The direct-to-consumer (DTC) landscape is shifting under the weight of rising customer acquisition costs, tariff threats, overdependence on Meta and Google, and a lack of long-term strategic planning. While performance marketing has fueled explosive short-term growth, it's also created fragile business models that often falter under pressure. The most resilient and profitable brands are those that look beyond return on ad spend (ROAS), embracing balanced, full-funnel strategies that connect brand building with long-term profitability.
The Efficiency Trap
Over the last decade, DTC brands emerged as agile disruptors, capitalizing on low customer acquisition costs (CAC) and hypertargeted Facebook and Google ads to acquire fast, retain cheaply, and scale with investor dollars. As such, ROAS, CAC, and lifetime value (LTV) became the dominant key performance indicators.
But that game has changed. According to the 2025 Haus DTC report, more than 70 percent of brands are still allocating 60 percent or more of their marketing budgets to Meta and Google. These are brands with at least $50 million in annual revenue, spending at least $6 million annually on marketing, yet many of them are seeing their ROAS decline and their growth stagnate.
Our internal models confirm a consistent pattern: DTC brands that lean too heavily into performance marketing without a corresponding brand investment hit a growth plateau, often in the $50 million to $100 million range. Their acquisition costs climb, retention erodes, and their brand lacks staying power.
ROAS-centric marketing is like running a business on sugar highs. It feels good until it doesn’t.
Instead, the brands that thrive are the ones that treat marketing as an investment, not an expense. They balance short-term return on investment with long-term brand equity, shifting some spend away from conversion-focused media into awareness and consideration tactics.
The Cost of Short-Term Thinking
As tariffs return to the conversation, inflation persists, and supply chains remain volatile, DTC brands are realizing that fragility in the model can't be patched over with ad spend.
In economic downturns, the first instinct is often to cut nonessential spend, which, ironically, often means upper-funnel, brand-building media. But this is exactly the kind of spend that provides long-term resilience. According to Google and Kantar, the long-term return of marketing campaigns in months five through 24 is equal to or greater than the returns in the first four months. Yet, these carryover effects are consistently undervalued by finance teams and operators focused on near-term payback.
Without a long-term strategy, budget changes driven by short-term pressure often result in panic decisions. This isn't a plan; it’s a loop of reaction.
Scenario planning changes the equation. By simulating for economic pressures like tariffs, cost surges, and inventory gaps against existing plans, brands can stay ahead of shocks rather than scrambling to catch up.
Plan for All Channels
As many DTC brands pivot into omnichannel strategies, they often face channel cannibalization.
Retail buyers demand support, while Amazon.com eats margins and DTC teams worry about dilution. However, winning brands have a clear philosophy.
DTC is the insight engine where you build deep customer relationships and test innovation. Amazon is the conversion engine, where the focus is on convenience, share of search, and competitive defense. Finally, retail is the scale engine, which unlocks distribution, volume and household penetration.
Instead of debating which channel deserves investment, brands should ask: What is the best total portfolio ROI? By tracking for halo effects across channels, brands can plan for cross-channel optimization, not just channel-level budgeting.
The 2025 Playbook
If you’re leading a DTC brand, you need to reset your KPIs. Instead of using CACs and ROAS, add marginal ROI, contributed profit, and net present value (NPV) of marketing to your dashboards. This gives you a complete picture of what’s working now and what will compound over time.
Following that, shift 5 percent to 10 percent of performance spend to upper-funnel tactics. Use incrementality testing and scenario analysis to model the long-term impact.
Brands should also modernize their measurement. Marketing mix modeling (MMM) is no longer a static, once-a-year report. New tools can make MMM real time and scenario-based, helping you simulate tariff pressure, inventory shortages, or cost spikes, and plan accordingly.
Finally, treat DTC, Amazon and retail as complementary levers in your growth strategy, not competing silos.
The growth playbooks of the last decade won't carry us into the next. As media becomes more expensive and consumer behavior more complex, the winners in DTC will be those that lead with strategy, not just spend.
In a world of uncertainty, smart marketing is your most controllable asset. It’s time to invest in it like you mean it.
Bradley Keefer is chief revenue officer of Keen Decision Systems, a marketing mix modeling platform powered by AI.
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Bradley Keefer is chief revenue officer of Keen Decision Systems, where he oversees marketing, sales, account management, and client success.