Meta/Facebook Ads – Where’s It All Gone Wrong?
Throwback to 2004, when a young Mark Zuckerberg launched ‘The Facebook’ from his Harvard dorm room. Ah, those were the days. Compared to Meta which exists now, it is a far flung and virtually inconceivable thought.
Facebook, or Meta, has morphed drastically since then, becoming a tech giant which sat atop the food chain. Now,some commentators think it’s become sluggish and disoriented, with a leader at the helm who seems intent on burning through inordinate amounts of money in pursuit of VR. This doesn’t sound very business savvy to us and the main impact on core customers who are SMEs is due to Meta’s strategy.
Considering Facebook is basically a glorified ad platform disguised as a social networking site, Meta doesn’t seem to be very focussed on what advertisers (or its users) actually want. This neglect in fixing advertising issues and adhering to people’s needs is causing major financial damage to the conglomerate, and has resulted in a big shift in its status.
Where is Meta going Wrong?
1. …Dare we utter it? The Metaverse.
It is well known that Zuckerberg is aiming to create a VR Metaverse, currently in development with Reality Labs. He’s a man with a 10-15 year plan, which would perhaps be less laughable if he weren’t losing buckets of money. Big buckets.
Let’s take a look at those figures.
In 2019, Reality Labs burned through $4.5billion, followed then by $6.62billion in 2020, and $10.19billion in 2021. But it doesn’t end there – in the first three quarters of this year alone, they have lost a staggering $9.4billion. This brings us to the rough sum of (drum roll, please) $31billion. In their third quarter earnings call, David Wehner said that they “anticipate that Reality Lab’s operating losses will grow significantly year over year”. Even Mark Zuckerberg himself has said that he predicts significant losses over the next 3-5 years.
Of course, these losses (both predicted and existing) haven’t instilled faith in investors. This has seen Meta’s stock drop 70% this year alone.
The question is, why is it still being pursued if all evidence implies it is a potentially fatal move for the company? Ultimately, it’s because the Founder wants it. Zuckerberg intrinsically believes in the worth of VR long term, and thinks this patience and investment will be rewarded. I guess we shall find out in 10-15 years time.
2. Plundering Over Innovation
If Meta’s purpose is not innovative social media (despite being a social platform), then it just isn’t going to push boundaries in the same way that other platforms do. It has become careless, and continues to rely on lazy copycat ideas rather than creating something truly brilliant themselves.
It started with a buyout of competitors. Meta bought Instagram for $1billion in 2012 (which seems like a pretty sweet deal). They then went on to buy Oculus VR and WhatsApp in 2014 for $2billion and $16billion respectively. Through eliminating competitors, they built a seemingly secure monopoly over social media and messaging communications. Zuckerberg even purchased a surveillance app called Onavo, which monitored the market for emerging platforms which it could replicate, buy, or kill. Again, no interest in personal innovation.
What if a Company Can’t be Bought?
When buying the competitor wasn’t an option, replicating products for Meta’s platforms has been a successful strategy in the past.
Take Instagram Stories for example; Snapchat resisted Zuckerberg’s buyout, and when this was no longer an option, Facebook used market dominance to find success by replicating their product to a degree of success on Instagram, and then Facebook.
But it seems that Meta has finally met its match with TikTok. Instagram and Facebook’s imitations of TikTok’s short-form video content are just not delivering. Quite frankly, it wasn’t what either Facebook or Instagram were built for or what users want. They were designed with the idea of connecting friends at their forefront, whereas TikTok is, in reality, an entertainment platform with an algorithm that doesn’t rely on you building a feed for yourself through connections.
If we look at it statistically, we can see to what extent Reels are failing to engage their audiences. Instagram users spend 17.6million hours a day watching Reels, whereas TikTok users scroll for 197.8million hours a day. This is a monstrous divide.
Because they are failing to keep up with demand, younger users are bailing on Facebook altogether. According to Pew, only 32% of 13-17 year olds say they use Facebook, compared to 71% in a 2015 survey. This will have great implications on ad placement and revenue considering the shift in demographics.
So No-One Wants the Metaverse (Except Mark), and No-One Wants an Inefficient TikTok dupe. Well, What Do People Want Then?
A re-haul. For marketers, one of the biggest issues they are facing are the challenges put in place by the new Apple iOS changes and increase in data privacy – something which Meta itself has acknowledged is a revenue problem (a ‘headwind of $10billion’ kind of problem). In fact, over the past four quarters, Facebook’s ad revenue has steadily declined, resulting in the first ever loss year-over-year.
Essentially, with users in greater control of their privacy (and with more of an inclination to seek it out due to numerous negligent cases) Facebook’s scope for data harvesting has been drastically reduced, in some cases up to 40%. This affects ad targeting efficiency for marketers, and in turn makes it harder to track ROAS on Facebook ads.
Meta needs to learn how to function in a cookie-less world in which their pixel isn’t as reliable anymore. It’s either that, or their space as an advertising platform is going to seriously dwindle as marketers look elsewhere for more diverse demographics and efficient targeting.
For consumers, there’s already a lack of trust with Meta – and rightfully so, as they have lots to make up for. For example, there have been issues with spreading extremist propaganda, misinformation surrounding Covid-19, and content which was flagged as harmful to teens, especially young girls.
For customers, specifically the core SMEs a re-focussed ads offering and new interface seems long overdue. Compared to other social platforms, Meta Ads is starting feel clunky and slow. There’s too much legacy in there and it feels bloated and not intuitive to use; a classic problem for ads interfaces when they have been built on top of. Add to this the endless barrage of calls and appointments with ads experts whose advice is often quite limited and poor integrations with other platforms and advertisers are looking for alternatives and ready to welcome new options that can deliver the same scale.
So far, it feels like the biggest step they’ve taken is a rebrand. They are trying to wash away their sins away by directing our focus onto their hallowed Metaverse. And all through the medium of a new name. Unfortunately, it will take more than that for marketers and users alike to trust Facebook, and for Meta to re-establish some well-needed faith in all who use their platforms.
There’s still some good in running Meta Ads – our team has been working on the platform since 2012 (remember PMDs before Facebook had its’ own half decent platform). However for the first time there seems to be genuine weakness with the ads product DUE to the business strategy.