Meta data: Has the reel run out for Instagram brands?

Consequently, Instagram is slowly losing its status as the go-to channel for performance marketing—click-to-convert ads that push an online user to buy something right away. Instead, ads running on e-commerce and quick commerce platforms are rapidly displacing it. This is taking place at a time when advertising on Meta has become expensive.

So, is the era of the ‘Instagram Brand’ drawing to a close?

Old play

But first, what is an ‘Instagram Brand’?

In the last five years, India’s consumer economy has seen a D2C boom, particularly during the pandemic years, when lockdown restrictions forced people to move their media consumption and buying habits online.

That is when these brands began working off an established playbook to scale up: a Shopify or alternative storefront and heavy spending on marketing, largely Meta (Instagram) and Google (YouTube and search). Shopify is a software service that allows brands to set up their own website to sell goods with minimal coding or upfront investment.

With digital advertising budgets of up to (and sometimes more than) 50% of their annual sales, these brands came to be nicknamed as ‘Instagram Brands’.

A lot of money has been riding on Instagram brands. Consider this: between 2016 and 2020, D2C brands in India received more than $1.3 billion in funding, according to an estimate by investment bank Avendus. Between 2020 and 2023, this had grown to more than $4 billion, as per VC firm Sorin Investments. It estimates that the size of the D2C market in India was nearly $17 billion in 2023 and will rise to more than $60 billion by 2027.

India’s D2C market, which was estimated to be worth around $17 billion in 2023, is pegged to cross the $60 billion mark by 2027.

The Shopify + Meta ads playbook is not unique to India. In fact, it was picked up from the 2010s success of American D2C brands such as Warby Parker (an eyewear brand that listed on the NYSE in 2021) and Dollar Shave Club (a razor brand acquired by Unilever in 2016 and sold to Nexus Capital in 2023). These brands scaled up rapidly last decade by spending heavily on performance marketing on Meta and Google, running viral video campaigns, and influencer marketing.

In India, similarly positioned D2C brands rode a boom as urban affluent customers moved their media consumption and discretionary spending online.

But this ‘Instagram Brands’ playbook, which helped companies such as Honasa Consumer (Mamaearth and others) and Nykaa (and its private labels) become large, listed entities, is no longer a guaranteed formula for success. Newer D2C brands with limited offline sales are struggling to eke out a return on ad spends (RoAS), particularly on Meta, for a number of reasons.

Meta declined to comment for this story.

Searching for returns

By far, the biggest reason brands are reconsidering their D2C playbook is the growth of retail media, including ads on e-commerce and quick commerce platforms. According to this year’s Ficci-EY Media & Entertainment report, while overall digital advertising grew 17% to ₹70,000 crore in calendar year 2024, e-commerce ads grew 50% to reach an estimated ₹14,700 crore, accounting for more than a fifth of all digital ads.

A significant chunk of India’s retail advertising comes from Amazon and Flipkart (including Myntra), which reported ad revenues of ₹6,649 crore and ₹4,972 crore, respectively, for FY24. Others, including beauty e-tailer Nykaa and its newer e-commerce rival Meesho, are also increasingly earning from advertising, although they do not break out how much of their revenue comes under that head.

This isn’t in isolation; retail advertising is growing at Meta’s expense around the world. Amazon’s annual ad revenue crossed $50 billion in 2024 and grew 19% in the March 2025 quarter to just under $14 billion. While Meta reported a better-than-expected $42.3 billion in ad revenue, it may lose up to $7 billion on that count this year because of US tariffs on China, affecting large Chinese advertisers such as Shein and Temu. Tariff-led uncertainty is hurting ad sales for other digital platforms as well.

“Most FMCG brands have traditionally run TV advertising for brand marketing but this channel has poor measurability and it is tough to target the right customer,” says Siddharth Jhawer, country manager—India for adtech company Moloco. “Then, YouTube innovated to give them engaged views, targeted reach to the right user, and tools to measure if the audience has really seen the ad or simply skipped it,” he adds. “Now, these brands are moving their spends to retail media because you can easily measure how many transactions are happening.”

With consumers increasingly shifting to quick commerce companies, these platforms are also gaining scale in advertising revenue. Last month, brokerage Elara Capital said in a report that Blinkit, Instamart, and Zepto collectively had an estimated ₹3,000-3,500 annual run rate in ad revenue. That is nearly half of Amazon India’s ad sales in FY24. Per estimates from a Bank of America Global Research report, monthly active users for the Blinkit and Zepto apps grew from around 10 million in February 2023 to 40-45 million two years later (Swiggy only recently launched a separate Instamart app). As more people in cities shop online, they are more likely to discover new brands on these platforms.

