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Meta shocked investors by announcing the first-ever fall in daily Facebook users, while conceding rival Bytedance-owned TikTok was taking more of users’ time. In fashion circles, TikTokers are dominating the front rows of fashion week, but Meta is investing in the sought after metaverse. So who will win fashion?
Since rebranding from Facebook, Meta said revenue fell short of expectations in its fourth-quarter earnings call, leading to a more than $200 billion decrease in its market valuation. CEO Mark Zuckerberg admitted that TikTok was a key competitor (and taking more of users’ time) while Reels, Instagram’s short-form video answer to TikTok, was less mature. Video advertising is typically harder to monetise than the type of in-feed ads that sent Instagram and Facebook to dominance, he added. Facebook daily active users decreased by about half a million at the end of last year, and monthly active users also fell below analyst estimates. Slowed advertising revenue growth in part due to Apple’s 2021 privacy changes also weighed on the share price. Snap and Pinterest’s share prices also fell.
TikTok still has room to grow: TikTok reached 1 billion monthly active users in September, while Meta reported 2.9 billion in 2021. In advertising revenue, TikTok is far behind, making approximately $4 billion last year, compared to Facebook’s $100 billion.
Fundamentally for fashion, Meta and TikTok are competing for the attention span of younger users, while they also compete for fashion as advertisers. Already, TikTokers have joined fashion guest lists along with now-traditional bloggers and Instagram-first influencers. Meta’s one advantage — it hopes — is its aggressive push toward shopping; in recent years, it has rapidly rolled out technology that helps people buy what they see on Instagram especially, including in-app checkout, computer vision to find shoppable versions of goods seen on images and live video shopping. It’s also increasing the integration between Facebook and Whatsapp to enable brands to create storefronts, called Shops, and upload inventory and communicate with customers.
“Our strategy here since introducing Shops a year and a half ago has been to make it as easy as possible for people to make a purchase after discovering a new brand or product without having to switch over to a browser or re-enter their payment info,” Zuckerberg said.
Part of the plan to combat a loss of attention is a major pivot to a metaverse platform, an area that is also crowded and will take time to catch on. The metaverse is widely regarded as the next stage of the web, and expected to be as influential as websites and social media for fashion, especially because of the opportunity to sell digital items for avatars. Already, leading brands such as Gucci and Ralph Lauren are signing on to metaverse experiences on platforms such as Roblox, Zepeto and Decentraland, and Morgan Stanley predicts social gaming could add up to $20 billion to luxury’s total addressable market.
Virtual worlds and virtual commerce also mean the opportunity for virtual ads, informed by behavioural data that far surpasses what Instagram or Facebook could measure via tapping and scrolling. In its pivot to the metaverse, Meta is heavily investing in augmented reality, virtual reality, artificial intelligence and the necessary talent to build hardware and software to do this, a cost further eating into profits.
Meta’s vision is a virtual world in which realistic-looking avatars, wearing digital clothing that people bought via one of its properties, congregate to work and play. It hopes that all of its properties are integrated, and that people jump between its virtual worlds and augmented worlds using a range of its hardware, including AR glasses and high-end headsets. But “this fully realised vision is still a ways off,” Zuckerberg admitted, and there are already a range of players who have a head start in building immersive virtual worlds for commerce, including Roblox, Decentraland and The Sandbox.
Discord is another competitor, Zuckerberg noted, as the gamer chat platform quickly evolves into a destination to discuss Web 3.0 and NFT projects.
When the company announced that it was changing its name to Meta in October, searches for the term “metaverse” soared. Already, people mistakenly think that Zuckerberg and Meta have invented “the metaverse”. But if this is a positive for Meta is unclear: Many people already distrust Facebook. As many as 87 per cent of Americans expressed privacy concerns if Facebook succeeds in creating its proposed metaverse, according to a recent study from VPN service provider NordVPN. It also found that more than 41 per cent think it will be hard to safeguard their real identity from their metaverse identity.
Additionally, the concept of “the metaverse” is inherently interoperable, meaning that a dominant platform approach is discordant with the premise of early adopters.
Thus, Facebook might face a challenging couple of years ahead as it pursues its metaverse vision while retrofitting Instagram to compete with TikTok. “Meta is sacrificing its core business model for its fascination with the metaverse," said Rachel Jones, associate analyst at data and analytics company GlobalData, in a statement. “Betting big on the metaverse isn’t a bad thing, but it will take at least another decade to really get going, and Meta’s underwhelming number of daily users on both Facebook and Instagram signify intensifying competition for user engagement with other platforms.”
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More on this topic:
How shopping on TikTok might work for luxury
The fashion marketing shake-up: As Instagram, Facebook costs surge, where next?
Lush is quitting social media. The start of a trend?
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