Last week, for the first time in its 18 years existence, Facebook reported that its daily average users (DAU) was down for that quarter. Daily average users for October, November and December dropped to 1.92bn – down from 1.3bn people. Granted, this doesn’t seem like a lot, but a million users is a million users.
The drop in DAUs saw the social media platform’s parent company, Meta Platforms, struggle in the stocks as shares plummeted by over 25% – this wiped off around £147.5bn of the stock value. Although, for balance, other social media platforms stocks’ struggled during the same period too.
Traditionally, Facebook has always grown – quarter on quarter, year on year. So a drop in DAU towards the end of 2021 coupled with a fifth of the stock value being wiped out does make grim reading for the social media giant.
Is it the beginning of the end? Probably not, but it’s likely to cause some sweaty palms at 1 Hacker Way, Menlo Park.
Meta’s CEO, Mark Zuckerberg, has blamed competition from rivals such as TikTok. Though, the social media battleground has always been somewhat congested, so the feeling is that there’s more at play than the popular video-orientated social media platform.
Facebook Advertising Isn’t As Attractive As It Was
Meta or Facebook – whatever your poison – generates the vast majority of its income through advertising. Apple’s iOS 14 update brought with it a slew of difficulties for advertisers, targeting and tracking on Facebook’s advertising platform is now more difficult than it was prior to Apple’s rollout.
In short, Facebook is not as an attractive platform for advertisers as it was last year – many have voted with their wallets.
A further issue faced by Facebook – pardon the pun – is the cash drain that is the Metaverse. As a concept, the Metaverse received a lukewarm reception and is some way off of being fully realised.
As the younger generation begins to abandon the seminal social media giant in favour of different platforms, issues such as these could begin to rear up more often.
A decade ago, Facebook was seen as a forward thinking, cool place to work. The collective consciousness of silicone valley has altered somewhat and now many view it as a toxic brand and actively look to distance themselves from it. The knock on effect is that the talent required to claw back younger users and attract the advertiser’s wallets is becoming increasingly more difficult to acquire.
Facebook’s struggles is in stark contrast to the growth seen in the tech industry as a whole. In less than a decade (2020 to 2027) the Website hosting industry, for example, is projected to grow by 15%.
The challenges posed by real world events such as COVID and uncertain global markets mean that technology has to adapt to stay relevant, and therefore survive. It appears that Facebook has doubled down on investing in the future, pouring billions into the Metaverse.
The elephant in the room however is, have they forsaken the present in favour of the future? Of course, companies must be forward thinking – more so in the technology industry – we certainly are. What is of importance though is forward thinking does not come at the detriment to current business.
If history has shown us anything, it’s that the technology industry has no qualms about leaving outliers by the wayside – no matter how large. This is especially prevalent when we take a look at social media – is anybody still friends with Tom on MySpace?
Which ever way you look at it, Facebook’s reign at the top is certainly being challenged by some young, interesting upstarts. They have a battle ahead.
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