- Meta has made 11,000 layoffs, echoed throughout other social media platforms such as Twitter
- Like many other brands, Apple’s changes to its data privacy policies have disrupted Meta’s revenue model
- It has also lost “focus” by investing heavily in the Metaverse, absorbing over $10bn in R&D spending per quarter
- Regular ClickZ contributor Ed East, Founder of Billion Dollar Boy, discusses what this means for Meta and social media marketing
In 2022, Meta went from being one of the most valuable companies in the world to not even making the top twenty.
Its share price has fallen from a peak of $379 in September 2021, to a trough of $90 in November. This is its lowest level since early 2016. So, what’s changed?
Meta isn’t the only one
A glance at other social media platforms and Meta’s recent performance isn’t an outlier. A lot of its competitors are currently facing some of the same challenges.
In the same month that Meta sadly let 11,000 workers go, Twitter’s new owner, Elon Musk, led a company-wide effort to cut 50% of its workforce in a matter of weeks. And, although TikTok remains committed to hiring almost 1,000 engineers, it has also slashed its global revenue targets by at least $ 2 billion. Snapchat also announced its slowest revenue growth in five years since going public.
The collective malaise is a consequence of several factors putting pressure on the platforms. It’s no secret many global economies are experiencing an economic downturn and rising inflation. This was directly blamed as the leading cause of Snapchat’s slump in growth.
Rule of three
In his note to Meta employees, the platform’s founder Mark Zuckerberg also cited three other factors:
Firstly, the emergence of new platforms, including TikTok and BeReal, has “increased competition,” shrinking the market share of legacy platforms. TikTok continues to grow rapidly with the number of monthly active users expected to reach 1.8 billion by the end of 2022. This is close to a staggering 50% increase year-on-year. Meanwhile, BeReal’s monthly active users increased from 921,000 in July 2021 to 21.6 million in July 2022.
Additionally, Zuckerberg’s letter highlighted changes in consumer behavior. He admitted to overinvesting at the outbreak of Covid in the expectation that the pandemic-induced increase in online activity would continue. “Online commerce has returned to prior trends,” he said. “Unfortunately, this did not play out the way I expected.”
And finally, Zuckerberg blamed “ads signal loss.” What does this jargon triple threat mean for social media marketing?
A problem made in Meta
The reference is an acknowledgment of the impact of Apple’s data privacy changes in 2021. These limited the amount of data Facebook could gather on iPhone users. The changes have drastically disrupted Meta’s ad revenue business model.
Apple’s iOS upgrade forces apps, including Facebook and Instagram, to ask users for permission to track their data. Without that data, Meta platforms are unable to serve personalized ads that garner greater clicks and sales. So, if users opt out, the ads become less effective, and Meta, dramatically less valuable.
However, it’s an issue that the whole sector has had to face, exacerbated by the upcoming cookie phase-out next year. Meta’s competitors, including TikTok, have explored ways of circumventing Apple’s prohibitive code audits and user activity tracking changes.
Apple’s iOS upgrade also means that brands and marketers can no longer rely on the use of personal data to target consumers. They will need to consider targeting options that use first-party data instead.
This could result in a shift in ad budgets towards content creators who know their audiences intimately and can engage them with curated content for brands. News that Meta is trialing sponsored profile page posts is a sign of this renewed focus. The platform is now enabling select creators to launch sponsored posts within profile pages. For the format to succeed, it will need to take learnings from native advertising, ensuring that any sponsored content appearing on creator profile pages matches the look and feel of the host. Native advertising is another marketing channel that uses exclusively first-party data. It places ads on contextual web pages that match the look and feel of the host site.
Many brands are also investing increasingly in creating digital loyalty programs that are fully ingrained and crucial to receiving previously widely shared discounts. Every supermarket now has one, as does McDonald’s and many others. This is where the evolution of the internet is going. Just like other brands, Meta should be exploring this more sustainable approach in the short to medium term.
Meta losing its “focus”?
