What is Meta's Ambition with Metaverse

What does Meta live with

Meta which was previously called Facebook, is a traditional social media company. Facebook is obviously their product once shocking the world. It brought brandnew social communication approach to the public. However, as all the other internet companies, it had headache on how to monetize what they have. By checking Meta’s earning report of 2021 and 2022, Advertisement took 99% of it’s income. It seems internet industry can’t find a monetization solution better than advertisement. Online advertisement is eventually a model of demand and supply. Apparently, Meta is on the supply side. Meta advertisement inventory can be devided into two categories, which are O&O inventory and 3rd party traffic. Meta now is monetizing Facebook, Instagram and Whatsapp. These apps are owned and operated by Meta. The other set is the traffic on the Facebook Audience Network. According to experience of other similar Ad platforms. O&O traffic and 3rd party traffic are taking different position within an online advertising company. Mostly, O&O traffic plays the role of profit generator, while 3rd party traffic plays the role of scale expander.Two types of traffic are working like gears matching and running the whole machine. Without O&O traffic, companies don’t have capability to build Ad networks from scratch. Withouth extenral 3rd party traffic, O&O traffic will be priced higher and higher and it will result in performance downgrade and advertiser leaving.

What’s the trouble ?

Unfortunately, Apple applied very strict privacy policy on iOS from iOS 14.5. As we all know, users on iOS are producing relatively more spending vs Android users. The higher ARPU helps Ad network a lot to maintain higher ROAS for their Advertisers. However, after ATT applied to iOS apps, Meta can’t target users precisely. Either can they track each user with IDFA any more. The online Advertisement returned back to what it was a hundred years ago, when the famous statement saying that no advertiser can know which part of spendings take effect on the final conversion. According to estimation, Meta made 3BN USD revenue on Meta Audience Network which is 2% of its total income of the year. Since the performance downgrade due to lack of IDFA, Meta lost almost 10% revenue. And it’ll impact much more along with Ad business development within Meta.

Why Metaverse ?

Becuase what we’ve seen above, I believe FB management team made their mind to build a network right from the basement, which is the hardware. Advertisement are presented in different scenarios to impact customers. Different scenarios are based on different media. Customers browse media for their different intents. Where is the media based ? It’s based on hardware . With hardwared in the digital era, Meta can track all the user behaviors and the advertisement performance. Apple has iPhone .Google has Android. How about Meta ? Nothing so far.Therefore , Metaverse is the last piece that Meta is always dreaming about.

What’s Metaverse ambition ?

Nowadays, Meta is running multiple apps for 2B mountly active users. Whatsapp is still in very early stage of personalization. But Meta has apparently realized danger of the missing pieces. Hence, Meta started its ambition of Metaverse. Metavers is a new media scenario based on a brand new type of hardware. Meta is betting on the future of user interfaces. If once , VR/MR becomes the mainstream of communication, Meta will eat the biggest share of the market and retain the biggest amount of customers. i With hardware ,Meta can control the traffic from its source. It will become the rule maker but not a player on the new platform.It will solve the Advertising confusion problem from the very beginning by tracking each individual and define the principle on how to evaluate each Ad impression. It’s the same path Google and Apple has walked along. Yet, the path is not easy. It requires much more investment as well as some help by the era

Where’s the future ?

I believe Meta took the corret road , but there are still a long way to go. Meta needs to stay alive till it achieves its ultimate goal.

• Although Meta took the correct road to build its future from sratch, Meta ignored one critical issue that transaction chain has not been built in Metaverse. Without built-in transaction process, the Ad performance won’t be welcome by Advertisers. We are start another topic to discuss the relationship of transaction and Advertising. Withouth transaction, Meta can’t cover the full loop of consumer.
• Is the VR/AR scenario can be accepted by the folks ? At least till now , the answer is no. It’s now only applied to entertainment area, especially gaming. It will succeed once it can cover more generic using scenarios , like what Facebook is doing which we can call message transfer.Advertisment is a kind of message transfering. All the large Ad networks are covering user scenario of message transfer like Google , Facebook, Tiktok , etc.

Conclusion

Meta took a bravo move to the Metaver. But whole eco-system are still in growth which are not able to supporting Advertisement well so far. Moreover, the competitors are coming. With release of AR equipment by Apple in 2023, we’ll be more clear on what’s the shape will be of the future .