The issue was exacerbated by the explosion of social media and DTC brands. Over 10 years ago it was relatively cheap and much cheaper back then to advertiser on social media, to acquire customers and get immediate sales. Brands were able to grow quickly and gain a following aka build some brand equity that way.
Since the competition was much less there was some relative success although it was all about short term growth and not true profit margin growth. Aka the idea of acquiring customers at a loss.
Then everyone started to do it and got funding from early seed investors and VCs and they all wanted as fast as possible exits with multiples. This put fuel to the fire of short term ROAS, CAC etc goals.
But since the competition grew so did CPMās aka it got more expensive to advertise on social media. The competition led to less brand differentiation and more āsamenessā see athleisure brands, t shirts brands, water bottle brands, beauty products, candles, etc.
This put even more pressure on brands to chase short term goals bc they had investors and lenders to pay back, so itās a vicious cycle. You need the sales to survive but at the expense of long term brand building which actually reduces the cost of getting a sale and customer.
And now with more social media platforms than before and more channels/ways to advertise thereās even more pressure to chase short term goals bc of the attribution and measurement problem of the walled gardens and now with some of the mid sized and small brands thinking they need to advise on CTV bc they see how CPMs on social media keep rising.
The fundamental issue is digital advertising itself. Itās relatively easy to advertise on digital platforms for anyone almost, aka all you need is a dollar and a dream (howās that for brand building!)
Therefore you have tons of people starting up a brand/company when they havenāt truly flushed out their go to market approach and brand strategy and approach. They almost immediately start to advertise digital aka most likely social media before they have established the fundamentals and set expectations of growth timelines.
Also you still have lenders, seed investors, investors, private equity, VCs still out there looking for short term exits and multiples, which puts pressure on the brand founders and brands themselves. And many of them increasingly use their own money putting even more pressure.
