There’s no question that Meta is bleeding, and bleeding badly. But, as Lotame exec Mike Woosley asks, is the secret to success simply grinning and bearing it?
Facebook’s evolution to Meta hasn’t gone quite to plan / Charles Deluvio
We all recall the years when Mark Zuckerberg could do no wrong, but lately he actually seems worried. At an all-hands meeting on June 30, he lost his cool when an employee asked if Meta (née Facebook) would continue affording five surplus vacation days. So-called ‘Meta Days’ were granted to pamper stressed employees during the pandemic. Zuckerberg said that Facebook was in the middle of a downturn. Forget vacations, layoffs could be on the cards instead.
More recently, the company’s latest earnings call this month catalyzed a share price plunge that hit multi-year lows. Meta has fallen 72% in 2022.
For Meta, a hasty pivot to virtual reality (VR) that left many adherents scratching their heads is being followed by a series of rapid-fire changes at Instagram that sometimes smack of desperation, and which seem to be losing steam already, according to reports by The Wall Street Journal. The newspaper suggests that viewers are spending time on TikTok at 10 times the rate they spend with Instagram Reels. Further, engagement in Reels is actually moving in the wrong direction: down. In fact, data reported by Meta indicates that it declined by nearly 14% in August alone.
Back in the meatspace, some analysts might say Zuckerberg has nothing to worry about. While Instagram has had a rocky history since it was acquired by Facebook in 2012, and Zuckerberg booted its founders in 2018 (reportedly over disagreements concerning the importance of monetization over user experience), Instagram’s US revenues passed those of the core Facebook platform last year, and its sales will exceed $30bn this year. That’s at least five times TikTok’s estimated revenue, expected at a paltry $6bn for 2022.
But Meta is smart enough to know this disparity can’t last forever. The company is already struggling to provide laser targeting for marketers, since Apple began suppressing its advertising ID on phones last year. Meta acknowledged Apple’s change would have an estimated $10bn impact on its 2022 sales. Meta must be aware that if all the eyeballs are on TikTok – especially in coveted demographics – that is where the money will eventually go.
Loud voices have bemoaned the experience-focused app changes at Instagram, and in some cases Meta has responded directly. When Kylie Jenner took to the app to plead, “make Instagram Instagram again,” the post went super-viral, and it brought Instagram head Adam Mosseri out of the woodwork. He posted on his own feed that the changes were a test and meant to make Instagram “a bit more fun and engaging.” The response only sounded defensive because it was, well, defensive.
Perhaps Zuckerberg will take a lesson from his former friend Evan Spiegel, founder of Snap. In 2018, Spiegel dropped a complete overhaul of the application that was almost universally panned by its core userbase. Spiegel himself acknowledged the rework was poorly planned and full of bugs, but he felt the change was existential for the company, so he stuck with it. At the time Snap sales were about $1.2bn annually. Three years later, even with headwinds, those sales are expected to exceed $4.5bn this year. That ain’t Meta money, but it’s scale and growth that would be the envy of most in the industry.
Jenner may carp about Instagram’s changes (she similarly complained about Snap in 2018), but ultimately for Meta, Instagram is a business – and the company will change and adapt to preserve and grow its assets. That can’t be news to Jenner, who did backflips with her cosmetics line to get it sold to Coty in 2019. Perhaps Instagram should hire Jenner to help with its own evolution…
Mike Woosley is chief operating officer at Lotame.