Connect with us

SOCIAL

Meta Reports Increasing Costs, Lower Ad Revenue in Q3 Performance Update

Published

on

Meta Reports Increasing Costs, Lower Ad Revenue in Q3 Performance Update

Mark Zuckerberg’s commitment to his metaverse vision is about to face its biggest test, with Meta’s Q3 results showing rising costs, reduced ad income, and slower growth in key markets.

First off, on usage – Facebook is now up to 1.98 billion daily active users, an increase of 16 million on its last report.

But as you can see, the hard sell for Facebook here is that all of that growth is coming from the Asia-Pacific and ‘rest of the World’ markets, which are not as lucrative for the company as the US and Europe.

Meta Q3 2022 results

Facebook has seen solid growth in India and Indonesia, as connectivity and accessibility increases in these regions, but the overall usage counts here don’t contribute as much to the company’s bottom line. They will, hopefully, as these markets mature, and Facebook continues to grow its presence. But as you can see, DAU growth in the US and Europe is dead, which is a concerning sign for the app.

Facebook’s monthly active user counts reflect a similar story, with almost all of the growth coming outside of its top revenue markets.

Meta Q3 2022 results

But then again, Facebook usage is holding firm, people are still logging into the app every day, with the total user count still pushing 3 billion. I would question whether those who are logging in are spending as much time as they used to in the app (something Meta doesn’t report), but the overall figures do underline the significant role that Meta’s tools still play in our broader interactive landscape, as do its Family Active People stats (i.e. users of FB, WhatsApp, IG and Messenger).

Meta Q3 2022 results

Meta’s apps are still hugely popular. But even so, there are some concerning signs.

Those concerns are further exacerbated when examining Meta’s revenue numbers. Meta brought in $27.71 billion for the quarter, which is still a massive result, but it represents a decrease of 4% year-over-year.

Meta Q3 2022 results

That reduced revenue performance is partly due to the impacts of data privacy shifts, partly due to the broader economic downturn – while Meta also notes that:

“Had foreign exchange rates remained constant with the third quarter of 2021, revenue would have been $1.79 billion higher”

In other words, there are various factors at play, it’s not one thing that’s hurting Meta’s revenue numbers. But cumulatively, they are having a big impact, which is not good when Meta’s also continuing to invest in its expensive metaverse vision, which has seen its costs and expenses rise by 19% YoY to $22.05 billion.

What’s even worse here is that Reality Labs, its VR department, and its biggest cost center, is also bringing in less revenue over time, as rising VR headset prices, and reduced interest in the metaverse, have seen it declining in sales and revenue intake.

Meta Q3 2022 results

As you can see here, after peaking in Q4 last year, likely due to people getting Quest headsets for Christmas, Reality Labs revenue has declined significantly, while operating losses for the division continue to ramp up.

And Meta says that’s only going to get worse in the short-term:

“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”

And this does not look great:

Meta Q3 2022 results

It seems the metaverse push is going to cost a lot more in development before we reach the next stage.

This is arguably the most challenging period in Meta’s history, and indeed, in Zuckerberg’s professional career. The company has lost two-thirds of its value since September last year (and that’s before this earnings result), amid rising skepticism about its metaverse vision, ongoing questions about the negative impacts of its apps, and increasing challenges to its ad business. 

On the metaverse, as noted, the company continues to sink cash into its future-looking strategy, which, again, still looks like it’s going to cost a lot more before it’s even close to being a workable, functional, viable alternative for digital connectivity and engagement. Zuck’s view is that, one day, we’ll all be interacting in VR/AR powered spaces, which will enhance the feeling of connection well beyond what current social media apps are capable of doing. And that may be true, but it’ll require widespread take-up of increasingly expensive hardware, and really, a killer app or two that will make its VR and/or AR devices a true must-have

Meta has said that it will take years, perhaps a decade, before we reach the next stage – but can Meta and its investors stomach ten years of pain for the possibility of what could come next?

Which leads to the ad problem. Meta has already said that Apple’s ATT data privacy prompts will cost it around $10 billion this year, and it continues to point to ‘headwinds’ in the ad industry which are impeding the performance of its core ad business. Combine a lack of trust in the company with more consumer choice, then add in a global economic downturn, and the result is that Meta’s ad businesses is not as solid as it once was. It’s still good – the vast majority of Meta’s $27b in revenue this quarter came from ads – but the company really needs to keep growing its ad business in order to keep funding its future projects, which, increasingly, looks to be an impossible balance.

