Warby Parker grew revenue by $170 million in 2021 compared to 2019. But in 2019, Warby Parker had just reached breakeven. Last year, Warby was $144 million in the red and attributed the bad slip in profitability to higher stock-based compensation costs and, you guessed it, marketing increases.
The first quarter financial reports for 2022 are starting to arrive, and fledgling DTC firms are still reeling from the impact of Apple’s ad policy changes on their marketing budgets. The men’s grooming brand Manscaped increased revenue by $87 million year over year, outperforming a $47 million increase in cost of sales. Those are some positive figures. Manscaped, on the other hand, had a $164 million surge in marketing costs.
Shares of Solo Brands are down from around $22 last November to just shy of $7 today. Warby Parker shares reached an all-time high of $58.34 in November, but closed trading yesterday down by more than half at $23.79. YouTube is the biggest CTV supplier on the scene, which means advertisers need to account for reach and frequency there if they want a picture of the TV-focused ad ecosystem that reflects reality.
Solo Brands, a DTC brand holding company that IPO’d last October, spent $40 million in SG&A costs (selling, general and administrative – which includes marketing) in all of 2020. Last year, its marketing costs alone grew by $57 million.
“Before, there wasn’t a way to frequency cap on YouTube and YouTube live,” Maris says, other than via Google’s DV360 DSP. In other words, you could only frequency cap across Google’s own walled garden. But the big winner is still Google and not Freewheel, Innovid CTO Tal Chalozin tells Ad Age. Broadcasters haven’t effectively packaged their own YouTube content – and some shows have huge YouTube accounts. If those impressions can be sold in a single platform, broadcasters will bring their own ad sales to YouTube and drive value by packaging the inventory in upfront deals.
Historically, TV advertisers have “run two systems:” one for YouTube and one for the rest of their buys, Stefan Maris, FreeWheel’s head of global partnerships and business development, tells AdExchanger. FreeWheel’s YouTube integration is designed to standardize those supply silos so advertisers can get visibility into both Google-owned and broadcaster CTV inventory across a single live campaign.
In back-to-back weeks, multiple Bizarro World scenarios have come to pass. First was Netflix’s announcement last week that it’s contemplating advertising and plans to introduce an ad-supported tier in the next few years. Then, on Monday, the will-they/won’t-they drama of Elon Musk investing in…wait, abandoning…WAIT, BUYING Twitter culminated in an agreement by the Twitter board to sell to Musk at $54.20 per share, valuing the company at $44 billion. Twitter will delist from the New York Stock Exchange once the deal is completed.
The valuation is a 38% premium from Twitter’s closing price on April 1, when Musk announced his 9% investment in the company and set off a chain of events that brought an April Fools joke to life. The acquisition puts an uncomfortable spotlight on Twitter’s ad business. In a since deleted tweet, Musk proposed removing ads for Twitter Blue subscribers. “The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive,” he wrote.