Since becoming public, Meta has had its first quarterly revenue decline as a result of its advertising division being severely impacted by weaker demand. The parent company of Facebook, Instagram, and WhatsApp posted second-quarter sales of $28.8 billion, a 1% decrease from the same period last year.
The outcomes fell short of expert predictions for a 4% increase in revenue and show a sustained deceleration from Meta’s phenomenal 56 percent growth rate in Q2 2021. The revenue of the social media behemoth was buoyed by a surge in e-commerce usage last year, which has since leveled out and made year-over-year comparisons challenging. However, Meta’s revenue is also being hurt by weaker ad demand brought on by tumultuous macroeconomic issues, its decreased ability to target and measure advertisements due to privacy concerns, and difficulties monetizing emerging ad forms like Reels. The quarter ending June 30 saw a 1.5 percent decline in advertising revenue to $28.2 billion. Ad impressions across all of Meta’s apps rose by 15% year over year, but the average cost per ad fell by 14%. Meta’s net income dropped 36% to $6.7 billion due to a decline in revenue and a 22 percent increase in expenditures and expenses.
Taking on a new position as chief strategy officer, Meta’s chief financial officer Dave Wehner informed investors on July 27 that the ad deceleration was “wide based across verticals” as firms reduced their advertising expenditures in reaction to rising economic uncertainties. According to chief operating officer Sheryl Sandberg, marketers are under pressure to “make sure their ad dollars are used in the best way possible” as a result of rising prices and an impending recession. We are committed to assisting marketers in running successful marketing initiatives that maximize returns on investment. Apple’s restriction on app tracking, which has affected Meta’s capacity to target and monitor consumers, is still a problem. It started earlier this year that it anticipated losing $10 billion in ad revenue as a result of the changes by 2022. The firm stated its click-to-messaging advertisements, which it claimed were embraced by 40% of its advertisers, are growing quickly as evidence that this effort is paying off. The company is modifying its ad products to deliver personalization using fewer data.
Reels ‘cannibalizing’ revenue – TikTok has increased competition with Meta and the broader social media environment. Executives acknowledged on Wednesday that the company’s short-form video competitor, Instagram Reels, is cannibalizing the rest of the business in the haste to boost it. Last week, Meta launched a significant revamp for Facebook and Instagram that more closely resembles the TikTok stream. The new “discovery engine” favours content suggestions generated by artificial intelligence over updates from friends and relatives. Users of Instagram are not pleased with the new look. A petition requesting that the social media app switch back to its original feed has received more than 2,000 signatures.
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