DTC Advertising: What Brands Spend and How to Set Yours

DTC advertising is direct-to-consumer advertising: a brand pays to reach shoppers and sells to them itself, usually through its own online store, so each order can be traced to an ad. Prescription-drug ads share the abbreviation but follow separate rules.

On September 9, 2025, the FDA announced about 100 cease-and-desist letters and thousands of warning letters to drug advertisers, and said it would start rulemaking on a 1997 provision known as "adequate provision". That is the drug-ad story. It does not govern a skincare, furniture or pet brand.

Your ads are covered by the Federal Trade Commission (FTC), whose advertising basics state that claims "must be truthful, cannot be deceptive or unfair, and must be evidence-based." Write every ad claim so you could show the evidence for it.

Seven US-listed consumer companies with a large online business spent between 5.6% and 16.4% of revenue on advertising in their latest fiscal years, with a median of 9.6%. Use this as a reference range, not a target.

The rule we used to pick them: US-listed consumer companies whose annual report states advertising expense and that have a large online business. The seven below are the ones we pulled, not a random sample. We took advertising expense and revenue from each company's annual report filed with the US Securities and Exchange Commission (SEC) in 2026, and divided one by the other. Prior-year figures come from the same reports, except for Grove, which we left out of the year-over-year comparison. Data checked November 2026.

Three limits apply to this table:

• All channels are counted. Advertising expense includes every paid channel, not just Meta. It cannot tell you what a brand pays per customer on one platform.
• Several sell beyond their own store. Purple and BARK also sell through wholesale or retail partners, and Lovesac runs showrooms. Their share is spread over more revenue than the online store alone.
• These are large, listed companies. A brand still buying its first thousand customers can sit well above this range. That is a reason to know your own number, not a target to copy.

One beauty company, Oddity, spent 30.3%, so the range is not universal. Oddity files its annual report on Form 20-F rather than Form 10-K, so we kept it outside the table: $245.7M of $809.8M revenue in 2025, up from 25.4% a year earlier, according to its annual report.

The direction is mixed. Advertising share rose at two of the six brands compared year over year (ThredUp, Stitch Fix) and fell at four (Purple, Lovesac, Peloton, BARK).

The most you can pay on the first order is that order's revenue minus product cost, shipping and packing, payment fees and returns. That figure is your break-even CAC, where CAC is total ad spend divided by new customers. A share-of-revenue benchmark cannot tell you this, because it ignores your margins.

Here is the worksheet. The inputs are illustrative; replace them with yours. This is our model, not an official figure.

1. Average order value (AOV) of a new customer's first order: $80.
2. Product cost: $24.
3. Shipping and packing: $9.
4. Payment fees at 3% of the order: $2.40.
5. Returns and refunds at 5% of the order: $4.00.
6. Break-even CAC = 80 − 24 − 9 − 2.40 − 4.00 = $40.60.
7. Break-even return on ad spend (ROAS, revenue divided by ad spend) = 80 ÷ 40.60 = 1.97.
8. Target CAC: we recommend about 75% of break-even, here $30, which is a target ROAS of 2.67 (80 ÷ 30).

The 75% is our recommendation. It leaves room for the costs this worksheet leaves out, such as software, creative production and overhead. If customers reorder, you can accept a CAC above the first-order line, but only on a repeat-purchase rate you have measured, not one you hope for. Our guide to setting a ROAS line from margin walks through that step.

Then run the sanity check. Divide total advertising spend by total revenue and compare it with the 5.6% to 16.4% range above. If you sit far outside it, your repeat revenue or your margins need to explain why.

Spend two to three times your target CAC on each ad before judging it. With the $30 target above, that is $60 to $90 per ad. This is our recommendation: below that, a handful of purchases is too noisy to read, and a few clicks prove nothing.

After that spend, check where shoppers stop. The thresholds are our recommendation:

On the Margin row, spend per purchase between $30 and $40.60 is above break-even but under target, so fix the offer or order value before adding budget.

To test the checkout row, buy from your own store on a phone and note every point where you hesitate. A brand that spends $1,000 and gets clicks but no sales usually has a product page or price problem, not an ad problem, and more ad sets will not fix it. Retargeting (showing ads to people who already visited) will not help either: it only re-shows a page that did not convince them the first time.

Our guide to four common reasons Facebook ads fail goes deeper on each row.

Test the message before the audience, one angle per test, using the words your customers already use. In our view, the angle matters more than targeting when the budget covers only a few tests.

This is how we work at Deepsolv. Our creative intelligence platform for Meta advertising teams combines four inputs: ad-performance data, competitor activity, customer signals and past ad learnings. It turns them into a ranked weekly test plan and execution-ready creative briefs. You can run the same steps by hand:

1. Collect the phrases customers use in reviews, comments and direct messages. Each recurring complaint or desire is a candidate angle.
2. Look at what competitors are running: hooks (the opening seconds of an ad), offers and formats.
3. Rank the candidates by what you would learn if the test won or lost.
4. Write one brief per test, with a single angle and a single success measure. Our creative brief template is built around exactly one test.
5. Log the result so the next test starts from it. We call this Brand Brain: it stores what worked, what failed and why.

Our AI creative studio, Adam, drafts hooks, scripts and statics from those signals. When an ad clears your target CAC, plan creative before you raise budget.

See Deepsolv pricing, or book a demo with our founding team.