Alex FitzGerald, Brave Co-Founder
Spending money on Facebook as an advertiser has always been an ethically difficult decision for me. The revelations brought to light this week by a Facebook employee turned whistleblower are new but they fit a long-established pattern. There has been plenty to get upset about for a long time, from the platform’s impact on teenage mental health, amplification of suspect information, suppression of valuable information, and the platform’s tendency to optimize for outrage. The fact is, I’ve known for a long time that Facebook causes negative effects but it seemed impossible to grow an independent direct-to-consumer packaged foods company without it. So I made a bargain that the good produced by scaling Brave on the platform outweighed the negative.
Facebook’s combination of scale and precision allowed Brave to steadily grow its customer base and still have enough money left over for investments like sustainable packaging and organic ingredients. I’m convinced that Brave makes a positive impact in our customers’ lives and to the sustainability of our food ecosystem. Certain of this, I’m grateful to Facebook for expanding the scope of our mission but it’s time to break up.
The last few months have changed my calculations on the cost-benefit of advertising on Facebook. I’m now convinced that Brave needs to work quickly to reduce and eventually eliminate our reliance on Facebook. My mind was changed for three reasons; clarity on the ethical impact of Facebook advertising, changing economics, and the promise of word-of-mouth growth as an alternative to Facebook.
Clarity on the ethical impact of Facebook advertising
Recent leaks confirmed what many of us have long suspected, Facebook and Instagram can be harmful to mental health. The link between Facebook and mental health issues was established by their own research team as The Wall Street Journal reported last month, “Repeatedly, the company’s researchers found that Instagram is harmful for a sizable percentage of them (research subjects), most notably teenage girls.”
While I wouldn’t do it myself, I have no problem with a business selling consumers a vice. I am a consumer of alcohol and tobacco products myself and I’m glad someone made these products available to me because I enjoy a cigar despite knowing it’s bad for me. What is particularly distasteful about Facebook though, is their deceit about the true harm their products cause. Again from The Wall Street Journal, “In public, Facebook has consistently played down the app’s negative effects on teens, and hasn’t made its research public or available to academics or lawmakers who have asked for it.” Their intentional deception reminds me of the tobacco industry coverups except, in this case, Facebook has the power to make their product less harmful and chose not to. The ethical implications of advertising on Facebook has increased to a breaking point.
I’ve also been influenced by conversations with owners of small businesses like Another Mother Runner (AMR) who make their money from advertising and compete directly with Facebook for ad dollars. AMR, a content network that inspires women with expert-led training programs, is providing a service that completely aligns with Brave’s values and mission. I would rather give my ad dollars to Sarah and Katie of AMR than to Mark Zuckerberg but until recently I couldn’t justify moving ad dollars away from a platform that was performing so well.
Changing economics
As ethical issues were piling up on the cost side of the cost-benefit ratio, the benefits of Facebook have been decreasing. Once a profitable means of reaching new customers, Facebook has become very expensive. Recent changes to Apple’s operating system rolled out in June with IOS14 hurt our advertising performance significantly. With less data to work with, Facebook wasn’t able to find us the customers most likely to enjoy and benefit from Brave.
When advertising on Facebook was cheaper, I could make a modest profit on a customer’s first purchase after paying Facebook to find them and use that profit to find more customers and improve our product. With the cost of finding new customers on Facebook 25-30% higher, we actually lose money on a customer’s first purchase. Luckily, Brave customers tend to come back and purchase from us multiple times so we are still able to make a profit on each customer but it takes longer to recoup the cost of acquisition which places a lot of pressure on our available cash. As a company with minimal outside investment, it’s difficult to sustain a model of acquiring customers that depends on large cash reserves. We’ve had to make painful cuts to our operating budget including letting some of our partners go and not paying myself and my Co-founder. On top of that, the squeeze on our profit makes investing in improvements to the product more difficult but we’re committed to doing so.
By consumer packaged goods (CPG) standards, our product does not have particularly good profit margins. We’ve consistently opted for more expensive inputs like organic plant-based ingredients, a serving size that will actually keep people full, and packaging made from recycled materials. We don’t use additives, fillers, added sugar, or flavor powders because we feel it’s the right thing to do for our customers and the planet. To keep prices reasonable we have to accept a smaller profit margin. We’ve made our commitment to ethical products so we need to sustain the growth of our company with less available cash for advertising. Our hope is that customers love Brave so much that they want to be a part of the mission, and get their friends on board as well.
Word-of-mouth growth as an alternative to Facebook
This is where you come in.
The beauty of Facebook’s algorithm is its ability to take a great Brave customer and find other people like them to advertise to. It uses algorithms to find connections between people that have never met and share little in common to the human eye. The scale of digitized social networks is incredible but the ability isn’t unique. Word-of-mouth advertising, passing positive experiences with brands to your friends, family, and co-workers, is the original strategy of viral growth.
If you like Brave, the chances that those in your close network will like Brave are really good because you share important similarities with those close to you. Maybe you have similar values around sustainability and plant-based, organic eating or maybe you enjoy the same pursuits like running and cycling. A recommendation from you is more powerful than any Facebook ad because your network trusts and loves you. They don’t trust and love Facebook and no matter how good our intentions are as a company, we can’t convince a new customer of our mission half as well as you can.
When you invite a friend to try Brave, you are helping us scale our mission of a sustainable food ecosystem and convenience without compromise. You’re giving your friend or family member the opportunity for more time and energy for the things they love. You’re helping us reduce our reliance on Facebook so we can invest further into improving our products and working with advertisers that share our values.
