Introduction

I’ve always marvelled at brands that manage to get from 0 to 1 in what seems like the blink of an eye. How the hell do they do this? How do they get the word out to so many people without performing Richard Branson-like stunts over the river Thames?

Coming from a design background, I’ve always been strong at the first part of direct-to-consumer (DTC) marketing: branding and web design. The second bit – getting people to actually visit your website – has required some active learning.

Turns out, there are many ways to drive traffic to your website. None, however, is as reliable and efficient as Meta Ads, the machine that drives the $1.8 trillion business behind Facebook, Instagram, WhatsApp, and more of your favourite apps.

According to estimates, roughly 97% of working-age people in the UK use Meta apps on a daily basis. That’s an eye-watering figure. If you can get your message out clearly and effectively on this platform, the potential rewards are significant.

That all said, Meta Ads is not always the silver bullet. Since the ‘e-comm goldrush’ of Covid-19 days, competition has intensified and ad costs have skyrocketed as a result. Today, you need to be more cautious in your approach to Meta ads, from both a financial and strategic perspective.

And that is the purpose of this article: to determine whether or not Meta Ads is in fact right for your business in 2025. Specifically, I’ll be focusing on the DTC space.

Financial Considerations

Subscription businesses like Butternut Box benefit from high CAC:LTV ratios, allowing them to spend more on the initial customer acquisition

Gross Margin

Before you start deliberating on the strategic implications of using Meta Ads, you may want to run the financials first. Simply put, if you don’t have enough gross margin (GM) or lifetime value (LTV; the average amount a customer spends over the course of their lifetime with you), Meta Ads is a non-starter.

Gross margin is important because it determines whether you have sufficient room to take on ad spend, the middleman of the DTC space. The cost of acquiring a customer (CAC) will vary depending on your product and the quality of your marketing, but as a rule of thumb, eats up about a third of your margin.

So, if you’re selling a product for £60, expect to spend about £20 on ad spend. If your cost of goods sold (COGS) is £20 (i.e. GM of 67%), that leaves you with £20 profit. Not bad. If your cost of goods sold is £40, you’re breaking even on every sale. In this second scenario, would Meta Ads still be worth it?

Customer Lifetime Value

The answer to this lies in your LTV. If you’re only going to sell the product once, you break even once and that’s it. If you sell it on a monthly basis for an average of 3 years per customer, that’s £2,160 of revenue and £720 of gross profit. All of a sudden, your £20 CAC looks to be a bargain.

This is why Meta Ads is particularly suited to subscription businesses, where the relatively high CAC is amortised over the course of the customer’s lifetime. If you’re having to give up a third of your margin just to drive a one-off sale, Meta Ads will help you scale, but not necessarily at a profit.

Payback Period

Even when your LTV exceeds your CAC, you must consider how long it takes to recover that initial investment (known as the 'payback period'). For instance, if you sell a subscription product for £20 per month with a 50% gross margin (£10 gross profit monthly), but spend £30 to acquire each customer, you'll need three months to break even. Without sufficient capital to bridge this gap, the delay between spending and profitability can create significant cashflow pressure.

Key Considerations

So, to summarise, there are 3 key things to consider when going over the unit economics:

1. Do you have enough GM to accommodate ad spend (expected to be ~1/3 of your margin)?

2. Where margins are tight on the first sale, are you safeguarded by a high LTV?

3. Where your LTV is high, do you have enough cash to fund the payback period?

Strategic Considerations

Because consumers prefer to try certain products before buying, brands like Cubitts, who sell premium eyewear, are forced to adopt an omnichannel approach

Suitability to E-Commerce

Once you’re confident Meta Ads is right for your business from a financial standpoint, you’ll then want to run through some strategic considerations.

The first big one is whether or not people are actually going to buy your product after seeing a Meta ad. Some products, by their very nature, are harder to sell online than others. Would you buy a washing machine online? Probably not. A car? Definitely not. How about a pair of £300 sunglasses? Maybe, maybe not.

Generally speaking, Meta Ads (and e-commerce in general) is more difficult for products that require lots of education before purchase and/or are high-ticket (£300+). Such products tend to do better in retail, where customers can speak to a sales assistant and touch, feel, and try the product.

One way of mitigating this – and let’s take the £300 sunglasses example again – is by eliminating friction across all touchpoints in the sales & returns process. If I see an ad for a nice pair of sunglasses, click on the website, and see a £300 price tag, I’d be far more inclined to make the purchase if I knew I could receive the product, try it on, and return it all without paying a penny.

Of course, by swallowing up all these costs, you’ll lose money on any sale that results in a return/refund. But assuming you sell a good product, the net result of reducing this purchase friction will have an overwhelmingly positive impact on sales.

