Meta’s organizational shuffle this week, with the announced departure of chief business officer Marne Levine, comes just as the company tries to reinvigorate its core advertising business, and navigate product changes that have affected its ad tech platform and social media services. Meta’s business team, which works with brands, ad agencies and millions of small businesses, also is in the middle of a transition, and there is pressure to ramp up sales.
Meta, the Facebook parent company, has been in a slight rut, along with much of the digital ad world, and has faced questions about how well it can hold up against a rising TikTok and an increasingly powerful Apple.
The underdog position is unfamiliar to Meta, but the company is embracing the role, said Nicola Mendelsohn, Meta’s head of global business group, who spoke with Ad Age this week. Mendelsohn discussed the state of the company after she took a newly expanded job title when Levine decided to move on from the company, which will officially happen in the summer.
“I think we’re underestimated as a company,” Mendelsohn said. “So, we’re going to use that, because it’s not a bad thing to be in that position.”
Meta is streamlining some of its structure, which is part of an “efficiency” push outlined by CEO Mark Zuckerberg this year. Meta has posted lower year-over-year ad revenue over the last three quarters, including a 4% decrease to $27.2 billion, year-over-year, in the fourth quarter of 2022. Industrywide problems, such as budget cuts from marketers amid economic uncertainty and inflation, have made it harder for companies like Meta to post revenue gains. Meanwhile, Apple is a problem for Meta, and all digital ad businesses, because Apple changed how marketers collect data from consumers on iPhones and web browsers. At the same time, TikTok is winning consumers over with compulsive video consumption that Meta is trying to mimic.
Related: How Meta is rebuilding its ad platform in response to Apple
Signs of a turnaround
In the fourth quarter of last year, Meta showed some bright spots, when it announced surpassing 2 billion daily active users on Facebook and WhatsApp, and it reported progress with Reels, its TikTok competitor. Also, Meta said it had made advances in adjusting to Apple’s data rules through improved advertising technology using AI.
These were all initiatives that had been partly under the purview of Levine, who had been chief business officer since 2021. Levine reported to Javier Olivan, the chief operating officer, who ascended to the position after Sheryl Sandberg’s departure last year.
Levine was Sandberg’s longtime ally within the company, and Levine said this week that she decided to leave, comfortable with Meta’s position in the marketplace. “Things have been just ‘go, go, go,’ and my focus has really been on making sure that we continue to improve the performance for advertisers and make sure that they’re connected to the solutions that will really help them grow,” Levine said in a phone interview this week. “When I sort of look at where the business results were going, and how they’ve improved, and that we have a really great strategy in place, and very strong leaders in place, I started to think that this could be the right time to transition.”
Meta’s stock has rebounded—after dropping 65% in 2022, shares have moved more than 40% higher so far this year. But Meta still has challenges and a transition it needs to implement, which would be hard for any company that size—Meta is valued at more than $450 billion.
The changes at Meta are myriad: In November, the company cut 11,000 jobs, or 13% of its workforce, and more layoffs may be on the way in March, according to the Financial Times. There have been signs of employee discontent and internal dissent, the Financial Times also reported.
Related: Meta Reality Labs’ Jason Sperling exits for Innocean USA
Zuckerberg and his top lieutenants have struck a tone that conveys Meta is getting serious about efficiency and it doesn’t want any straggling workers. Last month, Andrew Bosworth, Meta’s chief technology officer, wrote a blog post titled “Focus,” which outlined how the company took its eye off its core competency. Bosworth recalled the intensity of Meta when it was still a startup called Facebook. “Resources and time were so tight that you could feel the weight of all the things you weren’t working on,” Bosworth said. “You had real conviction that the thing you were doing was the most important thing.”
