Opportunities and Risks for Meta

Opportunities and Risks for Meta

The Gist

  • Impressive growth. Threads hit 100 million users within a week.
  • Potential distraction. Threads’ growth might dilute Meta’s core apps.
  • Hiring opportunity. Ex-Twitter talent could boost Threads’ development.

The updates came swiftly from Mark Zuckerberg. Threads, his Twitter copycat, hit 2 million users within two hours of its launch on Wednesday. Then 10 million within seven hours. Then 30 million the next morning. “Feels like the beginning of something special,” Zuckerberg posted. By Thursday afternoon, Elon Musk threatened to sue. Now, Threads has 100 million users.

With a fast expanding userbase and support from its parent company, Threads appears destined to stick around for a bit. And while there’s opportunity for Meta, its emergence is not without risk. In its pursuit of cultural relevance and added revenue, Meta’s opened itself to distraction in its fight against TikTok. Threads may also dilute its core apps, weakening their network effects.

As Meta’s hot, new Twitter-clone enters its second week, here are four opportunities and two risks to consider: 

Opportunity: Make Some Serious Cash 

Twitter always struggled to grow revenue because its ad system was inferior to its competitors. Meta’s ad targeting and optimization tools are world class, and they could make a difference when applied to a Twitter-esque product. Meta, for context, made nearly $40 per user last year while Snapchat, with similar features, made $12.98. Twitter’s best year was 2021, where it made a bit over $5 billion. With the assistance of Meta’s ad platform, Threads could do much better.

Related Article: What Is Meta’s Instagram Threads?

Opportunity: Use the Reels Algorithm to Build A Better Twitter

When Meta copied TikTok, it put a ton of resources into its Reels algorithm. To show you the best videos from across its network, not just posts from your friends, it needed a recommendation algorithm more powerful than the News Feed’s. Already, its effort is spilling over to Threads, where algorithms sort the feed, and there’s no “following” tab. By going all-in on “For You” — at least at the outset — Meta is making a point. It believes its algorithm is better at finding posts you might like than you are yourself, and it has Instagram’s follow graph as a helpful signal. Meta’s algorithmic feed may work well on a Twitter-like platform, where new and casual users never saw the appeal in building follow graphs from scratch.

Related Article: What’s Behind Elon Musk’s Tweet Viewing

Source link