For D2C brands rushing to list on these platforms while paying hefty fees, running ads where their existing and potential customers are already present is a no-brainer. Besides, most of these companies are now building some version of a self-serve ad platform—meaning advertisers can upload, set, and run an ad on their own with no manual intervention from a company account manager.

“The newer folks such as Blinkit, Swiggy Instamart, Zepto are all very good in the advertising tools they provide,” says Rajat Jadhav, co-founder of sexual wellness D2C brand Bold Care. “You do have a lot of control on what you can do, the costs you will incur, and the results you can drive.”

‘The newer folks such as Blinkit, Swiggy Instamart, Zepto are all very good in the advertising tools they provide.’
— Rajat Jadhav

Besides, brands selling to the urban elite in India are now grappling with a slowdown as lower growth in wages and higher cost of living hurts discretionary spending. Already, large FMCG companies, including India’s largest—Hindustan Unilever—have reported single-digit sales growth for the quarter ended March 2025. Smaller, early-stage brands vying for the consumers of these larger rivals are now looking for better ways to allocate their marketing spends. This has pushed them away from expensive spends on Instagram toward retail media even more.

The competition for urban consumers’ attention and money has intensified in the last five years. Consider this: Since 2016, more than 600 D2C brands have been founded in India, and nine of them became unicorns (meaning, a valuation of over $1 billion) by 2023.

“When there is this cash squeeze, there is more discipline in where people will spend their money,” Moloco’s Jhawer says. “They want the best bang for their buck. E-commerce platforms are better in this regard as there is a higher measurable outcome for your ad spends.”

Smaller, early-stage brands vying for the consumers of larger rivals are now looking for better ways to allocate their marketing spends. This has pushed them away from expensive spends on Instagram toward retail media even more.

Yet, it isn’t as if consumer brands are letting go of Meta entirely. Rather, they have realised that it comes at a cost, prompting them to think of clever marketing tricks that can grab their intended customer’s attention better, delivering value for money.

“People are not shutting off Meta and Google,” Moloco’s Jhawer says. “What people have realised is that Meta is preferred more than Google for D2C brands. But these channels are getting crowded as all D2C brands compete for the same users. This has led to CPMs [cost per mille, a measure of ad costs] getting expensive, and RoAS declining.”

Finding workarounds

With advertising on Meta’s platforms, especially Instagram, becoming expensive, D2C brands and their founders have been looking for ways to grab urban affluents by the eyeballs instead of constantly bombarding them with Instagram ads.

Take Bold Care, for instance. Last year, it grabbed attention when it launched an ad campaign starring actor Ranveer Singh and porn star Johnny Sins. A few months later, the brand’s co-founder, Rahul Krishnan, went viral for posting his credit card details on X, promising to let anyone use his card to buy something for up to ₹1,000 for a ‘Happy Sextember’.

Krishnan spent hours posting one-time passwords as thousands of people began to charge food orders and other online shopping to his card. The post received over 5 million views.

“Pre-2022, it was like playing the game in easy mode,” says Frido’s Sonawane. “Now, it is in super-hard mode. Targeting was really efficient and there were no regulatory challenges,” he adds, referring to Apple’s move to restrict apps from automatically accessing user data. Meta’s revenue took an approximately $10 billion hit in 2022 because of Apple’s restrictions, and it followed with aggressive cost cuts. Google was expected to follow Apple’s path, but postponed the decision repeatedly and then scrapped its Privacy Sandbox project, meant to block access to third-party cookies and user data.

Amid all this, e-commerce platforms have been fine tuning their ad offerings, especially with brands cutting ad spends. For instance, in February, Nykaa told investors that it was tweaking product listing ads. These are sponsored listings that appear when a user searches for a product or browses the app.

“We’re not looking to increase the ad dollars and not see the same incremental growth in revenue,” Anchit Nayar, executive director of Nykaa said in an earnings call in February this year. “The real goal for us is to have revenue growth and ad dollar growth in line.”

Nayar said the company is encouraging brands to try out new ad formats on its platform instead of merely selling banner ads on various landing pages. Yet, as the demand slowdown continues, he said brands are discounting their products rather than spending that money on advertising.

‘Instagram Brand’ or not, eventually D2C brands will want the same thing: own their customer and have them shop directly, without the need to spend on marketing.

“D2C tends to be a U-curve, where it is a loss-making sales channel for most brands in the beginning,” Bold Care’s Jadhav explains. “Then, you scale up, spend on other platforms and people begin to search for your brand. Then the U curves back up with more organic search and higher retention. For us, D2C has now become profitable as a lot more organic traffic is coming back to us.”