Despite the buzz about Facebook’s transition to the metaverse, marketers are unlikely to see any immediate changes in the way the company runs its advertising business.
Zuckerberg opened Connect, explaining why his company plans to build a larger virtual world over the next decade – defined by non-fungible tokens, virtual goods, blockchains, and decentralized platforms – but faces the myriad of problems the company faces today. Not addressed.
“[Facebook] is an iconic social media brand, but increasingly it doesn’t encompass everything we do,” Zuckerberg said at the event.
While the CEO touted virtual social experiences in the metaverse, the mention of the big blue social networking site itself was noticeably absent. The rebranding serves as a way to move away from Facebook’s tarnished legacy as a social platform amid an onslaught of scrutiny and negative press coming from whistleblower documents, lawmakers, regulators, civil rights groups, and digital watchdogs. Zuckerberg has anticipated in recent weeks how Facebook will change its image as a social platform over the next few years and become a metaverse-focused company. This week, he painted a clearer picture of where the company is headed.
“It’s the next chapter in our business,” says Zuckerberg. “Today we are seen as a social media company. The metaverse is the next frontier.”
But renewing the corporate identity could go so far, as there are still many unresolved questions about whether Facebook can successfully transition to Meta. The tech world is no stranger to companies looking to implement structural changes along with a new name change – see, for example, MySpace – before it disappears.
AR/VR is nothing new for Facebook, which has invested heavily in technology by acquiring companies like Oculus. Earlier this year, it assembled a product team to work on the metaverse and this month announced that it will hire 10,000 employees in Europe over the next five years to work on the initiative. With the change, the Oculus brand will disappear in favor of the Meta name.
“This is not a profitable investment for us for the foreseeable future,” Zuckerberg told analysts. “But fundamentally, we believe that the metaverse will be the successor to the mobile Internet.”
Instead, Meta will build on products like:
Horizon Worlds, Home, and Workrooms, which are game-like platforms accessible through AR/VR hardware.
Earlier this week, the company turned Facebook Reality Labs into its division, likely with the aim of insulating its profitable legacy business from potential financial pressures on its future bets. It’s also a way to lay the groundwork for a company that isn’t anchored in its old social network, which is reputed to be mostly for older users, without the necessary reach among young people who could one day populate the metaverse.
The introduction of Meta comes at a time when Facebook’s core advertising business faces uncertainty, showing the platform in a weakened state and potentially signaling broader implications in the world of mobile technology.
Facebook, which reported a 33% increase in ad revenue in the third quarter, warned that Apple’s privacy changes would weigh on its digital business this quarter. The company reported quarterly revenue that fell short of market expectations, which executives say was largely due to iOS changes that made it difficult for brands to target and measure their Facebook ads.
The company’s total third-quarter revenue, which comes primarily from ad sales, rose to $29.01 billion from $21.47 billion a year ago but missed estimates of $29.57 billion. Advertisers on Facebook have also felt the impact of global supply chain disruptions and labor shortages, which have affected demand for advertising in nearly every industry and region.