Home Platforms Nicola Mendelsohn, Meta’s Ad Chief, Claps Back At The Metaverse Critics

Nicola Mendelsohn, Meta’s Ad Chief, Claps Back At The Metaverse Critics

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Nicola Mendelsohn, VP, global business group, Meta

Meta’s stock took a nosedive after the company reported its third-quarter earnings in late October.

Less than two weeks later, Meta confirmed plans to lay off 11,000 employees, or roughly 13% of its total workforce.

Although Meta’s former CFO (and now chief strategy officer) Dave Wehner told investors that the revenue impact of Apple’s holy fury (aka its ATT privacy changes on iOS) has started to diminish, there’s still a “volatile macroeconomic landscape” to contend with and weak ad demand going into Q4.

You’d be hard-pressed to find an earnings call transcript from this past quarter that doesn’t at least make some mention of “a challenged economic environment,” “this time of high inflation,” the “slowdown in buyer spend” or some variation thereof.

Unlike most other companies, however, Meta is making a very (very) big bet on the metaverse … and Reality Labs, the division within Meta focused on virtual reality, lost nearly $3.7 billion in the third quarter.

But, to be fair, the majority of Meta’s investments still go toward its core.

In Q3, Meta spent just a hair over $18 billion – roughly 82% of its overall expenses – on Facebook, Messenger, Instagram and WhatsApp and on improving its advertising services, Nicola Mendelsohn, VP of Meta’s global business group, told AdExchanger.

“When I look at our products,” she said, “and especially our new products, I think we have an extraordinary runway for growth.”

AdExchanger caught up with Mendelsohn for a few hot takes.

On the recent layoffs: “I can’t talk about anything without first addressing what Mark shared about the decision to restructure parts of the company and lay off a percentage of our workforce.

“This is not a decision any company wants to make, and it wasn’t one we took lightly. But the changes, as difficult as they’ve been, set us up for success and to better support the business in the long run.

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“As part of the restructure, we’ve shifted more of our resources to a smaller number of priority areas, with a particular focus on our ads and business messaging platforms, AI and our discovery engine tied to ad performance.”

On the metaverse skeptics: “We’ve been very clear that we’re going to continue to invest in the metaverse, but we’ve also been very clear about the timing. We believe the metaverse is five to 10 years out.

“I understand where some of the pushback comes from, but I don’t think there’s enough attention paid to all of our other growth opportunities. Reels, for example, is not even two years old, and it’s our fastest-growing content format, with a combined annual revenue run rate of $3 billion.”

On Reels monetization: “There’s a reason why we’re bullish. Fourteen billion Reels get played every single day, which is a 50% increase from six months ago, and it’s incremental to time spent in our apps. And now that we’re gaining in terms of time spent, we’ll also start gaining share from competitors, like TikTok.”

On messaging: “Social interactions around the globe are moving into messaging, and we’re also seeing a flywheel between discovery and messaging, like with click-to-message.

“We just launched our first end-to-end shopping experience on WhatsApp with JioMart, an ecommerce company in India, where you can shop on JioMart using the WhatsApp chat function.

“This is the type of experience that we can work to replicate in other markets around the world, including North America, which is actually our fastest-growing region for WhatsApp right now.”

On all the negative headlines: “We’re deeply underestimated as a company. Our community grew last quarter and 4% year on year. We now have more than 3.7 billion daily active users for our family of apps and almost 2 billion people a day using Facebook, which is the highest it’s ever been.

“Instagram’s got more than 2 billion monthly actives, and WhatsApp has more than 2 billion daily actives. The fact is, the majority of our expenses are going toward the development and operations of our family of apps.”

On whether Meta is facing an innovator’s dilemma: “That’s not how I would describe it. We’re clear on who we are as a company and we’re clear about what we’re focused on: Reels, messaging, AI and delivering the most relevant ads so people can discover, engage and make connections. That’s what we’re about.”

Answers have been lightly edited and condensed.

For more articles featuring Nicola Mendelsohn, click here.

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