Facebook is rotating to video– short-form, this time.
Woot. All aboard, I guess.
As Mark Zuckerberg extolled the virtues of Facebooks TikTok clone, Reels, on the businesss revenues call Wednesday afternoon, (apparently its the fastest-growing content format in terms of engagement on Instagram) Metas share cost was experiencing a alarming and precipitous slide.
Facebooks stock plunged more than 20% in after-hours trading– seriously, it fell off a cliff (see listed below)– in reaction to a bleak outlook partially due to Apple-related headwinds and partially an outcome of slowing development as engagement shifts to shorter-form formats, like Reels, that monetize more slowly than news feeds.
Apples iOS 14 personal privacy modifications alone will likely have a $10 billion overall effect on Facebooks company this year, stated CFO Dave Wehner.
” Its a quite substantial headwind for our company,” Wehner said.
Dealing with the headwinds
The concern is, whats Facebook doing to reduce the effect on targeting precision and measurement?
A few things, according to COO Sheryl Sandberg, including working on closing the reporting information gap from missing out on web-based iOS 14 conversions, with tools like Aggregated Event Measurement that design data to recreate attribution analytics.
Although those efforts should help, “we anticipate the general targeting and measurement headwinds to reasonably increase from Apples changes and from regulatory modifications in Q1 and throughout 2022,” Sandberg said.
Facebook will face difficult comps in the first half of 2022, since the very first two quarters of last year were before Apple totally rolled out its AppTrackingTransparency structure.
However, its only reasonable to point out that Facebook is still a revenue-generating beast.
Overall advertisement revenue in Q4 was $32.6 billion, up 20% year-over-year, and 2021 also marked the very first time Facebooks business produced more than $100 billion in yearly income. (It was simply shy of $118 billion, for the record.).
But guess who made well over 2 and a half times that quantity in annual profits, at $257 billion, in 2021? Alphabet, of course.
And Wehner had a thing or 2 to say about Googles success, especially the strength of Google search advertising during the back half of last year.
Ecommerce is generally strong in Q4, Facebook saw a significant downturn in growth in that vertical due to Apples iOS 14 privacy modifications– which is “quite noteworthy,” Wehner stated, because “Google called out seeing strength in that really same vertical.”.
” Those constraints from Apple are created in such a way that carves out web browsers from the tracking prompt Apple needs for apps,” he continued. That means “search advertisements could have access to much more third-party information for measurement and optimization functions than app-based platforms like ours.”.
To sum it up, “when it concerns utilizing data, you can think about it as … not really apples to apples for us,” he said. (Ha, good one, Wehner.).
” As a result, we believe Googles search advertisements service might have benefited relative to services like ours,” Wehner stated. “Given that Apple continues to take billions of dollars a year from Googles search advertisements, the incentive plainly exists for this policy inconsistency to continue.”.
Metaverse, and so on.
Oh yeah, and Zuck stated some things about the metaverse. Its one of Metas top seven investment concerns for the year, consisting of Reels, neighborhood messaging, commerce, ads, privacy and AI.
However no word yet on whether or when we can anticipate to get legs.