Metaverse company Facebook has published its latest earnings results, which show steady overall increases in both users and revenue, as the platform continues to build towards the next stage of development, and becoming an even bigger part of our everyday lives.
Which may not be a great thing, given its influence in many aspects. But Zuckerberg’s social media is still expanding, especially in developing markets – although there are some steadily growing signs of concern when you dig a bit further into the broader numbers and notes.
First off, on users – Facebook added 30 million more daily active users in Q2, taking it to 1.91 billion on average.
That’s in line with Q1, with Facebook continuing to add significantly more users in the Asia Pacific region, despite a slow down, and even a reversal, in other markets.
Which could be a concern. As you can see, Facebook’s DAU count has stalled in the US entirely, after declining in Q2 last year, while it’s also now receding in Europe as well.
Which is particularly problematic when you also consider the platform’s Average Revenue Per User stats:
Facebook earns significantly more from the US and Europe than it does from other regions, so while it may be seeing overall growth, a reduction in usage in its prime markets could be an important element to monitor.
Overall, adding 28 million more users, at Facebook’s size and scale, is still a major achievement. But if these markets continue to decline, that could spark further concern for the company – or at the least, have it looking to accelerate its growth plans in other areas in order to shift the focus away from the platform’s waning popularity in its most established markets.
Does that mean that people in Europe and the US are gradually moving away from Facebook, and looking to other apps instead?
I mean, in terms of overall usage of Facebook’s apps, incorporating Facebook, Messenger, Instagram and WhatsApp, it’s still steadily rising.
But those numbers are not broken down by region, and it could be that Facebook itself has indeed plateaued in these markets, while negative news stories about its potential for amplifying misinformation and hate speech may also be turning more people away, another point of concern.
We don’t have a specific measure of time spent in the app, only overall daily and monthly usage counts (monthly Facebook users are now at 2.9 billion). But it does seem that there is a level of reduction here.
Either way, Facebook’s broader presence is still growing, so its business potential is still rising. But for advertisers, the slowdown in these major markets could be a point of note for your campaigns.
As could this:
“Advertising revenue growth in the second quarter of 2021 was driven by a 47% year-over-year increase in the average price per ad and a 6% increase in the number of ads delivered. Similar to the second quarter, we expect that advertising revenue growth will be driven primarily by year-over-year advertising price increases during the rest of 2021.”
Facebook ad prices are rising, which is another element to consider – so while Facebook’s daily active user count is stalling, Facebook’s charging more for ads. That’s largely driven by demand, of course, but again, there are some important points to note for marketers within the headline growth figures. It’s not all about the broadest audience reach, which Facebook is keen to project.
On the revenue side, Facebook brought in $29 billion for the quarter, a new record high for the company.
Advertising remains its key revenue driver, bringing in more than 98% of its overall revenue intake, but it is still seeing steady income developing from its ‘Other’ bets.
Facebook has reportedly sold more than 6 million Oculus VR units, which, along with sales of its Portal device, are helping to boost its hardware elements, which will take another leap with the release of its own AR glasses, the first iteration of which is due at some stage this year.
That’s really where Facebook is now looking to shift – because while it still clearly has plenty of opportunity for expansion, particularly in developing markets, it needs to move towards the next big tech shift to in order maximize its presence, and maintain a hold on its audience.
Which is where the Metaverse comes in.
Indeed, Facebook CEO Mark Zuckerberg has made specific reference to both its evolving creator tools and the Metaverse concept in his summary statement:
“I’m excited to see our major initiatives around creators and community, commerce, and building the next computing platform coming together to start to bring the vision of the metaverse to life.”
The Metaverse is still a somewhat vague concept, but the idea is that people will soon be able to use digital representations of themselves, in virtual environments, to directly interact and engage, in an increasing range of ways.
That could be through virtual reality, which, as noted, Facebook is already looking to build upon, but it also relates to more simple examples, like your presence within gaming, digital clothing items that your avatars can wear, immersive AR applications that layer a new reality over the world, and co-working online, which simulates real world interaction.
Zuckerberg provided his own explanation for this recently, in an interview with The Verge:
“The metaverse is a vision that spans many companies – the whole industry. You can think about it as the successor to the mobile internet. […] You can think about the metaverse as an embodied internet, where instead of just viewing content – you are in it. And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage.”
That, as Zuckerberg notes, aligns with many of the same themes that Facebook’s been working towards for years, so it’s now looking to adopt the Metaverse concept as a whole of Facebook idea, which could help to bring its various components under one banner.
Which could also help Facebook avoid increased regulatory action – like, say, breaking up the company into separate parts. If it’s all part of a broader Metaverse, then every component will interact, and Facebook will become an umbrella that encompasses everything.
That’s likely the inspiration behind Facebook looking to merge its messaging tools, and while the Metaverse is a very different concept, it could also assist along the same lines, further welding together Facebook as a single, all-consuming tech entity.
But it’s also still a long way off – and while Facebook has formulated a working group to build towards that next stage, right now, it’s still a social media company, and one which is working to build stronger ties, in various ways, to maximize engagement, fend off competition, and make its platforms a more essential utility in many regions.
The numbers do show that, overall, it is still succeeding on this element, and the fact that user counts are still climbing 17 years in is a major achievement within itself.
But there are some key points of note from a marketing perspective that may be hidden behind the massive revenue result.