Facebook's $200 Billion Flop
IT’S BEEN A ROUGH WEEK FOR FACEBOOK
For the past few years, many of us in the digital marketing industry has been wondering when we may be able to break out of the restrictive duopoly that is Facebook and Google. If you believe the stock markets, that day may be sooner than ever (at least for one of them).
Last week many of the tech companies reported their quarterly earnings, and let's just say Mark Zuckerberg has had better days. In fact, his company lost over $200 Billion in value, which set an all-time stock market record for the largest single-day drop. To put that into perspective, Meta (the company formerly known as Facebook) lost more value than the total value of Airbnb + Starbucks combined.
Why such a dramatic sell-off? Facebook actually lost users for the first time ever, and they missed their projected earnings numbers. Investors see the slow down as a sign that competition is heating up, and they're also wary that Zuckerberg's $10 billion bets on the metaverse is going to flop, but that's a story for another time.
The competition is what's most interesting to us as digital business leaders because, while FB plummeted, Snap reported its first-ever profit, which sent its stock up over 50%, and TikTok continues to dominate in both user acquisition and engagement numbers.
Even YouTube posted strong numbers, showing that they shared more than $15 Billion in revenue with creators, which can only be good for the general creator economy.
SO WHAT?
Pretty much everyone is focusing on new ways to grow their user engagement and build better social products, except for Facebook, which appears to be distracted by their metaverse ambitions. If you haven't yet, now is the time to start think about non-Facebook-owned platforms for your content and advertising budgets, because, if the user growth numbers are any indication, the party is heading elsewhere.
LEARNING FROM FACEBOOK'S MISTAKES
A META-ANALYSIS:
In the early days of Facebook, the message was very clear: The Facebook Page is by far the best place to be investing to build a brand. The promise was that not only would we get impressions and clicks, but every person who Liked a brand's page would have opted into future brand communication, and therefore have significant long-term value.
Then they introduced algorithm updates that pulled the rug out from under millions of businesses that had believed their story, forcing businesses to pay for advertising in order to appear in front of those same audiences.
History is not without a sense of irony, because that seems to be almost exactly what's happened to Facebook via Apple. In the above-mentioned earnings report, Facebook blamed much of its failings on the fact that Apple introduced stricter privacy controls, which reduced Facebook's ability to track users and serve ads. In effect, the platform that Facebook had trusted to build their business upon gave it a taste of its own medicine.
There's a lesson in all of this, and it's has nothing to do with Billionaires battling for world domination.
Instead, it's that, from time to time, there will inevitably be marketing opportunities that promise outsized returns if we only shift ownership of our data and customer relationships onto someone else's platform. Many people will succeed in these situations, as many have on Facebook, but all of us will be subject to the whims of another business that may choose to make changes that fundamentally disrupt what we've built.
Today, we're advising everyone to take a close look at how they're thinking about their audiences and ask:
Who controls access to your most important customer relationships? And if the answer is any company that doesn't have your best interests at heart, now might be a good time to think about how you can move those relationships closer to home.
Want specifics? Here are a few communication channels that are much more secure than a Facebook Like or Instagram Follow:
Email newsletter
Podcast subscription
Loyalty program membership
Mobile application
SMS marketing
Private group (ie. Slack, Discord, Telegram)
Written by Conner Galway, Junction Consulting