- In the last year, Meta Platforms has seen a dramatic loss in market value, thousands of layoffs, loss in ad revenue, and increasingly strong competition.
- CEO Mark Zuckerberg has plans to transition the company from a purely social-media platform to the metaverse, but investors are skeptical.
- Changes to Apple’s privacy policies may have driven Meta’s spiral into chaos.
- The targeting advertising industry has been significantly affected by these changes, greatly reducing ad revenue.
Why it’s news
Since its beginning, Facebook was an attractive option for advertisers as Zuckerberg promised that their ads would go directly to their target audience using data collected by Meta.
Meta’s data collection allows advertisers to identify users with specific characteristics such as age and hobby interests—identifying possible new customers.
Now, new privacy restrictions on Apple devices severely limit the targeted ad practices. Apple users are able to choose which advertisers can track their activity. This reduced the accuracy of Facebook’s targeted ads and made the advertising slots less valuable for marketers.
Changes from Apple also stopped advertisers from accessing data to learn what happened after a customer clicked on an ad—limiting data that would allow advertisers to assess the effectiveness of an ad.
At the beginning of this year, Meta estimated that Apple’s changes would reduce Meta’s ad revenue by $10 billion.
Since then, Apple has continued to make changes to the ad privacy policies. Apple itself is working to build its own advertising business and critics have accused the company of undercutting other advertisers intentionally. Apple has denied these claims.
The declining revenue has been a major hurdle for a company that has never had such a serious decline. The layoffs announced earlier this month were the first in Meta’s history. Zuckerberg has been focusing on reducing overall spending within the company.
Meta has been making adjustments to adapt to the new advertising landscape, but it will take time for their new methods to be effective.
Meta’s targeting technology is now focusing more on the use of artificial intelligence (AI) to predict which users are the best target audience. The company is also improving the way it tracks ad performances.
A shift in focus to one of the newer features on Facebook and Instagram—reels—could potentially benefit the social media company. While the videos are receiving billions of views, the ads played throughout the videos are not as profitable as other options.