Facebook Commissions Study to Say Facebook Is a Great Tool for Challenger Brands

But these experts say otherwise

The study found that 72% of digitally native brands experience 'rapid or consistent revenue growth.' Facebook
Headshot of Ann-Marie Alcántara

Brands are growing weary of Facebook, but the social media giant says otherwise—at least according to a new Ipsos study commissioned by the company.

The new study, released as a tie-in to CES, describes numerous ways “disruptor brands,” also known as direct-to-consumer (DTC) or digitally native vertical brands (DNVB) are using Facebook to grow and communicate with customers. According to the study, which surveyed 1,134 U.S. businesses, three in four brands using Facebook had higher growth levels than non-DNVBs, and 72 percent reported “rapid or consistent revenue growth.” Nine in 10 brands said Facebook helped them reach customers.

“In our first year of sales, when no one had heard of Peloton, Facebook was the only marketing channel that drove results for us at any scale,” said Graham Stanton, co-founder and svp, digital sales and marketing at Peloton, in a blog post. “Five years later, Facebook and Instagram are still among our top methods for engaging with current and future Peloton members.”

However, ecommerce experts predict brands will continue to move away from Facebook and Instagram. Robin Li, vp at GGV Capital, said there’s a lot more innovation around a “non-Facebook strategy.”

“[These brands] are so reliant on spending so much on these platforms and they’re becoming so inefficient,” Li said.

Rachel Tipograph, founder and CEO of MikMak, a social video commerce platform, said Facebook and Instagram are still “top performing conversion channels” for the brands they work with but that some companies are allocating more of their budgets to channels like programmatic, YouTube, Snapchat and Pinterest.

“We’re seeing the shift in brand spend to other platforms mostly due to CPMs becoming more expensive within Facebook and Instagram, because you have everyone competing for the same impressions, disrupters and non-disrupters alike,” Tipograph said.

Jason Goldberg, chief commerce strategy officer at Publicis, does think brands can still find success (and profits) on Facebook. But, he said, a Facebook strategy should be part of a brand’s portfolio—just not its entire acquisition strategy. After all, according to eMarketer, Facebook ad revenue is expected to grow through 2020—with $27.57 billion expected this year—so brands can’t write off the platform just yet.

“The problem is, after you sell to that audience, buying a larger audience is an increasingly worse customer acquisition cost,” Goldberg said.

What’s new and notable for DNVBs about Facebook’s platform today are the new ad products and formats like Instagram story canvas ads, said Nik Sharma, head of DTC at VaynerMedia.

The beauty about driving acquisition through DTC, unlike most traditional retail, where it’s a game of who can pay for the most shelf space, is DTC/DNVB direct-response marketing is all predicated on who can tell the best story,” Sharma said. “If you can be the best storyteller, you will win.”

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@itstheannmarie annmarie.alcantara@adweek.com Ann-Marie Alcántara is a tech reporter for Adweek, focusing on direct-to-consumer brands and ecommerce.
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