The Limited Times

Now you can see non-English news...

Meta is experiencing its first ever drop in revenue - and is relying on Rails and the Metatowers to save it - voila! Marketing and digital

2022-08-02T08:36:07.995Z


For the first time in history, Meta reports a decline in revenue. Alongside the tough competition from TikTok, Zuckerberg's megalomaniac plans to change the face of the internet are in doubt


Meta is experiencing its first ever drop in revenue - and is relying on Riles and the Metaverse to save it

For the first time since its founding in 2007, Meta, or Facebook, if you will, reported a decline in its quarterly revenue.

Against the background of this crisis and the tough competition from TikTok, Zuckerberg's megalomaniac plans to change the face of the Internet are in doubt

Ditza Kern

02/08/2022

Tuesday, August 2, 2022, 10:07 a.m. Updated: 10:41 a.m.

  • Share on Facebook

  • Share on WhatsApp

  • Share on Twitter

  • Share by email

  • Share in general

  • Comments

    Comments

Expert opinion and the Facebook group of the marketing channel in Vala (photo: photo processing, Yaron Other)

According to Meta's latest revenue report, the company's revenue in the second quarter of 2022 was $28.82 billion - a 1% decrease compared to $29.07 billion in the corresponding quarter in 2021.

Meta's profit was 6.68 billion dollars, a drop of no less than 32% compared to the previous year, and this is due to the growing investment in the Metaverse project that Zuckerberg is now pushing with all his might.



Are you shedding a tear right now?

Wait, that's not all.

Forecasts predict a further decline for Meta in the current quarter, with expected revenues of between 26-28.5 billion dollars, and this is despite the increase in the number of daily active users on Facebook and Instagram by 3% in the second quarter, which is mainly attributed to Rails.



All of this is happening against a background of increased regulatory oversight and a turbulent economy, and while trying to promote a new vision of digital communication - the Metaverse, it's hard to know where things will go from here.

The beginning of the fall of Facebook?

Meta's report symbolizes the prolonged slowdown in the digital advertising market. Against the backdrop of rising inflation and interest rate hikes, businesses all over the world continue to cut their advertising expenditures.



In a long post that Mark Zuckerberg posted last week, of course, to Facebook, he attributed the decline in revenue, among other things , to the anti-tracking feature that Apple recently added to its operating system, which makes it harder for Meta's social platforms to collect information about Apple users and show them third-party ads.



"Our approach here is to increase first-party understanding of people's interests by Making it easier for people to engage with businesses on our apps — whether it's through business chats, stores, or new advertising products," he wrote.



Does this mean Facebook's sponsored advertising will become effective again? Only Zuki knows.



Add to that the tough competition that Meta is experiencing from TikTok, perhaps its most significant rival to date, and you can understand why Meta is taking steps that, at least on the surface, are portrayed as reckless and desperate.


While Zuckerberg noted that he can't predict how long the economic downturn will last, he believes the situation "looks worse than it did a year ago," and as always, he has a heroic plan to save the day.

Meta belt buckle

At a weekly question and answer meeting of Meta employees from June, Zuckerberg announced the hiring freeze, and announced the application of more aggressive performance procedures, with the aim of getting rid of staff members who do not meet the goals.


Now, with the news of the decrease in profits, the company's employees will have to face an even more difficult reality.

"Our plan is to steadily reduce the growth in the number of employees over the next year. This is a time that requires more intensity, and I expect we will do more with less resources," Zuckerberg said.



In the midst of an economic crisis, cuts seem like the most likely part of the plan, but it's not clear how they line up with Zuki's megalomaniacal ambitions to turn the Internet upside down with the Metaverse.



To set the record straight, in the second quarter alone, the work on the project, known as Reality Labs, cost Meta approximately 2.8 billion dollars, which was invested, among other things, in the purchase of startups and the development of VR equipment, in an attempt to catch up with the technological gap with other media giants such as Apple, Google and Microsoft.

And yet, despite the inexhaustible investment, it seems that the company's virtual reality glasses, which are the project's current flagship product, are still far from becoming mainstream among consumers.

Is this what will change the face of things?

For your faithful consideration:

Trying to imitate Tiktok?

If Tsuki has reason to cheer, it's the involvement in Riles, which continues to grow rapidly.

