Investing in virtual worlds: Facebook is fighting for the young target group

Status: 10/26/2021 9:36 a.m.

Facebook’s business continues to grow, but the age group of young adults seems to be increasingly turning their backs on the Internet company. An expensive strategy swing by the company should change that.

Facebook wants to win back young users with high investments. The competition from services such as that of the Chinese video app provider TikTok is apparently causing problems for the group. When announcing the business figures for the third quarter of this year, Facebook boss Mark Zuckerberg agreed the shareholders on a strategy that focuses more on the target group of young adults. All Facebook apps get the goal of “becoming the best services for young adults between the ages of 18 and 29”, according to Zuckerberg, “instead of optimizing them for a larger number of older people.”

According to media reports, the plans include putting short videos in the foreground on Facebook and the Instagram photo service. This is also the core business of Chinese rival TikTok. Most recently, 60 percent of video advertising revenue came from portrait clips that were less than 15 seconds long. Young adults have traditionally been a “strong base”, according to the Facebook boss. In the past decade, however, the user base has become “more diverse” and Facebook has focused on being there for everyone. The needs of the younger generation should now become the company’s “guiding star”. Zuckerberg described the video service TikTok as “one of the most efficient competitors we have ever faced”.

“Virtual Realities” as a future market

Investing billions in building a virtual world should also serve this goal. Facebook sees this as the next communication platform. With the help of these “virtual realities”, Facebook users should be able to jump back and forth between different devices and applications in the digital world and communicate with one another. In the current year, the segment called Facebook Reality Labs (FRL) will have a separate pillar alongside the Facebook, Instagram, Messenger and WhatsApp apps. Many are hoping for more details about the plans from the developer conference on Thursday. According to media reports, Facebook could then also give itself a new name.

The shift in strategy towards the young target group could initially put a strain on Facebook’s business. You will “have consequences,” said Zuckerberg in the following conference call with analysts. Because in other age groups there could be “probably less growth” according to the company. There are no quick successes in sight; the new approach will take “years, not months”.

Data protection burdens on iPhones

The business figures that Facebook presented yesterday evening show not only the tough competition from TikTok, but also burdens from the data protection requirements of Apple’s new iPhone operating system. This makes advertising more difficult to personalize, making it less effective. Facebook generates around 97 percent of its revenue from advertising. Now the company spoke of a “considerable uncertainty” due to the new iOS system.

In terms of sales in the past quarter, Facebook missed the analysts’ expectations for this reason. They had expected an average of a good 29.5 billion dollars. Facebook managed an increase of 35 percent to 29 billion dollars. However, at around $ 9.2 billion, Facebook earned more than expected – a year-on-year increase of 17 percent. The number of daily active users on Facebook rose within three months from 1.91 to 1.93 billion.

The strategic realignment Facebook has to cope with in the middle of an image crisis for the group. The company has come under massive pressure in recent weeks from internal documents that a former employee made public. Frances Haugen appears as a whistleblower and accuses Facebook of putting profits above the well-being of its users.

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