Meta records its first quarterly revenue drop in company history
By our News Team | 2022
Increased competition from new platforms and reduced spending by advertisers worried about a recession has hit Facebook and Instagram.
Meta, the company that owns social media platforms such as Facebook and Instagram, has announced the first drop in revenue in its history. The announcement was made by Mark Zuckerberg, its Chief Executive, during a financial results update for the second quarter of 2022.
The company has been experiencing difficult economic times for the past three financial quarters. Compared with the same period in 2021, Meta experienced a 1% drop in overall revenue to just under US$29-billion.
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Advertising, which is the main source of revenue, has been falling as advertisers become increasingly cautious about the global economy and concerns about an international recession.
The effectiveness of ads being placed on Facebook and other social media platforms is also increasingly being questioned, given that Apple now allows users of its products to opt out of tracking. Online privacy restrictions are also being stepped up by various national governments and regulatory authorities, making ad effectiveness harder to quantify.
Increased competition from new industry players
There is also increased competition from industry newcomers such as short-form video platform TikTok and photo-sharing app BeReal.
“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Zuckerberg said in a call with analysts. “It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago.”
According to Zuckerberg, Meta is still focused on helping people connect with friends and family. Social media users, he noted, are discovering interesting content in their feeds and then messaging that content to friends.
“This creates this flywheel of discovery and then social connection … inspiring people to create more content themselves,” Zuckerberg said. The company has seen a more than 30% increase in the time people spend engaging with its short-form video feature, called Reels, across both Facebook and Instagram.