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If that were true, we'd see other companies that rely on advertising to drop similar, or at least drop as well. Google, ClearChannel, IPG, and even Amazon. But
by berkes 4y ago
If that were true, we'd see other companies that rely on advertising to drop similar, or at least drop as well. Google, ClearChannel, IPG, and even Amazon. But those aren't collapsing.
What you say is probably one reason, though. But the actual crash is more likely because Meta didn't innovate and move away from-, or diversify their advertising-model over time. So rather than a steady change through continued innovation, A&M etc, they are now forced to bet on a giant pivot. For one, this makes investors nervous.
Meta has performed several M&As though, some of which proven extremely profitable and successful. But while e.g. Instagrams' userbase is different from FB, their income is based on almost the exact same model of targeted advertising. FB failed to move into ecommerce, video, streaming, etc. and diversify their income significant. Something that Amazon or Google do much better.
- allie1 4y agoFB/Instagram became boring for a very long time. Their recent pivot to "discovery" is a move in the right direction, but they are still ways off from staging a return. And all this is overshadowed by the Metaverse. They've invested so much reputation wise (changing their name even) that it's very hard for them to back down, maybe impossible considering who makes that call.
- berkes 4y ago> Their recent pivot to "discovery" is a move in the right direction, I'm not following META closely. But isn't this another pivot to diversify their userbase, rather than diversify their revenue-stream? Or is there some plan to monetize this "discovery" outside of their common "targeted advertising"?
- whimsicalism 4y agoGoogle is dropping. Amazon doesn't rely on advertising. The advertising market is definitely slowing with the high rates.
- berkes 4y agoAmazon doesn't rely on a single revenue stream. But Advertising certainly is an important income stream. It gets its own chapter in the earning calls. ~$9 billion in 2021, which is more than subscriptions (Prime etc), at ~$8 billion[1] [1] https://www.insiderintelligence.com/insights/amazon-revenue/ https://www.insiderintelligence.com/insights/amazon-revenue/ , https://s2.q4cdn.com/299287126/files/doc_financials/2022/q2/Q2-2022-Amazon-Earnings-Release.pdf https://s2.q4cdn.com/299287126/files/doc_financials/2022/q2/...
- whimsicalism 4y agoI wouldn't call that reliance. Compare with advertising as share of Google or FB revenue.
- bredren 4y agoThe reason has less to do with share of revenue and more to do with stalled or weakening performance in the business’s core value offering. Facebook loses users of genuine content consumption to tiktok. Amazon has smaller baskets checking out. Google threatened on its buying into default search on mobile safari. Ad revenue has padded earnings and shielded these companies from investor critique and urgency in “what’s next?”
- carl_dr 4y agoIt’s much bigger than content and TikTok - it’s teens and early twenties not using Facebook, they are all using Snapchat for their social network. So the audience is getting older, and there is no way of now getting new eyeballs. So they have to try something else to get them, hence Metaverse.
- whimsicalism 4y ago> it’s teens and early twenties not using Facebook, they are all using Snapchat for their social network. Let me introduce you to: Instagram.
- mayankkaizen 4y agoNoise vs signal ration. Despite all those nasty infliction of ads, Google still provide very important services. Ditto for Amazon. Amazon does show ads but it is aligned with their business model. I mean I am browsing for products and I get ads for products. The same isn't true for Facebook. I've stopped using this 7 years ago and I didn't even miss it for one day. One day my wife was scrolling through FB feed and all I can see is ads after ads after promoted pages. She scrolled for like 5 minutes, encountered may be 2 posts from her acquaintance circle and then she closed the app. The boredom while browsing FB feed was visible in her eyes. FB simply doesn't offer any value these days. Almost everyone I know has gradually stopped using FB. This is an app with very low signal to noise ratio.
- thevagrant 4y agoSomething was broken at Facebook for a long while. Before I stopped using it, my feed would show me content that had nothing to do with my social network. The algorithm was trying to keep my attention. My FB feed would not show me posts from friends, whom I knew posted something (by checking their profile manually). I think their internal kpi metrics meant staff sacrificed their user base by tuning for engagement in the short term. Once users realized they weren't seeing posts from their own social network they left. As each person left, FB had no choice but to fill a diminishing feed with crap. To the point where they forgot to feature genuine posts their users made over curated 'attention' content.
- rsynnott 4y agoI think it's a bit like the recent abandoned UK budget. Lots of countries, under current conditions, will show budget deficits this year, without really being punished by the markets. And the bulk of the UK deficit under the proposed budget would have been that sort of thing. But the difference with the UK was that a portion of the budget was just _gratuitously throwing money away for no reason_ (particularly the top-rate tax cut), and the markets punished them for that. This is similar; everyone dependent on advertising is struggling to an extent, but most of them aren't currently setting fire to vast piles of cash in service of an idiosyncratic project which most people don't have much hope for.