• by Karlene Lukovitz  @KLmarketdaily, June 16, 2022

While Meta has seen positive results from incorporating the TikTok-like Reels short-form video feature in Facebook, the company is now planning to ramp up its counteroffensive by also changing Facebook’s main feed to mimic TikTok’s.

Specifically, instead of prioritizing posts based on the accounts that users follow, Facebook’s Feed algorithm will, like TikTok’s, begin recommending posts regardless of where they originate, based on passive viewing habit data, according to a report by The Verge, based on an internal Meta memo.

Among other things, TikTok’s “fire hose” approach to recommending videos makes it easier for videos from creators without large followings to go viral.

In an April memo to employees, Tom Alison, head of Facebook, also laid out plans to bring the Messenger app back into Facebook in order to “unlock messaged-based sharing.” The two apps were separated eight years ago.

Earlier this month, Meta revealed other changes to Facebook Reels (above) and Instagram, including new audio-editing options, interactive stickers and longer video clips.

Meta is also developing “basic,” lower-cost ads for Facebook that eschew use of personal data for targeting, hoping to attract more brand advertising from smaller advertisers.

Meta’s slowed advertising growth — reflecting mounting competition from TikTok, as well as the impacts of Apple’s iOS privacy changes — has forced the company to slow the pace of its investments in the metaverse, the linchpin of its strategy for the future.

Hoping to reassure investors, CEO Mark Zuckerberg announced intentions to trim metaverse investments during the company’s first quarter earnings call. And just last week, Meta announced it will be halting development or production of several anticipated hardware projects, including its augmented reality glasses, its dual-camera smartwatch, and its Portal smart display device.

Meta’s stock plummeted 26% after it reported Facebook’s first decline in users in Q4 2021. And while it still reported 2.94 billion monthly users, that fell short of investors’ 2.97-billion Q1 expectation.

Meta’s total Q1 revenue rose 7%, to $27.9 billion, driven largely by greater ad volume that offset price declines. But that was the slowest growth rate since the company went public a decade ago — in fact, the only single-digit growth in that period — and analysts had expected $28.2 billion.

Meta’s Q2 forecast of $28 billion to $30 billion also fell short of analysts’ expectation of $30.6 billion. If revenue is on the low end of that range, it will represent the company’s first year-over-year decline.

Meanwhile, according to Sensor Tower, TikTok has been downloaded 3.6 billion times, and its estimated downloads in 2021 were about 20% higher than both Facebook’s and Instagram’s.

eMarketer has projected TikTok’s ad revenue will leap by 200% this year, to $11.64 billion, and to $23.6 billion by 2024.

Facebook’s ad revenue is still far greater, but projections point to gradually slowing growth.

Worldwide, Facebook generated $114.9 billion in ad revenue in 2021 according to Statista, which projects that will rise to $135.9 billion in 2022 and $153.8 billion in 2023.

eMarketer projects a 15.5% increase in U.S.-only Facebook ad revenue in 2021, to $58.1 billion.

However, that will represent a 24.2% share of total U.S. digital ad spending, down from 32.1% in 2021. And Facebook’s U.S. ad revenue growth is projected to slow to 12.2% in 2023, stalling share of U.S. digital spend at 24.1%.