Meta Platforms stops pitching the Metaverse to advertisers
Meta Platforms, the parent company of Facebook and Instagram, is revamping its sales strategy. The company is offering discounts to advertisers as it moves away from the Metaverse.
Meta Platforms Inc., chastened by disinterest, inflation, and the collapse of advertising in the metaverse has changed its strategy for ad sales.
The Information reported that the Menlo Park, California-based parent company of Facebook and Instagram, will no long require ad agencies to commit to spending increases of 20% or higher, nor will it push advertisers to its metaverse products.
The Information reported that Meta has agreed to allow advertisers to spend the same amount as last year. It will offer incentives up to 25% off for those who agree to try out promotions with products like its TikTok-like product, Reels.
The Information reported that Meta's discounts are "unusually large" according to one executive who spends more than $200 million per year with his company.
The company's excessive spending on Reality Labs, the metaverse division, was a major factor in Meta's revenue decline. Reality Labs will spend $13.7 billion in 2022.
Meta, despite vehemently defending this project in October of last year, cut its spending on Reality Labs during its "Year of Efficiency" in February of this year. Meta has cut more than 20,000 jobs in the last six months.
The sales team at Meta is now promoting its artificial intelligence-powered tools for ad measurement and delivery, such as Advantage+. According to The Information, Advantage+ will be launched in 2022 and uses machine learning for targeted ads on Meta's social media platforms.
It's been difficult to sell.
According to Financial Times, some advertisers were reluctant to give up control of ad placement to Meta's algorithms.
The first quarter revenue projection for Meta, which is heavily reliant on advertising, will be released April 26. According to The Information, it could be "6% lower than the previous year to possibly up by 2%."