You can also add to this Apple’s latest stab at the company – a 30% tax on boosted posts in social apps announced just this week.

So what does Meta do? It’s too late to go back now, it’s already sunk billions into the metaverse and what it sees as the next phase for the company.

It could scale back that investment, as suggested by Brad Gerstner of Altimeter Capital in a recent open letter, in which Gerstner, as a representative of around 2 million Meta shares, said that:

“We think Meta should cap its metaverse investments to no more than $5B per year with more discrete targets and measures of success, as opposed to today’s much more ambitious and open-ended strategy.”

For context, Meta spent double that on its metaverse projects last year, and will clearly best that again in 2022.

Maybe that would be a way to rationalize investment, and keep its projects on track – but presumably, that would also extend the timeline for its metaverse development. And time is something that Meta might not have.

Because Meta’s apps, while still hugely popular, and still, as noted, seeing overall growth in overall users, are also themselves experiencing a downturn in key areas.

The key consideration here is younger audiences, which Meta has conceded are not using its apps like they once were.

Facebook usage by age bracket

Trends in younger demographics logically ripple through over time, which means that Meta, while it is still a key utility in many respects, is slowly losing ground to other platforms.

It’s not happening rapidly, it’s a steady decline, and it largely relates to time spent in app, as opposed to logging on to check the latest updates then logging off and spending more time elsewhere (which, I would argue, is why Meta’s overall user counts remain high). But it is clearly happening, and while Meta would love to put more time and effort into fixing Instagram and Facebook, and getting its core business back on track, it might not be able to do that, as its replication of every trending app that comes along seems to suggest.

And then there are the concerns around the harm caused by Instagram, how Facebook continues to facilitate the spread of misinformation, how Meta’s plans to encrypt all messages will protect criminals from detection.

When you look at the full scope of Meta’s business, really, it needs to start fresh with the metaverse, and it needs the metaverse to become a thing. Otherwise, it is indeed on a slow and steady descent back to earth.

Again, this is not happening quickly, I’m not saying that Facebook is dead or that Meta will be gone anytime soon, because it absolutely won’t. But Zuck and Co. are logically navigating towards a new future for the company for good reason. And now it’s a race to see whether it can get there, without spending too much, and pissing off too many shareholders, in the process.

All that said, I wouldn’t be counting Meta out too quickly either. Zuckerberg is very likely right, digital interaction in wholly immersive spaces, via avatars, digital goods and more – all of this seems very logical, especially when you look at how youngsters engage in gaming worlds like Fortnite and Roblox. Those are the users Zuck is planning for, not the vocal critics of what the metaverse looks like right now.

And if he gets the timing right, Meta could still be the critical connector in the next phase.

But right now, Zuck and Co. will be feeling the heat, more than ever before.



Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address

SOCIAL

The North Face Delivered Jacket Via Helicopter After Viral TikTok Complaint

Published

on

The North Face Delivered Jacket Via Helicopter After Viral TikTok Complaint

  • Popular apparel brand The North Face posted a crazy marketing stunt on TikTok recently. 
  • In a video, they delivered a rain jacket to a woman at the top of a mountain in New Zealand via helicopter. 
  • The woman had complained in a viral TikTok that her waterproof jacket got soaked in the rain. 

The North Face pulled an elaborate marketing stunt on TikTok and delivered some rain gear via helicopter to a woman in New Zealand, whose complaint about the brand went viral on the platform. 

Jenn Jensen posted a TikTok video on November 17 showing herself on a hiking trail in the rain where she’s soaked whilst wearing a rain jacket sporting The North Face logo. 

“I’ve got a bone to pick with North Face,” Jensen says in the video which has racked up over 11 million views. “I bought this ‘rain jacket’ a couple of days ago and the tag for the advertising said that it’s waterproof. Well listen, I’m 100% sure that it’s raining outside and I’m soaking wet.” 

She added: “Listen… I don’t want a refund. I want you to redesign this rain coat to make it waterproof and express deliver it to the top of Hooker Valley Lake in New Zealand where I will be waiting.” 

