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Following the greatest single-day stock drop in recorded history, Facebook CEO Mark Zuckerberg intends to shift the company’s focus to growing short-form video.
Zuckerberg communicated this plan to Facebook employees during a company-wide virtual meeting.
The stock price of Facebook’s parent company, Meta Platforms Inc, dropped by over 200 billion dollars this past week after reporting major losses in a quarterly earnings report.
Not only did Facebook’s expenses exceed its revenue, but it experienced a first-ever decline in daily active users.
From the third quarter to the fourth quarter of 2021, almost half a million people stopped logging into Facebook every day.
Investors panicked after learning the details of Facebook’s quarterly report, which triggered the stock to crash.
How Did This Happen?
The reason for the loss of daily active users is due to TikTok, Zuckerberg says.
Explaining his company’s dismal performance, Zuckerberg cites an “unprecedented level of competition” from TikTok.
The for the inflated expenses Meta incurred this past quarter is due to the company’s long-term vision for the future.
Meta is on a spending frenzy as it works to make the Metaverse the next big thing — an investment which has yet to pay off.
In addition to having greater expenses, Meta is bringing in less money from advertising. Apple’s App Tracking Transparency feature is said to be eating into ad revenue.
The feature, which was introduced last year, limits the ability of iPhone apps to track user data.
This reduces the targeting capabilities of Facebook ads, which leads to less engagement from users.
Less engagement means less spending from advertisers, since they’re not getting a satisfactory return from their ad spend.
The combination of higher expenses, lower revenue, and a loss of users all added up to a monumental plunge in stock price.
What Does This Mean For Facebook?
Unable to fix its advertising problem, Facebook is instead setting its sights on tackling the TikTok problem.
Facebook will take on TikTok by building up short-form video as its main draw.
The company is now said to be prioritizing Reels, a TikTok-inspired video feature available on Facebook and Instagram.
In a call with investors, Zuckerberg states:
“People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly. And this is why our focus on Reels is so important over the long term.”
Instagram has been headed in the direction of being a video sharing platform since 2020, and now it sounds like Facebook is following suit.
What Does This Mean For Marketers?
The writing on the wall indicates that video is the future of social media marketing.
TikTok is thriving, Instagram has been prioritizing video for over a year, and Facebook is now pivoting to video.
Even Snapchat is turning a profit for the first time, based on its recent earnings report.
Social media users have made it loud and clear they want to go where they’re being super-served with video content.
Now it’s the job of social media marketers to meet the demand.
If video editing and production isn’t already part of your skill set, it certainly should be.
If you’re not keeping up with the latest video trends, you need to get on that as well.
A combination of text and well crafted images used to be enough to captivate an audience’s attention on social media.
Now it’s almost a necessity to add video into the mix.
Thankfully, as far as production is concerned, there’s not a high bar to meet.
TikTok and Reels are both built around vertical videos, and everyone has the ability to create those with their smartphone.
Sources: CNBC, Business Insider
Featured Image: TY Lim/Shutterstock