One of Meta's top executives is cautioning brands not to get too excited about the metaverse just yet, even as the social media giant moves aggressively into virtual worlds. Nada Stirratt, Meta’s VP Americas, noted in a recent phone interview that brands like Wendy’s, which is an early tester of the company's metaverse efforts, have sales goals to move hamburgers, a bottom line that won’t be reached in the metaverse alone.
“You want to make sure that you’re not avoiding testing new things,” Stirratt said. “But I would be very, very careful if somebody puts all their money in the metaverse, and then doesn’t understand why they weren’t able to sell more cars.”
Stirratt was among the Meta executives who spoke with media buyers at the company’s first live NewFronts in New York City last week. Marketers have been confused by the messaging coming out of Meta in the past year, after it changed its name from Facebook and said it was going all-in on the metaverse. Marketers are trying to understand how virtual and mixed reality fit into what they already do on Facebook, Instagram and messaging apps. Meta used its NewFronts to showcase its suite of video ads, and also demonstrated how the metaverse could augment campaigns.
Meta has been investing heavily into the metaverse, so much so that it lost $3 billion last quarter in its Reality Labs division. The company also has had challenges in its traditional social media advertising business, as ad revenue grew 7% year over year in the first quarter to $27.9 billion. This compared with a 46% increase year over year in the first quarter of 2021. There are forces weighing on the broader digital advertising industry; Apple and other platforms are clamping down on data-sharing. Apple’s platform rules have particularly affected the performance advertising that mobile marketers use to drive app downloads and sales. Meta relies on those marketers more than most platforms.
The NewFronts typically cater to big-budget brand advertisers that typically invest heavily in TV. During its presentation, Meta was clearly trying to appeal to those marketers: “With Meta, you’re most important brand storytelling can thrive through video,” Sheryl Sandberg, Meta’s chief operating officer, said in a pre-recorded video that aired during the event.
Meta presented a case of Wendy’s, which became the first official brand to open an outpost in Horizon Worlds, Meta’s virtual reality app. Wendy’s designed a VR destination called the “Wendyverse” for March Madness.
Wendy’s and Meta emphasized other advertising channels on Facebook, Instagram and messaging apps, as ways to deliver broad-based brand messages; Meta reaches 3.6 billion people a month on its apps, and Horizon Worlds reportedly reaches about 300,000 users through Meta Quest VR devices. Meta’s next plan with Horizon Worlds is to launch it as an app on mobile devices, among other screens, which could expand the user base.
“The metaverse is many years away from having the scale of the other properties,” Stirratt said.
The Wendy’s case study showed how brands could incorporate Horizon Worlds into campaigns. Wendy’s used in-stream ads in Facebook videos, Instagram Stories and Reels, and augmented reality, among other placements. Wendy’s said in total it reached 52 million people on Meta platforms, but it did not reveal how many of those people visited the Wendyverse.
“All of the different products in the Meta portfolio work in concert to be able to drive things like 52 million people in under a month,” Stirratt said.