Social Media 2.0 Profiler Platforms (NASDAQ: META)

identification platforms (Nasdaq: Meta), after a strong start to 2022, shares have gained more than 30% since November. However, those gains pale in comparison to the 57% erosion in Meta’s market value in the past 12 months. A slowdown in advertising spending, and lackluster returns from the billions of dollars invested In the metaverse, layoffs and the company’s struggles in attracting younger users have played into Meta’s recent struggles. As the metaverse continues to gain traction as the future of technology, many companies have embraced the metaverse. At a time like this, it’s easy for investors to forget that Meta Platforms are as much about social media as they are metaverse. Indeed, Meta’s prospects in the next five years will largely depend on its ability to remain at the top of the social media hierarchy. This analysis discusses some of the emerging trends in social media The sector that changes the dynamics of the playing field and how Meta looks at the top of its game even in a difficult time like this.

The evolving social media industry

The social media industry has attracted a lot of attention since the pandemic as individuals have turned to these platforms to keep in touch with friends and family while being told to stay at home. Meanwhile, restaurants, events, schools and businesses remained closed. There was a huge increase in the use of social media in the early days of the pandemic. For example, during the pandemic, data from the social media platform Facebook showed that people were using the platform for longer periods of time, and engagement increased by up to 50% in some countries. The time spent on social media and the number of social media users has increased by 11% globally, from approximately 3.4 billion in 2019 to 3.78 billion in 2021. Moreover, the creative economy has introduced new trends that have led to an increase in usage with Increase the time spent. From 56 minutes per day in 2019 to 65 minutes in 2021 in the United States.

Figure 1: Average time spent by Internet users worldwide on social media

Source: Statista

The way social media users consume content has changed over the years, and there are different types of content that are capturing the attention of users today including but not limited to text posts, images, infographics, gifs, live videos, short videos, and press lists. Among these, short videos have had the most profound impact on the social media industry in the past two years with the advent of TikTok. From a technological perspective, AI has a huge impact on the way people use social media as well. On the other hand, mixed reality is emerging as a must-have technology on social media platforms. In the remainder of this analysis, these new developments will be discussed along with what Meta Platforms are doing to stay ahead of the competition.

Short video content

Short video content refers to videos that are typically 60 seconds or shorter in length, and are designed for quick consumption. Short video content has become increasingly popular on social media platforms in recent years, and there are several reasons behind this:

1. Ease of consumption: Short videos are easy to watch and understand, which makes them ideal for busy users who don’t have a lot of time to spend on social media.
2. Shareable: Video content is highly shareable, which means it can easily go viral and reach a large audience. This is especially true on platforms like TikTok, which are known for their short, engaging videos.
3. Cost-effective: Short video clips are usually less expensive to produce than longer content, making them more accessible to a wider group of creators.
4. Adaptable: Content can be created for a variety of purposes, such as entertainment, education, or advertising, and can be easily retargeted and shared on multiple platforms.

The growing popularity of short video content on social media can be attributed to the reasons mentioned above. TikTok is the undisputed leader in short content, something investors agree on. Facebook and Instagram launched Reels in an effort to attract and retain users who were flocking to TikTok. Reels have already become a very popular way to consume content on both Facebook and Instagram, but TikTok’s authority looks much better when it comes to short video content.

Figure 2: TikTok vs Reels – Engagement Rate by Followers

Source: Socialinsider

Figure 3: TikTok vs Reels – Transmission Frequency

Source: Socialinsider

Meta platforms may be behind TikTok when it comes to embracing short video content but the company is moving in the right direction by embracing the new paradigm shift.

The impact of artificial intelligence on social media

Artificial intelligence (AI) has been introduced to social media platforms in a number of ways to improve user experience, including content recommendation, personalization, moderation, and advertising.

1. Content Recommendation: Artificial intelligence algorithms are used to recommend content to users based on their interests and past behaviour. For example, YouTube uses artificial intelligence to recommend videos to users based on their viewing history, and Facebook uses artificial intelligence to suggest pages and groups that users might be interested in joining.
2. Personalization: Artificial intelligence is used to personalize the content users see on their social media feeds. For example, Facebook’s News Feed algorithm uses artificial intelligence to rank and filter the posts users see based on their interests and interactions with the platform.
3. Moderation: Uses artificial intelligence to help moderate and filter content on social media platforms. For example, Facebook uses artificial intelligence to identify and remove inappropriate or offensive content from the platform.
4. Advertising: Artificial intelligence is used to target and serve ads to users on social media platforms. For example, Facebook’s ad targeting system uses artificial intelligence to match ads to users based on their interests and demographics.

Meta Platforms’ technical investments in the past few years are paying off today with the company using artificial intelligence to create a better user experience for active users on Facebook and Instagram while expanding monetization opportunities. The company may be behind TikTok when it comes to short-form content but it is years ahead of many of its competitors in embracing AI technology.

Mixed reality and social media

Mixed reality (MR) refers to a combination of virtual reality (VR) and augmented reality (AR), which allows users to experience and interact with virtual objects in the real world. Social media platforms introduce mixed reality for a number of reasons. The primary goal is to improve user experience and attract new users. MR can provide a more immersive and interactive experience for users on social media platforms. For example, AR filters can allow users to try out different virtual appearances or visit virtual events, which can be more engaging than traditional static content. This results in attracting and retaining new users who are interested in engaging and interactive experiences. By offering MR features, platforms can differentiate themselves from their competitors and attract a wider audience. In addition, MR can help increase engagement because it provides users with new and exciting ways to interact with content and with each other such as VR events that can bring users together in a virtual space. As user numbers increase, these platforms can generate revenue by allowing them to charge brands to create and promote AR filters, or they can sell tickets to future VR events as well.

MR has been implemented on social media platforms in several ways, including:

1. AR filters: Many social media platforms, including Instagram and Snapchat, offer AR filters that users can apply to their photos and videos. These filters add virtual elements such as masks, hats, and makeup to the user’s appearance.
2. VR Events: Some social media platforms, such as Facebook, have started hosting VR events that users can attend virtually. These events can range from concerts and sports games to conferences and workshops.
3. MR Ads: MR has also been used to create interactive and immersive ad experiences on social media platforms. For example, brands have used AR filters on Instagram to promote products, and Facebook has used VR to create virtual storefronts for users to browse and purchase products.

Snapchat, which is owned by Snap Inc. (SNAP), one of the first social media platforms to offer users a virtual reality experience, but Facebook and Instagram are getting ahead quickly. Meta Platforms, with the help of Oculus, is well positioned to become a market leader in bringing innovative virtual reality experiences to users.

The Takeaway: Meta Platforms are the complete package

Social media, as we know it, is changing. In the early days of the industry, the focus was on providing users with a seamless experience of connecting with friends and family. Today, social media usage is centered around content, not people. Meta Platforms has identified this shift, which is evident in some of the products the company launched on Facebook and Instagram recently. Although competitive threats remain a concern, Meta has created a platform to successfully mitigate these challenges over the long term. Unlike many of its peers, Meta is profitable, has a strong balance sheet, and is rated as a mature company at a P/E of 14.9 despite having years of growth ahead. Thus, Meta Platforms is the complete package for investors looking for opportunities in the social media sector.