Big news #1: Meta posted its first-ever YoY decline in advertising revenue.
Meta advertising revenue (YoY growth):
1) 2015-Q2 – $3.8B
2) 2016-Q2 – $6.2B (↑ 63%)
3) 2017-Q2 – $9.2B (↑ 47%)
4) 2018-Q2 – $13.0B (↑ 42%)
5) 2019-Q2 – $16.6B (↑ 28%)
6) 2020-Q2 – $18.3B (↑ 10%)
7) 2021-Q2 – $28.6B (↑ 56%)
8) 2022-Q2 – $28.2B (↓ 1%)
Big question #1: What is driving the drop in revenue?
Quick answer: Falling ad prices with little increase in ad impressions.
Meta daily active users in the U.S. & Canada (YoY growth):
1) 2015-Q2 – 164M
2) 2016-Q2 – 175M (↑ 7%)
3) 2017-Q2 – 183M (↑ 5%)
4) 2018-Q2 – 185M (↑ 1%)
5) 2019-Q2 – 187M (↑ 1%)
6) 2020-Q2 – 198M (↑ 6%)
7) 2021-Q2 – 195M (↓ 2%)
8) 2022-Q2 – 197M (↑ 1%)
Meta advertising revenue per user in the U.S. and Canada (YoY growth):
1) 2021-Q2 – $53.01
2) 2022-Q2 – $50.25 (↓ 5%)
Big news #2: Instagram is going full TikTok and adopting a feed that includes more content from outside of your social network.
Why this matters: Facebook’s bread and butter has been a feed of content powered by the social graph (your connections). Now they are reacting to TikTok’s rapid growth by copying their bread and butter (algorithmic driven content).
Average monthly time spent per user according to Scott Galloway:
1) TikTok – 25.7h
2) Facebook + Instagram – 23.9h
Big question #2: How much Instagram content is shifting over to a TikTok-style feed?
Share of Instagram content served outside social graph:
1) Currently – 15%
2) End of year – 30%
Big question #3: How are Instagram users reacting to the change?
Quick answer: Not well. A petition has been launched on Change.org to Make Instagram Instagram Again.
Big question #4: Will this change solve Meta’s revenue problems?
Quick answer: No. Content served in a format like Instagram Reels demands lower ad prices than the traditional news feed.
Quote from Casey Newton – Founder and Editor @ The Platformer:
“Can Meta manage two pivots at once? Indeed, Meta is trying to build an entirely new way of computing/internet with its investments in the Metaverse. And now it’s also trying to completely revamp what the current Web 2 Facebook is – as in, it’s no longer a newsfeed for your friends’ rants or kids pictures, but a place where you find all sorts of random would-be viral videos from strangers.”
Quote from Mike Shields – Founder @ Shields Strategic Consulting:
“This is both a global social experiment the likes of which we’ve never seen, on top of a massive economic overhaul where the currencies, rules, and valuations are being completely rewritten.”
More: Instagram Reels vs TikTok: Differences, Features, & Tools 2022
