What a Diaper Bankruptcy Says About the Digital Ad Market

It’s getting ugly out there for consumer brands, as today’s bankruptcy filing by Hello Bello, the baby care brand founded by celebrity couple Kristen Bell and Dax Shepard, demonstrates. On the surface, Hello Bello had all the ingredients for success: famous co-founders who could promote the brand to their combined 20 million Instagram followers, as well as widespread distribution in big stores like Walmart. But that wasn’t enough. The bankruptcy, which my colleague Maria and I first reported, is the final act in a two-year saga that began with Apple’s privacy updates in 2021.

Hello Bello and other upstart consumer brands—including Winc (maker of Summer Water rosé), sneaker brand Allbirds, underwear startup Parade and activewear company Outdoor Voices—had once banked on digital ads on platforms like Facebook and Instagram as a cheap, reliable way to get in front of potential shoppers. But the changes, which limited the ability of social media firms like Meta Platforms to target users, made the ads much less effective. All of a sudden, brands were struggling to grow as rapidly as they had before, despite continuing to spend heavily on ads. In fact, Facebook’s parent company, Meta Platforms, was named as one of Hello Bello’s top creditors in its bankruptcy filing this morning.