After the largest single-day stock drop in recorded history, Facebook CEO Mark Zuckerberg plans 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 share price of Meta Platforms Inc, Facebook’s parent company, plunged more than $200 billion last week after reporting massive losses in a quarterly earnings report.
Not only did Facebook’s expenses exceed its revenue, but it saw its first-ever drop in daily active users.
From the third quarter to the fourth quarter of 2021, nearly half a million people stopped logging into Facebook every day.
Investors panicked after learning the details of Facebook’s quarterly report, which sent the stock crashing.
How did this happen?
Zuckerberg says the reason for the loss of daily active users is due to TikTok.
Explaining his company’s poor performance, Zuckerberg noted an “unprecedented level of competition” from TikTok.
As for the inflated expenses Meta incurred in the last quarter, that’s due to the company’s long-term vision for the future.
Meta is in a spending frenzy as it works to make the Metaverse the next big thing – an investment that has yet to pay off.
In addition to having more expenses, Meta brings in less money from ads. Apple’s App Tracking Transparency feature is said to consume ad revenue.
This feature, introduced last year, limits the ability of iPhone apps to track user data.
This reduces the targeting capabilities of Facebook ads, resulting in less engagement by users.
Less engagement means less spend from advertisers, since they don’t get a satisfactory return on their ad spend.
The combination of high expenses, low revenues, and the loss of users led to a massive drop in share prices.
What does this mean for Facebook?
Unable to solve the advertising problem, Facebook is instead setting its sights on tackling TikTok’s problem.
Facebook will take on TikTok by creating a short video as the main draw.
The company is now reportedly prioritizing Reels, a TikTok-inspired video feature available on Facebook and Instagram.
On a call with investors, Zuckerberg says:
“People have a lot of choices about how they want to spend their time, and apps like TikTok are growing really fast. That’s why it’s so important for us to focus on Reels for the long term.”
Instagram has been trending to be a video-sharing platform since 2020, and now it looks like Facebook is following suit.
- See: Instagram: “We’re no longer a photo-sharing app”
What does this mean for marketers?
The writing is on the wall that video is the future of social media marketing.
TikTok is booming, Instagram has prioritized video for over a year, and Facebook is now video-centric.
Even Snapchat is turning a profit for the first time, based on its latest earnings report.
Social media users have made it loud and clear that they want to go where video content is being served to them excellently.
Now it is the task of social media marketers to meet the demand.
If video editing and production isn’t part of your skill set, it certainly should be.
If you don’t keep up with the latest video trends, you need to keep up with them, too.
The combination of well-designed text and images was enough to capture the public’s attention on social media.
Now it’s almost imperative to add video to the mix.
Fortunately, in terms of production, there isn’t much of a limit to meet.
TikTok and Reels are both built around vertical videos, and everyone can create those with their smartphone.
Featured image: TY Lim/Shutterstock