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Meta Reports Slowdown in User Growth and Revenue Amid Shifting Economic Conditions

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NFTs are Coming to Facebook and Instagram – Whether You Like Them or Not

Tough times at Meta, with the company reporting a decline in monthly active Facebook users, and a further slowdown in revenue, as global economic trends continue to impact the company’s overall performance.

First off, on usage – Facebook is currently seeing 1.97 billion daily active users, a slight increase on last quarter.

The increases were almost entirely driven by the Asia Pacific market, with Facebook continuing to grow in India and Indonesia specifically. Though Facebook usage has continued to decline in Europe, this time in a significant way.

Part of that would obviously be attributed to Russia, where Facebook is facing restrictions due to Government censorship around the invasion of Ukraine. Facebook has 70 million Russian users, and with this in mind, it’s probably surprising that the decrease hasn’t been more significant in this region.

But then again, Facebook’s monthly active user counts look even worse.

Meta Q2 2022

As you can see, Facebook lost two million MAU overall in the period, with, again, European losses being the most significant.

The Russian invasion likely explains much of this, so it may not be as big a deal as it seems, while Facebook has continued to see growth in every other market, if slight in some.

As such, it’s difficult to say what the figures mean, in a broader growth context, given the surrounding environment, and impacts around the world.

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Meta has also provided its ‘family of apps’ usage, which incorporates Facebook, WhatsApp, Messenger and Instagram.

Meta Q2 2022

As you can see here, overall, Meta’s still growing, up just slightly on the last period.

Again, the broader impacts of Russia’s war on Ukraine are a big factor, so it’s hard to take anything definitive from this. But the conflict also doesn’t appear to be easing, and that will continue to have various market impacts – aside from the horrendous human toll – moving forward.

In terms of revenue, Meta brought in $28.82 billion for the quarter, versus market expectations of $28.94 billion.

Meta Q2 2022

Again, Europe is where Meta is seeing the biggest impact – which makes perfect sense, of course, but is still a challenge for Meta to deal with.

Meta attributes the slowdown to weaker advertising demand driven by ‘broader macroeconomic uncertainty’, while it’s also seen lower sales of its VR headsets, impacted by production delays, rising costs, etc.

Meta Q2 2022

Just this week, Meta announced an increase in the price of its flagship Quest 2 VR headset, which is a big deal considering that Meta needs to get more headsets into more homes to realize its metaverse vision. We’re also heading into the holiday season, when it’s most likely to see a sales jump. That could make it a particularly impactful change, which could have knock-on effects for the company’s broader plans for the next stage.

Though it’s probably this chart that will be the most discussed from Meta’s latest results:

Meta Q2 2022

Meta’s overall income – i.e. the money that it’s taking in after costs – is at the lowest level it’s been for two years.

That provides more context as to why the company is now embarking on cost-cutting measures, and why CEO Mark Zuckerberg recently told staff that many of them ‘shouldn’t be here’.

Meta’s staff headcount jumped from 59k in 2020, to 72k a year later, as part of its increasing push into the metaverse, and expanding its global footprint. That drive, given the shifting economic landscape, has proven ultimately too aggressive, and has since seen Meta abandon projects like its own smartwatch, consumer Portal devices and social audio projects, while also slashing investment in original content and its Bulletin newsletter offering.    

It seems like Meta is too big to fail, but the chart above provides true scope as to how much its metaverse investment is costing – which could ultimately pay-off, if Meta becomes the engagement platform of the next generation, for a broad range of options. But the risk is also clear, and Meta will need to tread more carefully moving forward.

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Which could be difficult, with Zuckerberg also committed to ‘going for it’ in regards to the metaverse shift, and guiding the future of digital interaction. This week, Zuckerberg told staff that Meta is in a ‘philosophical competition’ with Apple to build the metaverse, with the two tech giants on course to clash over what comes next.

As Zuckerberg explained:

“This is a competition of philosophies and ideas, where they believe that by doing everything themselves and tightly integrating that they build a better consumer experience, and we believe that there is a lot to be done in specialization across different companies, and [that] will allow a much larger ecosystem to exist.”

