DTC1133: Meta ROAS Drops, ChatGPT Ads & DTC Acquisitions

Gooood morning. It’s Rebecca here!

I’m hoping to have the chance to chat with a few more DTC readers (you!) for feedback on the newsletter. What you like, what you don’t, and what you want to see more of.

If you’d be willing to have a quick chat with me, either reply to this email or email me directly at rebecca@directtoconsumer.co and I’ll find a time for us.

Happy Tuesday!

Okay, let’s get into it.

📈 Big CPG is really paying for your first-party data and DTC infrastructure

Last week we reported on P&G buying Thorne for $3.8 billion. Modern Retail just published a deeper breakdown of that deal and the wider trend behind it.

Grüns, the fiber brand we've mentioned a few times recently, got bought by Unilever earlier this year the same way. Both buyers are legacy CPG companies paying up for wellness brands that already have real ecommerce traction, first-party data, and AI discoverability built in, stuff the big companies still don't have internally. PwC's read, per that piece, is that it's less about the product and more about buying the whole operating capability that made these brands work direct-to-consumer.

Demand for the supplement category isn't slowing down. GLP-1 users need more high-protein, high-fiber, hydration-focused products, and people worried about nutrient gaps from processed food are driving the rest. If you're building a wellness or supplement brand with real DTC traction and clean first-party data, you're building exactly what these buyers are paying premiums for right now.

🤖 You have until August 17 to opt out of OpenAI's new tracking default

ChatGPT Ads just added a bunch of new updates like oCPC (optimized cost-per-click) bidding, product carousels, and AAM (Automatic Advanced Matching).

With oCPC, advertisers still pay per click like a standard CPC campaign, but the algorithm shifts your impressions toward the clicks most likely to convert, so it behaves closer to a conversion-based bid strategy without the pricing model changing underneath you.

AAM sends hashed customer data back to OpenAI to improve matching, the same idea as Meta's version, and it flips on for every existing pixel on August 17 unless you turn it off first. If you're running product feed campaigns there, go check your pixel settings before the 17th.

The more useful upside is oCPC itself: you can now clone existing CPC campaigns into oCPC in bulk if you want to test it.

🔍 Measure new customers acquired without bid adjustments

Google Ads has finally created an easier way to measure new customer performance without relying on the penny bid hack (bidding a penny higher for new customers just to unlock the reporting columns).

There's now a "Report on new customers acquired" toggle that gives you New customers and New customer value without touching your bidding strategy at all.

▶️ YouTube’s testing an ad format that never stops your video

YouTube is testing a static image ad that lays over part of the screen every three minutes during landscape mobile playback, while the video keeps running underneath it.

Google hasn't confirmed if this is a narrow test or a real rollout, but if you're spending loads on YouTube pre-roll or creator sponsorships, flag this update for whoever runs that budget.

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💡 The real driver behind your Meta ROAS drop

A lot of accounts had a brutal Meta month. ROAS was down, some experienced account bans with no appeal path, and a few operators shared that conversion rates were at the lowest ever recorded.

Two platform changes (that have been talked about a lot) are making the picture especially messy. Andromeda, Meta's ad delivery system, now reads your creative to predict audience match instead of routing by interest or lookalike data.

Meta also changed what counts as a conversion in Ads Manager, blending 1-day engagement with a narrower link-click metric.

That second one matters more than people think. It can move your reported ROAS with zero change in actual account performance, which means you can't diagnose a real drop from Ads Manager alone right now.

We asked Pilothouse to give us an honest read on what they’re seeing in Meta accounts right now. Here’s what they shared:

• CVR (conversion rate) is much lower across the board:
  • CPC (cost-per-click) is also lower, but not sustaining the same pace as CVR on average
  • CVR is 40% worse than the amount CPC accounts for it
• AOV saw a small lift: Average Order Value is up but only by 10 to 20%
• Auto-apply recommendations caused overspend on specific days
• Mondays and the Thursday-Friday window were the weakest for ROAS over the trailing 30 days
• None of Pilothouse's managed accounts have been impacted by bans tied to third-party tool usage

What's holding up:

• Cost cap and CBO consolidation
• Advantage+ Shopping Campaigns for promo pushes
• Incrementality testing on accounts that used to run on click attribution

Pull your creative longevity number this week, the average window before a scale creative drops off, and have replacement creative ready before the next volatility spike hits.

🛋️ We put three operators on a couch and started asking questions

This week’s All Killer No Filler looks a little different.

Eric got out of his in-home studio and sat down in person with Pilothouse’s Taylor, Aves, and Abby for an After Hours conversation about the questions coming up in their accounts, creative meetings, and client conversations right now.

Over 45 minutes, they get into:

• Meta performance is suddenly all over the place. What should you actually do? And how much damage can you cause by panicking, launching 15 more ads, tossing out promos, rebuilding campaigns, or suddenly deciding your brand needs TikTok?
• If Meta disappeared tomorrow, what part of your business would break first? That answer can tell you a lot about where your next channel investment should go.
• Can an “underperforming” ad still be helping you make sales? Taylor digs into the increasingly messy decision of when to pause creative when individual ads may be playing an uncredited role across a longer customer journey.
• What does customer research look like when everyone’s feed is completely different? Aves breaks down why broad personas like “millennial moms” leave a lot on the table, right down to the fonts, lighting, filming styles, cultural references, and circumstances that signal whether content belongs in someone’s feed.
• Do ads still need to look organic? They talk native social, hyper-marketing-aware consumers, absurdist creative, and why sometimes openly admitting “yes, this is an ad” can be part of the idea.
• Where is AI making marketers worse? The group closes with the marketing takes they quietly judge, including handing creative direction over to ChatGPT, outsourcing too much analysis to LLMs, underestimating the volume of creative brands need, and losing touch with the underlying data of your own business.

It’s basically 45 minutes inside a Pilothouse strategy conversation, with significantly more talk about fishing metaphors, Dadaism, and “cognitive debt” than our normal episodes.

▶️ Watch the full After Hours episode here or listen here on Spotify

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