Meta is setting up a product organization to identify new “potential paid features” for its family of popular apps after seeing its advertising business hit hard by changes to Apple’s ad tracking, a new internal memo reveals.
The decision comes as the California-based company faces a series of challenges.
In July, Facebook reported its first annual decline in second-quarter revenue, announcing a 1 percent drop to $28.8 billion, and the social network said growth could fall further in the coming quarter. Net income (profits) plunged 36 percent compared to the previous quarter, to $6.7 billion.
Apple’s new ‘Ask App Not to Track’ feature, which is a prompt on iPhones, reportedly cost Meta $10 billion in ad revenue last year. During its most recent earnings call, the company also projected third-quarter revenue to fall further, to between $26 billion and $28.5 billion, saying “continued weak ad demand” would weigh on sales.
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Meta is setting up a product organization to identify new “potential paid features” for its family of popular apps after seeing its ad business hit hard by changes to Apple’s ad tracking.
In July, Facebook reported its first annual decline in second-quarter revenue, announcing a 1 percent drop to $28.8 billion, and the social network said growth could fall further in the coming quarter.
Facebook reported its first quarterly decline in daily users this year and has been trying to convince investors that it can compete with TikTok for users.
Meta’s vice president of monetization who oversees the group, John Hegeman, 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 excited to pay for.”
Hegeman did not elaborate on what paid features are being considered.
Hegeman seemed to downplay paid features that would become a significant part of the business in the short term, but said “on the other hand, I think if there are opportunities to create significant new value and revenue lines and also provide some diversification , that’s obviously going to be something that’s going to be attractive.’
Meta’s vice president 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 excited to pay for.”
WhatsApp currently charges certain business accounts for the right to send messages to their customers, and Facebook group administrators may 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 head of research at Meta, according to The Verge.
WhatsApp currently charges certain business accounts for the right to send messages to their customers, and Facebook group administrators may charge for access to some content. But most of the billions who use Facebook, Instagram and WhatsApp have free access.
Longer term, Meta sees paid features becoming a more significant part of its business, Hegeman said. “In a five-year time horizon, I think she 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, increased competition from the ever-popular TikTok, and a widespread slowdown in advertising.
“It appears that we have entered an economic downturn that will have a broad impact on the digital advertising business,” Zuckerberg said.
We’re slowing down the pace [our] investments and pushing some expenses that would have come in the next year or two to a somewhat longer timeline.’
One of those expenses appears to be hiring and staffing, and Zuckerberg said he wanted to let internal leaders choose how to restructure their teams.
“I want to give our leaders the ability to decide within their teams where to double down, where to double down, where to compensate for attrition, and where to restructure teams while minimizing [the impact] to long-term initiatives.’
Zuckerberg has continued to tout the company’s plans for the metaverse, despite coming under fire online for a recent avatar who shared that he seemed ‘shocked’ and ‘creepy’.
Meta also has a range of new virtual and augmented reality headsets in development as part of its planned multi-million dollar expansion into the metaverse.
Late last month, a furious Zuckerberg warned staff that he will weed out poor performers 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 recessions we’ve seen in recent memory,” Zuckerberg told workers at a weekly employee question-and-answer session on Thursday, the audio of which was heard by Reuters.
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