Meta is setting up a product organization to identify new “potential paid features” for its family of popular apps after its advertising business was severely impacted by Apple’s ad tracking changes, a new internal memo reveals.
The decision comes as the California-based company faces a number of challenges.
Facebook reported its first annual revenue decline for the second quarter in July, announcing a 1 percent decline to $28.8 billion, and the social network said growth could slow further in the next quarter. Net income — earnings — plunged 36 percent sequentially to $6.7 billion.
Apple’s new “Ask app to track” feature, which is a prompt on iPhones, reportedly cost Meta $10 billion in ad revenue last year alone. During its recent conference call, the company also forecast third-quarter revenue to fall further to $26 billion to $28.5 billion, saying that “a continuation of weak advertising demand” would weigh on top line.
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Meta is setting up a product organization to identify new “potential paid features” for its family of popular apps after its advertising business was severely impacted by Apple’s ad tracking changes
Facebook reported its first annual revenue decline for the second quarter in July, announcing a 1 percent decline to $28.8 billion, and the social network said growth could slow further in the next quarter
Facebook reported its first quarterly drop in daily users this year and has been trying to convince investors it can compete with TikTok for users.
John Hegeman, VP of monetization at Meta, who oversees the group, told The Verge, “I think we see opportunities to create new types of products, features and experiences that people would be willing to pay for and be willing to to pay for it.”
Hegeman didn’t elaborate on which paid features are being considered.
Hegeman appeared to downplay paid features, which will become a significant part of the business in the near future, but said: “On the other hand, I think if there are opportunities to both create new value and significant revenue streams, as well as provide some diversification, that’s obviously going to be something that’s going to be appealing.’
Meta’s VP of monetization, who oversees the group, told The Verge, “I think we see opportunities to create new types of products, features and experiences that people would be willing to pay for and would be willing to pay for. “
Currently, WhatsApp charges certain business accounts for the right to send messages to their customers, and Facebook group admins are allowed to charge for access to some content. But most of the billions who use Facebook, Instagram and WhatsApp have free access
The group, called New Monetization Experiences, will be led by Pratiti Raychoudhury, who was previously Meta’s research director, according to The Verge.
Currently, WhatsApp charges certain business accounts for the right to send messages to their customers, and Facebook group admins are allowed to charge for access to some content. But most of the billions who use Facebook, Instagram and WhatsApp have free access.
Over the long term, Meta sees paid features as a more important part of its business, Hegeman said. “Five years from now, I think it can really move the needle and make a pretty significant difference.”
Still, the company is clearly struggling as it faces headwinds from Apple’s privacy push, increasing competition from the ever-popular TikTok, and a broad advertising slowdown.
“We appear to have entered an economic downturn that will have far-reaching implications for the digital advertising business,” Zuckerberg said.
‘We’re slowing down [our] Investing and postponing some of the expenses that would have been incurred in the next year or two to a little longer.’
One of those expenses appears to be hiring and staffing, with Zuckerberg saying he wants to give internal leaders choices in how they restructure their teams.
“I want to give our leaders the ability to decide within their teams where to duplicate, where to duplicate, where to even out attrition, and where to restructure teams while minimizing [the impact] to the long-term initiatives.’
Zuckerberg has continued to tout the company’s plans for the Metaverse — despite being blasted online for an avatar he shared recently that looked “dead-eyed” and “creepy.”
Meta also has a line of new augmented and virtual reality headsets in development as part of its planned multi-billion dollar expansion into the Metaverse.
Late last month, an irate Zuckerberg warned employees that he would weed out underperforming employees with “aggressive performance reviews” as the company braces for a deep economic downturn.
“If I had to bet, I’d say this could be one of the worst downturns we’ve seen in recent history,” Zuckerberg told workers Thursday in a weekly employee question-and-answer session, whose audio heard from Reuters.