She tagged The North Face’s TikTok page in her caption. In one comment a user named @timbrodini wrote: “*Northface has left the conversation.” 

The popular outdoor clothes brand made their own TikTok video in response to @timbrodini’s comment in which they said: “We were busy express delivering @Jenn her jacket at the top of mountain.”

In the TikTok video, a North Face employee can be seen grabbing a red jacket from one of its physical stores and then hopping onto a helicopter where he’s flown out to New Zealand. The man then jumps out of the helicopter at the top of the mountain and runs out to throw the jacket to Jensen who is waiting. 

She says “thank you” at the end of the video, which has also gone viral and gained 4.1 million views. 

Jensen then made a follow up video on her page explaining that The North Face’s marketing team saw her video and wanted to make “amends.” She said they flew her out by helicopter to the top of a mountain in New Zealand to give her new rain gear. 

“At this point the ultimate test will be if the new rain gear they gave me at the top of that mountain will hold up to the very high bar that North Face has now set for themselves,” she concluded at the end of the video. 

Some users speculated whether her original video was also a part of the marketing stunt but Jensen responded that she “turned down” the opportunity to be paid for the company’s follow up video. 

“I’m not an influencer, I was just a disappointed customer.” 

The marketing strategy appears to be a new way for brands to connect with customers by showing their care whilst also providing an entertaining video on social media. 

The North Face seems to be following the steps of the Stanley cup brand which recently went viral after gifting a woman a new car. The woman’s own car had burnt down, but in a TikTok video she showed that her insulated Stanley cup had survived the car fire and that the ice inside hadn’t even melted. 



Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

SOCIAL

U.S. Judge Blocks Montana’s Effort to Ban TikTok in the State

Published

on

U.S. Judge Blocks Montana’s Effort to Ban TikTok in the State

TikTok has won another reprieve in the U.S., with a District Judge blocking Montana’s effort to ban the app for all users in the state.

Back in May, Montana Governor Greg Gianforte signed legislation to ban TikTok outright from operating in the state, in order to protect residents from alleged intelligence gathering by China. There’s no definitive evidence that TikTok is, or has participated in such, but Gianforte opted to move to a full ban, going further than the Government device bans issued in other regions.

As explained by Gianforte at the time:

The Chinese Communist Party using TikTok to spy on Americans, violate their privacy, and collect their personal, private, and sensitive information is well-documented. Today, Montana takes the most decisive action of any state to protect Montanans’ private data and sensitive personal information from being harvested by the Chinese Communist Party.”

In response, a collection of TikTok users challenged the proposed ban, arguing that it violated their first amendment rights, which led to this latest court challenge, and District Court Judge Donald Molloy’s decision to stop Montana’s ban effort.

Montana’s TikTok ban had been set to go into effect from January 1st 2024.

In issuing a preliminary injunction to stop Montana from imposing a full ban on the app, Molloy said that Montana’s legislation does indeed violate the Constitution, and “oversteps state power”.

Molloy’s judgment is primarily centered on the fact that Montana has essentially sought to exercise foreign policy authority in enacting a TikTok ban, which is only enforceable by federal authorities. Molloy also noted that there was apervasive undertone of anti-Chinese sentiment” within Montana’s proposed legislation.

TikTok has welcomed the ruling, issuing a brief statement in response:

Montana attorney general, meanwhile, has said that it’s considering next steps to advance its proposed TikTok ban.

It’s a win for TikTok, though the Biden Administration is still weighing a full TikTok ban in the U.S., which may still happen, even though the process has been delayed by legal and legislative challenges.

As I’ve noted previously, my sense here would be that TikTok won’t be banned in the U.S. unless there’s a significant shift in U.S.-China relations, and that relationship is always somewhat tense, and volatile to a degree.

If the U.S. Government has new reason to be concerned, it may well move to ban the app. But doing so would be a significant step, and would prompt further response from the C.C.P.

Which is why I suspect that the U.S. Government won’t act, unless it feels that it has to. And right now, there’s no clear impetus to implement a ban, and stop a Chinese-owned company from operating in the region, purely because of its origin.

Which is the real crux of the issue here. A TikTok ban is not just banning a social media company, it’s blocking cross-border commerce, because the company is owned by China, which will remain the logic unless clear evidence arises that TikTok has been used as a vector for gathering information on U.S. citizens.

