Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh." Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh."
Meta has launched Facebook Reels, its short video product for the blue app, across 150 countries.
This is likely a bid to restore its plummeting user base, and restore some ad revenue.
After seeing some success with Instagram Reels, the company began testing its short video platform within the Facebook app in India last March. Later in September, it launched this feature in the US.
But is this global launch of Reels enough to right its sinking ship?
The social media giant has had a horrid past few weeks. Its daily active user count dipped for the first time in history. That resulted in the firm losing more than $250 billion from its market cap.
At the time of writing, Meta’s current valuation is $550 billion. For context, its market cap was at $921 billion on December 31, 2021.
This has led to Meta slipping out of the top 10 most valuable companies in the world. That’s not too encouraging.
During its Q4 2021 earnings call, Zuck & co. said it will lose more than $10 billion in ad revenue — largely due to Apple’s privacy-focused changes around ad tracking.
Metaverse won’t be a money-maker any time soon
Last year, Facebook renamed itself Meta — recently, even urging employees to consider each other Metamates — to focus on virtual worlds and experiences.
To do all this, the company set aside a massive development budget. As a result, Reality Labs, its division creating its metaverse, reported a loss of over $10 billion last quarter.
During its most recentearnings call, Zuckerberg said that building this dreamy world would be expensive — and it’d be a few years before it was profitable. The future isn’t here yet.
Is Facebook Reels the remedy to what’s ailing Meta?
It’s no secret that TikTok has been eating Meta’s lunch and then some. The short video platform is the world’s third-largest social network, despite being banned in India, losing a massive chunk of users along the way.
But as Hank Green, one of the creators of popular YouTube channel VlogBrothers noted, TikTok’s rapid growth could eventually lead to creators making less money. And, with that, leaving the platform.
Matt Navarra, a UK-based social media consultant, said this is where Meta’s opportunity lies. “Creators might have an opportunity to monetize their content better with Reels, now present on both Instagram and Facebook. The company has the advantage of providing them with more effective tools to generate a stable revenue stream of money than TikTok.”
In a call with investors, Zuckerberg mentioned that Reels is one of the prime focus areas for the company this year and is its “fastest-growing content format so far”. He indicated that you might see more short video stuff in the News Feed — now renamed just “Feed” — and other areas of the app.
The company said that adverts in Reels are currently bringing in less revenue than those in Feeds or Stories, but it expects improvements over time. While the firm might hope to regain lost users following the format’s introduction, Navarra feels that its issues with an aging demographic — as well as certain advertisers boycotting the platform — will still be roadblocks in overall growth.
Itai Elizur, COO at MarketAcross, a marketing firm based out of Israel, agrees that the company’s main aim is to restore user growth:
Meta has a long history of doing ‘clones’ or copies of key features in competing platforms. The main objective [of this Reels expansion] is hindering the growth of other platforms, and not so much gaining direct ad revenue.
Facebook seems set on squeezing money from Reels though. The company has started testing new overlay-styled ads in the US, Canada, and Mexico. With Reels’s global expansion, we can expect this feature to show up in more places.
What’s more, Facebook will also start inserting full-screen ads in-between two Reels in the next few months.
This is a hugely important monetary source for the company. And times are set to get even harder, especially with Google planning to bring a new privacy sandbox for Android soon, which might impact the business’ ad revenues.
And it looks like Facebook Reels isn’t the golden bullet Zuck is hoping for.
Elizur noted that with the company’s new approach, advertisers are less in control of where in the entire Facebook ecosystem their ad will appear. What this means is Facebook won’t see an immediate uptick in ad revenue through short videos.
It may come — and it’ll probably help settle some nerves at the company – but, for now, Zuck will just have to play the waiting game.
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