The DTC Confidence Index: How CTC Knows When to Invest and When to Pull Back

Every ecommerce brand running paid acquisition eventually faces the same moment: efficiency is slipping, orders are down, and the team is asking whether this is a brand problem, a creative problem, or something happening in the broader market. That question is harder to answer than it sounds. Efficiency modeling like aMER can tell you how to allocate spend to protect margin, but it cannot tell you when the market itself is turning.

That is the gap the DTC Confidence Index (DTCCI) was built to close.

Why Legacy Confidence Indices Fall Short for Ecommerce

Consumer confidence indices have existed since economist George Katona designed the University of Michigan Survey of Consumer Sentiment in the 1950s. The Conference Board followed with its own version. Both remain the dominant macro signals today, more than seven decades later, and both carry structural limitations that make them poorly suited for ecommerce decision-making.

The first problem is lag. An October confidence reading is typically published in mid-November, weeks after the month it describes. A brand making spend decisions for the next 30 days cannot act on information that old.

The second problem is that these indices are unanchored. They measure sentiment but have never been systematically checked against actual online spending outcomes. Decades of economic research find their predictive power for real consumer expenditure is, at best, modest.

The third problem is scope. Legacy indices survey the general population on their feelings about the national economy. That population does not map to your buyers. A middle-income household in a midwestern suburb holds different purchasing behavior from an active online shopper browsing your category. And general economic sentiment can decouple sharply from ecommerce demand: in 2020, consumer confidence collapsed while ecommerce spending exploded. The signal pointed one direction while the opportunity ran the other way.

"Efficiency modeling tells you how to spend. The DTCCI tells you when the market is ready to receive it."

How Common Thread Collective Built a Better Signal

In 2022, CTC noticed something while trying to explain a sharp drop in DTC ad efficiency across their client portfolio. Performance was moving in near-lockstep with legacy confidence readings, producing a contemporaneous correlation of approximately r = 0.89 with the OECD consumer confidence index. The relationship was real, but the signal arrived too late and spoke for too broad a population to be useful in weekly decisions.

So CTC partnered with KnoCommerce, a post-purchase survey platform running across thousands of DTC brands, to build something purpose-built for ecommerce buyers. The result is the DTCCI: a daily index built from real purchase behavior, not general population polling.

Four questions are asked of actual online shoppers immediately after they complete a purchase:

• Present purchase behavior: Did your household buy more or less online in the last month?
• Future purchase intention: Do you plan to buy more or less online over the next three months?
• Economic outlook: Do you think the economy will be better or worse in the period ahead?
• Current disposition: Are you operating as a spender or a saver right now?

The four sub-signals, tracked continuously across 2023 to 2026:

These responses roll up into a single daily score centered at 100, where 100 represents long-run normal buying conditions. A reading above 100 signals that buyers are leaning in; a reading below 100 signals tightening. And because the data comes from post-purchase surveys, it reflects people who are actively spending, not a random sample of the general public.

In early validation, the DTCCI tracked at 0.96 against panel-wide efficiency outcomes, compared to 0.89 for the legacy signal. In a representative forecast week, the index predicted an efficiency outcome of 6.06 against a realized 5.96, a forecast error of approximately 2 percent. The full methodology is documented here.

From Signal to Decision: Understanding Spending Power

The DTCCI is not useful in isolation. It becomes actionable through a concept CTC calls Spending Power: the amount of room a brand has to scale acquisition spend before efficiency begins to degrade meaningfully.

When demand is deep, efficiency holds as you increase spend. You can push acquisition budgets harder without watching your returns compress. When demand is thin, efficiency falls quickly as you scale, meaning the right move is to tighten targets and protect margin rather than chase volume.

The DTCCI forecasts where Spending Power is heading in the month ahead, giving brands a forward-looking view of market conditions rather than a retrospective accounting of what just happened. This connects directly to the Prophit Engine, CTC's efficiency modeling system, which governs how spend is allocated once the macro signal is understood.

"We are not forecasting GDP. We are forecasting your buyers."

What the Signal Has Called in Recent Months

The index has produced two clear decision points in recent history that illustrate how it works in practice.

In December 2025, forward-spending sentiment was materially stronger than the same week in the prior year, and present-purchase intent was near prior-year highs. The call was straightforward: green light for acquisition. Brands that leaned in during that window captured demand ahead of competitors who were waiting for lagging indicators to confirm what was already visible in buyer behavior.

In February 2025, the picture reversed. Following the January snap-back into saving mode, actual efficiency came in at 90.2% of average against a forecast of 96.8%. Saver sentiment hit a record reading. The right call was to hold discipline, protect efficiency, and avoid pushing volume into a market that was tightening. Brands that chased growth in that environment paid for it in compressed returns.

Both examples illustrate the same principle: the brands that time their investment to the market consistently outperform those that set budgets based on prior-month performance alone. Deeper analysis of both case studies is available in the eCommerce Playbook.

What This Means for Your Brand

The DTCCI is live at dtcindex.com. The index updates daily and is publicly available. For brands working with CTC, the signal is integrated directly into planning cycles so that budget decisions reflect current buyer disposition rather than guesswork about macro conditions.

When Spending Power is deep, the move is to scale acquisition before the window closes and competitors notice the same signal. When Spending Power is thin, the move is to tighten targets, protect margin, and prepare for the turn. The DTCCI tells you which environment you are operating in before the results tell you themselves.

Frequently Asked Questions

Know When to Push. Know When to Pull Back.

The DTC Confidence Index is one part of how Common Thread Collective helps brands time their growth to the market. If you want to know what the signal says for your category right now, let's talk.

Talk to Us