Banning a Chinese-owned app because its Chinese-owned is a statement, beyond concerns about a social app, and the U.S. is right to tread carefully in considering how such a move might impact other industries.

So right now, TikTok is not going to be banned, in Montana, or anywhere else in the U.S. But that could still change, very quickly.



Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

SOCIAL

Israeli president tells Musk he has ‘huge role’ in anti-Semitism

Published

on

Elon Musk, the world's richest person, said in video remaks that Hamas militants 'have been fed propaganda'

Elon Musk, the world’s richest person, said in video remaks that Hamas militants ‘have been fed propaganda’ – Copyright POOL/AFP Leon Neal

Israel’s president told Elon Musk on Monday that the tech mogul has “a huge role to play” to combat anti-Semitism, which his social media platform is accused of spreading.

The meeting came after the world’s richest person visited a kibbutz community devastated in attacks by Hamas militants on October 7, and met with Prime Minister Benjamin Netanyahu and defence officials.

Musk has been criticised over what critics say is a proliferation of hate speech on X, formerly Twitter, since his takeover of the social media site in October 2022.

He has been accused by the White House of “abhorrent promotion” of anti-Semitism after endorsing a conspiracy theory seen as accusing Jews of trying to weaken white majorities.

Israel’s figurehead President Isaac Herzog told him: “Unfortunately, we are inundated by anti-Semitism, which is Jew hatred.

“You have a huge role to play,” he said. “And I think we need to fight it together because on the platforms which you lead, unfortunately, there’s a harbouring of a lot of… anti-Semitism.”

Musk did not mention anti-Semitism in his video remarks released by Herzog’s office, but said Hamas militants “have been fed propaganda since they were children”.

“It’s remarkable what humans are capable of if they’re fed falsehoods, from when they are children; they will think that the murder of innocent people is a good thing.”

On October 7 Hamas militants broke through Gaza’s militarised border into southern Israel to kill around 1,200 people and seize about 240 hostages, according to Israeli officials, in the worst-ever attack since the nation’s founding.

Vowing to destroy Hamas in response, Israel has carried out a relentless bombardment of targets in Gaza, alongside a ground invasion, that the Hamas government says has killed almost 15,000.

A temporary truce has been in effect since Friday.

– Talk of satellites –

Earlier Monday, Netanyahu and Musk discussed “security aspects of artificial intelligence” with senior defence officials, the Prime Minister’s Office said.

Musk and Netanyahu held a conversation on X following their tour of Kfar Aza, one of the communities attacked by Hamas.

“We have to demilitarise Gaza after the destruction of Hamas,” Netanyahu said, calling for a campaign to “deradicalise” the Palestinian territory.

“Then we also have to rebuild Gaza, and I hope to have our Arab friends help in that context.”

Netanyahu told Musk he hoped to resume United States-mediated normalisation talks with Saudi Arabia after Hamas’s defeat and “expand the circle of peace beyond anything imaginable”.

The war stalled progress towards a Saudi-Israel normalisation deal, and in early November Saudi Arabia’s de facto ruler denounced the conduct of Israeli forces fighting Hamas in Gaza.

Israel’s Communications Minister Shlomo Karhi said his country had reached an understanding in principle on the use of Starlink satellites, operated by Musk’s company SpaceX, in Israel and the Gaza Strip “with the approval of the Israeli Ministry of Communications”.

Starlink is a network of satellites in low Earth orbit that can provide internet to remote locations, or areas that have had normal communications infrastructure disabled.

In September, Netanyahu urged Musk “to stop not only anti-Semitism, or rolling it back as best you can, but any collective hatred” on X.

Musk said at the time that while his platform could not stop all hate speech before it was posted, he was “generally against attacking any group, no matter who it is”.

X Corp is currently suing nonprofit Media Matters on the grounds that it has driven away advertisers by portraying the site as rife with anti-Semitic content.

Musk has also threatened to file suit against the Anti-Defamation League, a Jewish advocacy group, over its claims that problematic and racist speech has soared on the site since he completed his $44-billion takeover.

Source link

Keep an eye on what we are doing
Be the first to get latest updates and exclusive content straight to your email inbox.
We promise not to spam you. You can unsubscribe at any time.
Invalid email address
Continue Reading

Trending