Last summer, Meta was struggling to get users to embrace Reels, the short-form videos directly emulating those of its wildly successful competitor TikTok. But through heavy investment not only in Reels but in AI as well, the social media giant is bouncing back in style, with viewership finally picking up and exploding into life.
Last 12 months, Meta was challenged on two fronts: the tightening grip on its audience by TikTok, and the broad curtailing of ad spending on a volatile business landscape. Meta’s funds tanked; its stocks were devastated. Its share price plunged almost 25% in only at some point—and days later hit its lowest point since 2015. Revenues declined in Qs2 and 3—the primary declines of their kind in Meta’s history as a listed company. Profits plummeted. It wasn’t long before the corporate was announcing cuts to 13% of staff. Toward the top of the 2022, Meta’s stock had begun to get well somewhat, but still saw in the brand new 12 months down by two thirds, $600bn in market value having vanished into the ether.
The company began to see slightly daylight when it accelerated its AI spend, thereby weaning itself off the necessity for third-party data for ad targeting and enhancing its recommendations of content from accounts that users aren’t currently following. Apple’s recent privacy changes had made it such that iPhone users could opt out of apps tracking their activity more easily than ever, which prevents Meta from matching users’ Facebook and Instagram accounts with their browsing, shopping and app use. This had the effect of stymying Meta’s capabilities to goal ads and track when those ads were producing sales. In fact, in February 2022 Meta estimated that these changes would cost the corporate $10bn in lost sales, equivalent to 8% of its total revenue in 2021.
Meta’s newfound dedication to AI will see it conducting an unparallelled level of information evaluation through the detection of more profound correlations in user behaviours, with a view to higher predicting which ads they may consider relevant.
One approach the corporate has tested has seen them bargaining with users to agree to tracking in Meta’s own in-app privacy settings, where it guarantees to show them fewer ads in exchange for users consenting to providing their data. Elsewhere, Meta is trying to sell more ads that link directly to a messaging conversation with a business. While the corporate itself readily acknowledges that a few of these different attempts will likely flop, it’s nevertheless taking a more ‘enterprise capital’ approach: investing in a plethora of promoting strategies across the board, and committing to then identifying probably the most effective come the top of 2023.
Harnessing The Power of AI and Reels
Much of Meta’s present growth is attributable to the expansion of Reels. Interestingly, while the corporate’s own tackle the now-ubiquitous short-form video format is most frequently related to Instagram and younger users in public discourse, probably the most avid consumers of Reels are literally Facebook users.
Determining which Reels to show to users is significantly harder than determining which posts to show them, because they see posts from accounts they follow, whereas Reels come from accounts they don’t. Every single Reels suggestion demands intensive work by Meta’s algorithms to calculate which among the many countless supply will likely be most engaging for any given user.
To improve the relevance of its Reels and higher compete with TikTok and its highly effective suggestion engine, Meta is prioritising investment in its AI algorithms, in addition to running its own suggestion systems on more efficient microprocessors. By producing more granular user data, Meta hopes to enhance its ability to learn what sort of content users want to see—or can be involved in but aren’t yet aware of.
That’s all well and good—but as I’ve made clear to clients at my very own marketing agency, Pixated, actually monetising Reels is one other matter altogether. The rapid uptick of their popularity created a further problem for Meta within the short term: ads in Reels don’t currently sell for as much as those sold against regular posts and stories, so their growing share of content consumption was actually putting a dent in ad revenue. To counter this, Meta in the reduction of on Reels promotion to protect its earnings, which led to a decrease in watch time.
All that being said, within the meantime it’s encouraging that Reels appear to be doing the exertions without need for out of doors assistance. Meta is competing successfully within the red-hot space of short-term video—and, who knows, could even begin to set a course to outcompete TikTok in 2024 and beyond.
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