Disillusioned DTC Brands Reject Walled Garden Measurement

Direct-to-consumer brands, historically very performance-driven, are breaking away from walled garden metrics from platforms like Meta and Google, relying on third-party measurement firms and their own data to measure effectiveness, according to four sources.

Over the past decade, walled gardens helped launch thousands of startups by letting them buy cheap ads to reach new audiences and bypass retailers. That symbiotic relationship was disrupted in 2021, when Apple killed third-party tracking on iPhones, making finding the right customers harder and more expensive.

Growth-oriented businesses diversified media channels but never fully abandoned Google and Meta.

Now, performance-oriented brands are taking the next step toward platform independence by hiring third-party firms like Measured, Triple Whale, Rockerbox and Northbeam to measure campaigns. The move is motivated by a growing distrust of walled gardens, economic pressures and a desire to prepare for further privacy changes.

At digital agency Juice, 30% to 40% of clients have adopted a third-party measurement solution in the past 12 months, said co-founder Michael Lisovetsky.

At DTC agency DigiShopGirl Media, around 10% to 15% of clients are using third-party measurement solutions, which was relatively rare before the fourth quarter of last year, said CEO Katya Constantine.

“In some cases, we’ve recommended it, but many clients are naturally bringing up topics of ‘how can I better understand what’s actually driving results?’” Lisovetsky said, “And ‘what do I do when every ad platform takes credit?’”

Meta didn’t respond to comment by press time.

Platform disillusionment

In 2022, Meta introduced Advantage+, which uses artificial intelligence to choose who to show an ad to. Initially, some marketers said Advantage+ was so effective that it made up for signal loss on Apple.

Nearly two years later, the product has lost some of its initial luster, said Chris Rigas, vice president of media at agency Markacy. In fact, third-party measurement firm Measured found that the incremental performance of Advantage+ was consistently worse than the metrics Meta gives to advertisers.

Disappointment with the performance of Advantage+ led to Juice clients using third-party measurement solutions, Lisovetsky said. Clients were frustrated that Advantage+ includes retargeting (ads served to people who have already shown interest), inflating the tool’s return on ad spend and wasting money on customers already primed, he noted.

“[Meta] has tried to create a product that gives the appearance of a higher ROAS and abstracts away from where that ROAS is coming from,” Lisovetsky said, noting that many of the clients that have sought third-party measurement have also decreased their investment in Advantage+ campaigns.

A cautious mindset

Brands are also adopting third-party solutions because the cost of ads is more expensive, meaning companies want to be sure that they’re only spending on media that works.

Lisovetsky said the cost per thousand impressions (CPMs) on Meta has risen by 100% year-over-year for some accounts, spurring clients to use third-party measurement solutions to invest in cheaper channels like TikTok.

With third-party measurement tools, Markacy clients cut channels where they were paying to reach existing customers rather than finding new ones. Those include retargeting campaigns on Facebook and display, as well as branded search campaigns on Google (bidding on a brand’s own name), said Rigas. People searching for a brand are probably already existing customers.

Beyond high ad prices, economic headwinds facing DTC businesses are pushing brands to adopt more measurement tools, said Tucker Matheson, co-CEO of Markacy.

“Brands are trying to rationalize costs. There have been a lot of layoffs,” he said. “They need to be really smart [about] where to cut.”

Caution doesn’t just apply to wallets: Brands want to avoid having to rework their media strategy on the fly as cookie deprecation looms, Constantine said.

“No one wants to have another iOS 14,” she added.

Still no perfect solution

Third-party measurement tools can give brands a clearer picture of how their media is performing, but for digitally native brands that have spent years building up first-party data, the job can be done without outside help.

“You have to triangulate,” said Ankur Goyal, vp of growth at DTC diaper brand Coterie. “The goal is not to be a scientist and find the exact contribution of each channel. Then the ends become the means. The goal is to have an analytic framework that is easy enough to make decisions for me.”

Goyal has looked for a third-party solution to provide this analytic framework. So far, the more cost-effective solution is looking at upper-funnel data like post-purchase surveys, mid-funnel data from the platforms and lower-funnel data that includes last-click attribution. If all three metrics show that a channel is underperforming, it probably is, Goyal said.

And while Markacy clients have been increasingly using third-party measurement solutions, they don’t get granular data from Meta and other walled gardens, making the inferences they draw useful for only some DTC clients.

“There is not a perfect solution,” Rigas said. “What we have most success with is working with brands in really data-driven ways with all the different signals. It’s hard to say there is a panacea.”