In order to come out on top, Meta will need to keep pumping money in, while its ad revenue likely continues to decline, at least in the immediate term.

It’s a difficult sell for the company, which now needs to face up to shareholders and explain the grand vision once again.

The message will be that this is the right path, that it has to stay the course – that it can’t allow another company to push in and own the metaverse space.

How that’s received could have a big impact on the platform’s continual expansion, which will also influence ad display, user experience, and opportunities.

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Meta Launches New Reels Features, Including Stories to Reels Conversion and Improved Analytics

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Meta Launches New Reels Features, Including Stories to Reels Conversion and Improved Analytics

As it works to latch onto the short-form video trend, and negate the rising influence of TikTok, Meta has announced some new updates for Reels, across both Facebook and Instagram, including additional Reels insights, the expansion of the ‘Add Yours’ sticker, and ‘auto-created’ Reels clips. Yes, automatically created Reels videos.

Here’s how the new additions work.

The main addition is the expansion of the ‘Add Yours’ sticker from Stories to Reels, providing another way to prompt engagement from other users via Reels clips.

As you can see in these example images, you’ll now be able to post ‘Add Yours’ questions via Reels clips, while you’ll also be able to view all the various video responses to any prompt in each app.

It could be another way to spark engagement, and lean into the more interactive ethos of the short form video trend. Part of the appeal of TikTok is that it invites people in, with the participatory nature of the app essentially expanding meme engagement, by making it more accessible for users to add their own take.

Meta will be hoping that the ‘Add Yours’ sticker helps to facilitate the same, prompting more engagement with Reels clips.

Next up is auto-created Facebook Reels, which, as it sounds, will enable users to automatically convert their archived Stories into Reels clips.

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Reels updates

As you can see here, you’ll soon see a new ‘Create from Your Story Archive’ prompt in the Reels creation flow, which will then enable you to convert your Stories into Reels clips.

So it’s not exactly wholly automated Reels creation, as it’s just flipping your Stories clips into Reels as well. But it could provide another, simple way for users and brands to create Stories content, utilizing the video assets that they already have to link into the trend.

Worth noting that Meta also recently added a tool to convert your video assets into Reels within Creator Studio.

Meta’s also expanding access to its ‘Stars’ creator donations to Facebook Reels, which is now being opened up to all eligible creators.

Stars donations in Reels

Meta initially announced the coming expansion of Stars to Reels back in June, which will provide another critical monetization pathway for Reels creators. Short form video is not as directly monetizable as longer clips, where you can insert pre and mid-roll adds, so add-on elements like this are key to keeping creators posting, and fueling an ecosystem for such in its apps.

Stars on Reels will be available all creators that have maintained at least 1,000 followers over the last 60 days.

Meta’s also adding new Reels performance insights to Creator Studio, including Reach, Minutes Viewed, and Average Watch Time.

Reels updates

That’ll provide more perspective on what’s working, and what’s not, to help optimize your Reels approach – which could be especially valuable in the coming holiday push.

Lastly, Meta’s also expanding some Reels features that were previously only available in Instagram to Facebook as well.

Crossposting from Instagram to Facebook is now available to all Instagram users, while Meta’s also expanding its Remix option to Facebook Reels also.

Reels updates

As noted, Reels has become a key focus for Meta, as the short-form video trend continues to gain traction, and TikTok continues to rise as a potential competitor. By replicating TikTok’s main elements, Meta’s working to negate its key differentiation, which could ensure that more of its users don’t bother downloading a new app, and just stick with its platforms instead.’

Which, whether you agree with that approach or not, has proven effective. Reels content now makes up more than 20% of the time that people spend on Instagram, while video content, overall, makes up 50% of the time that people spend on Facebook.

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Meta additionally notes that it’s seen a more than 30% increase in engagement time with Reels across both Facebook and Instagram.

Meta doesn’t need to ‘beat’ TikTok as such (as much as it would like to), but it does need to dilute its significance if it can, and make it less appealing for users to have to start yet another new account, and re-build their friends list.

That’s why it’ll continue to replicate TikTok at every turn, because millions of people are currently not going to TikTok because of the presence of Reels in its apps.  

You can learn more about Meta’s new Reels updates here.

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