Meta shareholders and investment firm, Altimeter Capital Management, hinted at what might be distracting the platform from this crucial growth opportunity. It accused Meta of losing its “focus.” We may interpret this as a thinly veiled stab at its metaverse project. Its strategy to gamble all on the rapid adoption of virtual reality has absorbed more than $10bn each quarter on research and development.
A leaked Meta report recently revealed that Meta has yet to reach its goal of 500,000 monthly active users for Horizon Worlds. As it stands, Meta has bet big on its virtual reality project. But its vision for the future of the internet is too nascent.
Although Zuckerberg is reluctant to publicly admit it, the recent downturn in Meta’s share price is in part a result of its over-ambitious metaverse project.
Consider your role in the metaverse
There is still hope for Meta’s virtual reality. In our recent whitepaper – which canvassed over 4,500 consumers, marketers, and creators across the UK and US – almost a third (29%) of marketers are planning on operating within the metaverse over the next year, and 40% of UK Gen Z consumers and a third (32%) of UK millennials are already active within the immersive world, with half of both age groups keen to learn more. The results demonstrate that consumer interest remains high, and brands are open to exploring its potential.
Both Nike and Gucci are examples of brands that have already done so successfully. They’ve created ‘NIKELAND’ and ‘Gucci Town’ respectively. These virtual interactive spaces allow consumers to engage with the brand and other users. Adidas has partnered with NFT companies such as Bored Ape Yacht Club. The fast-food chain, Wendy’s, released its own branded game mode, called ‘Food Fight,’ challenging players to rid the world of frozen beef.
To change its fortunes, Meta will need to re-prioritize Instagram, Facebook, and WhatsApp, and find a solution to its growing data problem which means re-investing resources into other solutions which don’t rely on third-party data. And Meta will also need to refine the metaverse by attracting and retaining users more effectively. Securing buy-in from creators will be key to this process.
As it stands, the concept is too nebulous for brands and consumers. Advertisers and brands will need to be patient with the metaverse. Brands may need to redirect or pause 2023 ad spending in the platform until it has been refined. Meta’s other social platforms would offer brands more certainty. Moreover, for those brands with the bandwidth to be more experimental, first-party targeting channels should be a consideration.
So, what next?
The news that Meta is still trialing new ad formats to further enhance revenue streams for brands across Facebook and Instagram should encourage investors. The most recent examples are ‘multi-advertiser ads’ and ‘post-loop ads.’ Mult-advertiser ads are displays of products at the bottom of videos. Post-loop ads are short video partner ads in between creator Reels. And, from a business perspective, Meta will also be reassured that its platforms remain the most popular with consumers.
However, Meta cannot afford to simply rely on its existing consumer base for too long. As Zuckerberg himself admits, consumer behavior changes quickly and unexpectedly. Meta must adapt. And, although its recent financial performance figures haven’t been as healthy as hoped, they do however offer Meta an opportunity to re-assess its strategy, listen to its investors and re-focus its efforts on its other platforms, innovations in data, and creators.
The future of social media marketing
As for brands, with the purse strings tightening for many amid the cost-of-living crisis, they need a more considered approach. Where previously they may have otherwise been more inclined to try new formats and platforms, more established platforms, such as YouTube, Instagram, and TikTok, remain popular and effective.
But the question for brands might not simply be where the best place to invest in social is, but what type of content is worth investing resources into. The popularity of authentic content has given rise to the growth of BeReal. This is a theme that brands should replicate across platforms. Meanwhile, short-form video content continues to perform well. In uncertain times, brands, platforms, and creators will need to be agile and adapt.
Ed East is the CEO & Founder of Billion Dollar Boy (BDB), a global creative agency for the creator age. BDB uses industry-leading tech solutions to deliver integrated, creator-led marketing and end-to-end campaign management.
Since its inception, BDB has partnered with some of the world’s leading brands. This includes Heineken, King, Nintendo, PepsiCo, Campari Group, Primark, Shiseido, and L’Oreal. BDB connects them with more than 11,000 vetted content creators, reaching over 10 billion users globally.
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