I had another interesting last week, and I really enjoy talking to business owners to understand their financial side of the story. Shout out to my customer success team for looping me into these meetings. If you are a SaaS founder and not talking to 5 customers every week, you are losing out on valuable information... Anyways, coming back to the recap of last week. I spoke to 6 DTC founders, and they all had two complaints: 1. Meta ad costs are climbing—and fast. 2. It is becoming harder to deal with marketplaces (rising ad costs, fulfillment costs, account suspensions and so on). I will focus only on the cost of Meta ads on this post. I will put out a separate post about marketplaces next week. These brands, doing anywhere between $500K to $24M per year (excluding marketplace revenue), are seeing CAC go up and ROAS go down. Out of the six companies I spoke to, only one is profitable, two are barely breaking even, and three are losing money. Meta’s latest numbers back up what these brands are experiencing: 📈 14% increase in the average price per ad in Q4 2024 📊 10% rise in ad prices for the full year 💰 21% YoY increase in Meta’s ad revenue Look at Meta’s Q4 2024 financials: 💵 Revenue hit $48.39 billion, up 21% YoY 📈 Net income surged 49% to $20.84 billion But here’s the kicker—Meta’s ad impressions are growing at a much slower pace than the price per ad. That means Meta will keep raising ad prices, squeezing even more dollars from online stores, while impressions become less and less valuable. Meta is saying that more advertisers are bidding up for the same eyeballs. It is great for Meta, but not so much for the online stores. 49% increase in Meta's profit can be mainly attributed to the increase in the cost per ad. So, what does this mean for DTC brands? Replying only on growth from ad dollars alone is becoming harder to sustain. Instead of throwing more money at Meta’s rising ad costs, it’s time to focus on your product, your customers, and building real relationships. Here’s how: ✅ Email & SMS Marketing – But don’t burn out your list. Educate customers, position adjacent products, and offer value after the purchase. Set up all possible email and SMS automations. Educate your customers on how to use the product. 🎁 Loyalty Programs – Reward repeat customers and create stickiness. 📢 Referral Marketing – Tap into word-of-mouth and turn happy customers into your best marketers. 🔥 Obsess over your product and customers – The brands that focus on product quality and a customer-first mindset will outlast those that rely on ads alone. In 2025, product traction, virality, and strong word-of-mouth referrals are going to be a must if you want a profitable online store. Paid ads alone won’t cut it. I am not saying any of the above is easy, these are hard problems to solve. But business owners need to start somewhere and the agencies working with these online stores have to help these business owners to get there.