Friday the 13th, Valentine's Day, and Google's Shenanigans

Your Weekly Dtc Industry Roundup

Happy Friday the 13th.

Hope you're not superstitious … because tomorrow's Valentine's Day and the spending data leading UP to it is looking pretty damn good.

This week we're breaking down why Google's driving record revenue on LESS spend, how Meta's AI ad delivery system actually works under the hood, why Google's reinventing what an "ad" even is, and how AppLovin's ecommerce ambitions are bigger than Wall Street realizes.

Here's what you might have missed this week:

• Total DTC revenue is up 12% YoY heading into Valentine's and Google's responsible for most of it while spending LESS
• Meta's Andromeda and GEM systems now control which ads get shown (and your targeting preferences don't matter anymore)
• Google says it's "reinventing what an ad is" by turning Search into agentic commerce
• AppLovin reported $1.7B in Q4 revenue and laid out its ecommerce expansion plans (even if investors need time to catch up)

Let's get into it.

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Market Performance

Google Just Pulled Off Something Nobody Expected

Total DTC revenue is up 12% year-over-year in the last 28 days heading into Valentine's.

That's solid. But here's the part that doesn't make sense …

Google's reported revenue is up 13.4% YoY. On 0.51% LESS spend.

Brands spent LESS on Google ads this year than last … and got MORE revenue out of it.

Meta's also crushing it at +22% revenue on +18.5% increased spend. Which means ROAS actually improved despite dumping more budget into the platform. That's rare.

Between Google and Meta, they're responsible for 85% of the total revenue increase across DTC brands right now.

Returning customer revenue pulled away HARD after January 30th. It's up 19.56% YoY since then. Bigger jump than new customer revenue.

Something changed in how people are buying. Or platforms are serving ads. Or both.

See Steve's post here

Platform Updates

AppLovin's Making Big Moves In Ecommerce. Wall Street Just Needs Time To Catch Up.

AppLovin just reported $1.7 billion in Q4 revenue and 66% year-over-year growth.

Then its stock dropped 20%.

Classic Wall Street. They see the numbers but don't believe the vision yet.

CEO Adam Foroughi spent the earnings call laying out exactly how AppLovin's expanding beyond mobile gaming into ecommerce advertising. The progress is legit.

Their ecommerce ad conversion rate used to be around 1% per 1,000 impressions. Now it's climbing toward mid-single digits. For context, mobile gaming advertisers on AppLovin convert 50 out of every 1,000 ads served.

That gap is shrinking fast.

When AppLovin's model is confident in a conversion, it'll bid THOUSANDS of dollars on a CPM basis. That level of precision only works when you have massive budgets flowing through the platform and high conversion confidence.

They're getting there. Using generative AI to close the creative gap for a pilot group of 100 advertisers. Most ecommerce brands run hundreds of ad creatives while top gaming advertisers run tens of thousands.

Foroughi's not worried about the doubters. He knows the data tells the real story.

If you're looking for a performance channel that's NOT Meta or Google … this is worth paying attention to.

Read the full details here

Platform Deep Dive

Meta's Ai Doesn't Care About Your Targeting Anymore.

Meta rebuilt its entire ad platform around two AI systems most advertisers have never heard of.

Andromeda decides which ads are ELIGIBLE to be shown. GEM decides which ads SHOULD be shown next.

Andromeda doesn't start with your targeting settings anymore. It works backwards.

Evaluates your creative, copy, format, and historical engagement, then predicts which users are most likely to convert. Your interest stacks and lookalikes? They don't perform like they used to because the system isn't prioritizing them.

GEM is the brain. Analyzes patterns across organic content, ad sequences, formats, messaging, and behavioral data. Then feeds predictions INTO Andromeda about what should be shown next.

Meta says GEM is 4x more efficient at driving ad performance compared to the original ranking models.

What this means for you: Broad targeting now outperforms narrow audience segmentation. Creative is the primary signal.

Account structure simplification is winning. Frequent campaign edits reset learning phases, which kills performance.

If you're still optimizing like it's 2024, you're fighting a system that doesn't exist anymore.

Read the full breakdown

Platform Updates

Google Says It's "Reinventing What An Ad Is."

Google's VP of Ads & Commerce just laid out the company's vision for 2026.

The headline: "We aren't just bringing ads to AI experiences in Search; we are reinventing what an ad is."

Translation: Search is becoming agentic commerce.

Instead of showing you a list of links, Google's AI Mode has conversations with users, surfaces organic shopping recommendations, then shows ads for retailers that offer those products (clearly marked as sponsored).

They're testing similar formats in travel and other categories beyond retail.

The bigger shift is in HOW transactions happen. Google's rolling out Universal Commerce Protocol (UCP), which standardizes how AI agents connect with businesses across the entire shopping journey. Including secure digital identity and payments.

UCP-powered checkout is live now in the U.S. for Etsy and Wayfair inside AI Mode and the Gemini app. Shopify, Target, and Walmart are coming soon.

Google's trying to own the entire transaction layer … from discovery to checkout … inside Search.

If you're not thinking about how your products show up in AI-driven conversations, you're already late.

See what's changing

TLDR

What We Covered

Google and Meta are both driving record revenue for DTC brands heading into Valentine's Day. But the mechanics underneath those results completely changed.

Google's generating MORE revenue on LESS spend because its AI is better at inferring intent and matching ads to user needs instead of keywords.

Meta's Andromeda and GEM systems now control ad delivery based on creative signals and predicted engagement, not your targeting preferences.

Both platforms are moving toward the same future: AI-driven auctions where creative quality and conversion data train the system, and manual optimizations become obsolete.

The pattern across everything this week? The platforms are taking MORE control.

The advertisers who win are the ones feeding better inputs into systems they can't manually steer anymore.

If you're still trying to "optimize" campaigns the old way, you're working against the algorithms … not with them.