Following the shares’ biggest single-day drop in recorded history, Facebook CEO Mark Zuckerberg intends to shift the company’s focus towards short-form video growth.

Zuckerberg communicated this plan to Facebook employees during a company-wide virtual meeting.

The stock price of Facebook’s parent company, Meta Platforms Inc, fell more than $200 billion last week after reporting steep losses in a quarterly earnings report.

Not only did Facebook’s spending exceed its revenue, but it saw its first-ever drop in daily active users.

From the third to fourth quarters of 2021, nearly half a million people stopped logging into Facebook every day.

Investors panicked after learning details of Facebook’s quarterly report, which prompted the stock crash.

How did it happen?

The reason for the loss of daily active users is due to TikTok, says Zuckerberg.

Explaining his company’s dismal performance, Zuckerberg cites an “unprecedented level of competition” from TikTok.

The inflated expenses that Meta incurred in the last quarter are due to the company’s long-term vision for the future.

Meta is on a spending spree as it strives to make Metaverse the next big thing – an investment that has yet to pay off.

In addition to having higher expenses, Meta brings in less money through advertising. Apple’s app tracking transparency feature is said to be eating away at ad revenue.

The feature, which was introduced last year, limits the ability of iPhone apps to track user data.

This reduces the targeting capabilities of Facebook ads, which reduces user engagement.

Less engagement means less spend from advertisers because they are not getting a satisfactory return on their ad spend.

The combination of higher expenses, lower revenues, and a loss of users resulted in a monumental drop in the share price.

What does this mean for Facebook?

Unable to solve its advertising problem, Facebook is instead focusing on the TikTok problem.

Facebook will take on TikTok by creating a shortened video as the main draw.

The company is now said to be prioritizing Reels, a TikTok-inspired video feature available on Facebook and Instagram.

During a call with investors, Zuckerberg said:

“People have a lot of choices about how they want to spend their time, and apps like TikTok are growing very quickly. And that’s why our focus on Reels is so important long term.

Instagram has been heading towards a video-sharing platform since 2020, and now it looks like Facebook is following suit.

What does this mean for marketers?

Writing on the wall says video is the future of social media marketing.

TikTok is booming, Instagram has been prioritizing video for over a year, and Facebook is now turning to video.

Even Snapchat is making a profit for the first time, based on its recent earnings report.

Social media users have made it clear that they want to go where they are super served with video content.

It is now the job of social media marketers to meet the demand.

If video editing and production isn’t already part of your skill set, it definitely should be.

If you’re not keeping up with the latest video trends, you need to get on it too.

A combination of well-designed text and images was enough to capture the attention of an audience on social media.

Now it’s almost a necessity to add video into the mix.

Fortunately, when it comes to production, there’s no high bar to hit.

Both TikTok and Reels are built around vertical videos, and everyone has the ability to create them with their smartphone.

Sources: CNBC, Business Intern

Featured image: TY Lim/Shutterstock


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