Website

Another reason for people not buying a product off the back of an ad is a poor website. Your product may be excellent, but if the journey from impression to conversion is lacking in any way, you’ll suffer the consequences.

Your website (or ‘landing page’ – literally the page someone lands on when they click your ad) needs to do the following:

• Mirror the offer presented in the ad

• Present the functional and emotional benefits of the product

• Respond to key objections

• Reinforce the perceived value of the product through design

• Show that other people have bought and like the product (‘social proof’)

• Convey trust (guarantees, free returns, etc.)

Without these things in place, you’re essentially dressing up a shop window before you’ve fitted out your shop.

Learning Phase

The point above about social proof is an important one. How many times have you abandoned a purchase due to a lack of reviews – either on the website or on third-party sites like Trustpilot? It makes sense; the internet is full of scammers who can very easily set up a professional-looking website with real-looking products. What’s tougher to imitate is verified reviews from third-party apps like Trustpilot and Judge.me.

Unfortunately, many legit businesses with great products will also fail to sell anything as a result of social proof. They fail to understand its importance and never put in the time and effort to generate those all-important initial reviews, which most easily come from friends, family, and face-to-face selling (directed towards the website of course).

Generally speaking, this an issue faced by businesses in the Learning phase of the business life cycle. They’ve got a product, have made a few sales, but are suffering from low sales, high costs, and little to no profit.

Another big issue at this stage is the lack of product-market fit. It may sound obvious, but without a product-market fit – or at least some signals of product-market fit – advertising on Meta could be a costly exercise. This is particularly true in your traditional Advantage+ scaling campaign, where you’re essentially throwing money at Meta’s algorithm to help deliver results.

Meta Ads doesn’t have to be used as a scaling tool, however. Ultimately that’s where you want to end up but, in the early stages, it can also be used as a testing device. With clear objectives, tight budgeting rules, and proper analysis, Meta Ads lets you introduce your product to market, learn what’s working, and iterate accordingly.

Growth Strategy

Earlier, I mentioned a scenario where a business uses Meta Ads to scale without making any profit (due to one-off purchases that break even). Would this make any sense?

In my opinion, yes. In fact, I think it’s a smart strategy for the following reasons.

First, it leads to economies of scale. If you’re putting in orders of 1,000 units with your supplier instead of 100, your cost per unit is likely to be significantly lower. The delta here may even turn what was an unprofitable one-off purchase into a profitable one.

Second, it leads to brand awareness. If more people are aware of your brand, more people will talk about it (word-of-mouth marketing), more people will write about it (on their own websites / blogs / social media), more people will visit your website, and ultimately, more people will make purchases – both of the product you advertised and any ones you didn’t (pure margin sales). This flywheel effect can be powerful and very easily kickstarted with Meta ads.

Third, it allows you to build up a customer database. Assuming you have email marketing in check (automated flows plus regular campaigns), this allows you to upsell in the future and drive repeat purchases.

Key Considerations

So, from a strategic standpoint, there are 4 key things to consider:

1. Is the type of product you sell suited to e-commerce / Meta Ads?

2. Is your website ready to convert the traffic coming from Meta Ads?

3. If you plan on using Meta Ads to scale, have you: (i) accumulated enough social proof to convert; and (ii) proved product-market fit?

4. Could Meta Ads spearhead a wider growth strategy, even if direct sales are unprofitable?

Conclusion

BRĒZ, one of the fastest-growing DTC brands in the States allocates over 50% of its marketing budget to Meta Ads

So, is Meta Ads right for your business? The answer, as with most things in marketing, is: it depends. It depends on your product, your market, your funding, your growth strategy, and perhaps some other peculiarities that haven’t received a mention above.

Even if all the signs point you towards Meta Ads, I’d always advise starting by testing. Start with modest budgets, clear objectives, and rigorous measurement, and let the data guide your decisions before you commit significant resources.

If your testing phase proves successful and you're seeing positive returns, resist the temptation to put all your eggs in the Meta basket. Instead, build an omnichannel strategy that incorporates multiple traffic sources and customer touchpoints.

An over-reliance on Meta Ads leaves you vulnerable to sudden algorithm changes, increasing costs, or even the dreaded ad account ban that can happen without warning. By developing channels like organic social media and email marketing, you maintain control over how and where you communicate with your customers.

But let's not underestimate the power of Meta Ads. When executed properly, it remains one of the most powerful customer acquisition tools for DTC brands. The platform's unparalleled reach and sophisticated targeting have launched countless brands from startup to scale-up, and despite increased competition and costs, it continues to offer extraordinary potential for those who use it properly.

Ready to explore whether Meta Ads could work for your business? Get in touch to discuss your specific situation and objectives, so we can develop a tailored plan of action.