Meta post revenue decline for the first time
The Future. Meta did not have a lot of positive updates in its quarterly earnings call, admitting to the first revenue decline in the company’s history. Meta is doing its best to clone TikTok while cutting back on spending and hiring to get back on track. That may significantly curtail its ambitions in AR and the metaverse — the two long-term projects that are supposed to transform the business for the future.
Watch the throne
Meta’s dominance in the social media ecosystem may be on thin ice.
- According to WSJ, Meta reported that revenue was down about 1% to $28.8 billion, mostly because of depressed ad spending.
- That ad revenue decline sent profits down for the third quarter in a row to $6.7 billion — the worst earning streak for the company since 2012.
- The decline is primarily due to a downturn in ad spending (a similar thing happening at Snap, Google, and Twitter) as TikTok gobbles up a majority of the available ad dollars.
- Meta also points the finger at Apple’s opt-out features for the ad decline. To get back on track, the company is working on a new ad-targeting system that doesn’t require as much user data.
But there is some good news: Facebook’s daily active user count increased by a million to 1.97 billion users — still more than TikTok.
Bad News Feed
To combat the economic headwinds, CEO Mark Zuckerberg said that the company would reduce spending and cut headcount, noting that they would “get more done with fewer resources.” That’s definitely a different tune than when Meta rebranded last year and announced that it would hire 10,000 engineers in Europe alone to help build its metaverse product.
It’s no wonder that Meta is pushing aggressively into short-form video, hoping to capture some of the magic that has sent TikTok into the stratosphere. Users aren’t thrilled with the transition, saying photo engagement is getting short-shifted. But execs across the board at the company are pushing the narrative that the company needs to do this. And in true TikTok fashion, Zuckerberg announced that users would see more and more content sourced by AI (although not as much as the company initially wanted to).
In a bid for engagement, Facebook and Instagram’s era as traditional social media companies may soon be ending.