According to Zuckerberg, in the first quarter of this year Riles accounted for about 20% of the time people spent on Instagram, and this quarter he saw a 30% increase, both on Instagram and Facebook.



"We are focused on long-term investments that will position us to be stronger coming out of this recession - including work on our discovery engine and Rails, our new ad infrastructure."



While Rails isn't monetizing at the same rate as Feeds or Stories, Zuckerberg believes Meta's move to AI-powered recommendation systems will make things even better.

As of today, surprisingly, only 15% of Facebook's recommendations are made using artificial intelligence, but Zuckerberg believes that the faster this number grows, the more revenue it will bring to the company.

Indeed, having crossed the $1 billion mark in annual ad revenue, Riles' monetization efficiency appears to be growing faster than expected.



In an interview with the AdWeek website, Mike Proulx, VP and chief analyst at Forrester, said, "Meta is aggressively trying to monetize Rails and it is even forcing it on users, trying to compete with Tiktok." He is of course talking about the failed experiment that culminated in Instagram being reprimanded by Kylie Jenner and other influencers , which led the CEO of Instagram to apologize to the surfers and return the situation to normal, at least for now.



"Videos shorter than 15 seconds on Instagram will now be shared with reels. Instagram is also testing a new full-screen user interface that mimics TikTok and highlights reels in the feed. A forced engagement strategy won't bring Gen Z back to meta platforms, and could ultimately accelerate the exit theirs," Proulx continued.



It's hard to say whether Tsuki's plan will work, but it's impossible not to doubt it.

Meta Brills' focus seems more like an imitation of TikTok than an actual effort to produce an innovative user experience.

Now all that remains is to wait for the new structure of the Facebook home page, which is expected to hit the screens in the coming weeks, and see if Proulx was right.

Enter Metaverse with all your might

The trump card up Meta's sleeve is of course the Metaverse.

"Given some of the product and business constraints we face now, I feel even more strongly that the development of these (metaverse) platforms will free up hundreds of billions of dollars, if not trillions, over time," Tsuki wrote.


"This is obviously a very expensive undertaking over the next few years, but as the Metaverse becomes more important in every part of how we live, I'm sure we'll be delighted to have played an important role in its construction."



As part of this goal, Meta will continue to expand Horizon - its Metaverse social platform, and will launch web versions for all platforms later this year.

According to Zuckerberg, this move is expected to dramatically increase the number of Horizon users, who will hopefully pay enough money to dress up and customize their avatars, because someone has to fund this whole adventure.



Call me old fashioned but when I imagine the Metaverse, more than anything it reminds me of the games my Saturday the 13th plays on Roblox, certainly not something that old people with lives would have the leisure to mess with.

But just as no one anticipated social media's takeover of every good slice of consciousness, it's also possible that the Metaverse is simply ahead of its time.

Is Zuckerberg planning for the next generation?



Maybe, but for now, a recent study by the research body DEPT found that only 16% of people even understand what the metaverse is.

The latest data from Forrester from the UK also showed that among adults who do know Metaverse, 52% would not want to participate at all if Meta was the one running it.

This is the result of years of neglecting a criminal image on Zuckerberg's part, which have turned him into a hated and controversial figure.

What is expected of the meta in the future?

Even if it really is a new communications revolution, the push towards Metaverse is not necessarily the solution to Meta's budget problem, and some investors are skeptical that these investments will pay off in the long run.



In the circumstances, there is no escaping the question, what does Zuckerberg know that we don't?

How can he be so sure that the metaverse is indeed the next thing, and how can we know that it is not the asphemy dreams of a megalomaniac, whose actions are unpredictable and his power, i.e. his knowledge of the content consumption habits of most citizens of the western world, is simply unlimited?



Although a growing number of Metaverse users may eventually halt the decline in the company's revenue, Meta still has a long way to go to transform from a company focused on media advertising revenue into the first Metaverse corporation that should change the face of the Internet forever.

Want to comment?

Join the discussion in the group where the discourse of the marketing world takes place

To the full article

  • Marketing and digital

  • in the headlines

Tags

  • Mark Zuckerberg

  • Meta

  • Meteors

  • Instagram

  • tiktok

  • Facebook

Source: walla

All news articles on 2022-08-02

You may like

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.