If you have received, a "must be .ico" error, chances are that the file you're attempting to upload into this field is actually a .png or .jpg file type.
Check your file
You can check a file's actual file type by uploading it into this file checker. It will let you know the actually file type.
Convert to .ico if needed.
This will convert the image to .ico format.
After you're done converting the image, upload the generated .ico file in your custom branding page.