUNCHING GAMES: Yes, you read that right—LinkedIn is going to launch a Games tab. No, I don’t like it.

• IG PROFILE LEAD FORMS: I love this addition. IG is currently rolling out the ‘add lead forms’ option to the action button on profiles. Finally!

• TIKTOK’S CREATIVE PERFORMANCE WEBINAR: TikTok will be hosting a free webinar next week focused on creative performance reporting and more. Sign up now so you don’t miss it!

• FIGMA SHUTS DOWN RECENTLY LAUNCHED AI: Apparently, Figma’s new AI was too closely trained on real-world iOS data, and is outputting mock-ups that look similar to real apps.

• ELON SUES EVERYONE: Elon announced recently that he will seek legal action against those involved in the advertising boycott, forgetting, of course, that it was because of his own actions and concerns around Brand Safety.

Lastly, a quick note. As marketers, it’s easy to forget that the customer on the other end is human. No matter what the numbers say, there’s a real experience on the other end of the funnel. Consider this deeply when preparing your marketing strategies 👇

AD CAMPAIGN THROWBACKS

I’ll keep this short and sweet. Rishabh posted this incredible thread on X recently, throwing us back to some of the best ads of the past. Some of these ads are insane, such as the X-Box ad featured below. The funny thing is that this ad feels fake, but I remember seeing it on TV as a kid. The industry has certainly changed, for better or worse. Check it out for a blast of nostalgia!

AI’S FIRST COMMERCIAL

AI has shown its first major step towards creative dominance, with Toys R Us running the first entirely AI-created commercial. The ad looks AI-generated, but is that a bad thing? Overall, it has a good vibe and produces a sense of wonder, which I imagine is highly effective in their niche. While I’m not sure how I feel about the implications of this, it certainly marked an interesting milestone. Check out the commercial below, and let me know your thoughts!

NIKE — THE DTC STORM IS AFFECTING EVERYONE

A class action lawsuit has been filed against Nike, alleging securities fraud related to its DTC strategy. The suit alleges that Nike's DTC strategy failed to generate sustainable revenue growth despite leading the public to believe the program was going well. This comes after Nike recently acknowledged needed "adjustments" to its strategy and implemented a cost-savings plan, including layoffs.

Did I mention before that the DTC world was hurting? It turns out that not even the giants are invincible to the storm.

WE ARE IN A GREAT AI TIMELINE

MORE AI MADNESS. In this fantastic thread from Alvaro Cintas, Luma AI’s new keyframe feature is on full display, animating popular memes and adding alternate endings to some of them, which is both uncanny and exciting. I found it fun seeing these classic memes with new life. What do you think?

BENTLEY TEACHES US HOW NOT TO MAKE ADS

I don’t think I need to talk too much about this ad. Simply watch, and I suspect you’ll feel the same. This ad feels bad in so many ways. At best, it lacks excitement, and at worst, it is a blatant statement in support of classism. It feels remarkably tone-deaf, with so many opportunities missed to make it more exciting and engaging. It's a huge miss from Bentley, in my opinion.

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