One ad agency executive, who spoke on the condition of anonymity, said that Meta’s reorganization can be felt from the outside. Meta’s ad reps and salespeople have been “under the gun and under pressure,” this exec said. “Their goals have been ramped up and we’ve seen Meta’s teams acting in ways they haven’t before,” the exec said, “literally mentioning their sales goals and how much they need to grow, which is something I’ve never seen in a decade plus working with Facebook and Meta.”
Meta’s sales reps were angling to get brands to double, or even triple, their year-over-year ad spend in the second quarter, the exec said. “It’s very clear what the direction is internally,” the exec said. “It’s that everyone is going to be held accountable.”
In January, Meta saw declines in advertiser traffic to its online ad buying portal, according to web analytics firm SimilarWeb, which is a sign of declining fortunes. Traffic to Facebook’s business portal, an indicator of how often people buy self-serve ads, dropped 7% year over year in January, according to SimilarWeb. “Investors seemed to have some optimism immediately after the earnings report that management knew what needed to be done in terms of trimming costs and adding monetization to products like Reels,” David Carr, SimilarWeb’s senior insights manager, said in an email. “Maybe that will be the answer but looking at things from the outside I can’t see many positive signs.”
Traffic to Pinterest’s portal was down close to the same amount as Meta, and Twitter’s self-serve ad portal had 22% less visits in January, compared to the same period a year ago, according to SimilarWeb. Meanwhile, Snap and TikTok both saw healthy increases in traffic to their ad buying sites, SimilarWeb found.
Business and product practices
Meta’s changing strategy is exemplified by its moves after Levine said she was leaving—now Mendelsohn will work more closely with Justin Osofsky, who was Instagram’s chief operating officer and became Meta’s head of online sales, operations and partnerships. Mendelsohn and Osofsky, who report to Olivan, are two sides of the advertising coin at Meta. Mendelsohn is focused on the big fish—top brands and advertising agencies. Osofsky, with a background in operations, is focused on the millions of other small businesses, which primarily buy Facebook, Instagram and WhatsApp ads through the self-serve platform.
The advertising platform has many technological hurdles to confront, given Apple’s data rules. Google also is updating how data is shared through Chrome web browsers and Android devices. Websites and apps will face similar restraints on Google’s ecosystem. Meta has had to rework its entire ad platform to rely more on artificial intelligence for better ad targeting and measurement, so that small businesses, developers and retailers can track their ad campaigns. AI is expensive and complicated, and millions of advertisers are hard to service at that scale.
“I’m focused on two of our company’s top priorities, revenue and engagement,” Osofsky said in an interview this week, after taking on the new role alongside Mendelsohn. “Part of serving small businesses is making our operations more efficient, building products that meet the needs of these businesses,” Osofsky said.
Meta is tying its business and product sides more closely together, to put the advertising leaders in a better position to influence the services that affect revenue and to explain changes to marketers. Osofsky also works with creators, another key constituency in Meta’s ecosystem.
Brands, creators and marketers are affected by updates to Meta’s social media apps. These constituents want to better understand how products such as Reels affect engagement among users, and how the products lead to new ad formats.
As an example, this week, Meta introduced a new transparency tool, which gives consumers more details about how brands target their ads. Facebook and Instagram serve links within sponsored posts, which ask, “Why am I seeing this ad?” The information is now more complete, filling in the picture for consumers about what data was used to target the ads. The product change was for consumers but it also has ramifications for advertisers. It could affect how ads perform, too, if users set more preferences around which brands they allow to target them.
Advertisers also must learn new ad tactics when new products catch on, such as how to incorporate WhatsApp business messaging into campaigns. Just last month, Levine was touting the growth of WhatsApp’s “click-to-message” ad business, which is on pace to generate $10 billion a year.
“We’re building our messaging business” and “Reels is growing like crazy,” Levine said.
This week, Mendelsohn was in Brazil talking with global clients about how to use WhatsApp to talk with customers directly and to sell products and services within chats. “It’s all part of this vision to bring the product and the business sides of the house together even closer than we’ve ever been,” Mendelsohn said.
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