Dive Brief:

• Facebook is rebranding its corporate name to Meta to reflect its focus on building the metaverse, CEO Mark Zuckerberg announced yesterday at the company's virtual Connect conference. Its family of apps like Instagram and WhatsApp, however, will retain their current names.
• The company also previewed a plethora of ongoing developments in augmented and virtual reality (AR/VR) — which it sees as an immersive vehicle into the metaverse — including: Project Cambria, a "next generation all-in-one VR hardware;" Project Nazaré, the company's first full AR glasses; Horizon Home, an expansion of the Horizon platform to allow for virtual social hangouts; Presence Platform, a range of machine learning and AI to help developers build experiences on Quest.
• While the announcements illustrate a turning point for the company, they arrive at a time of weakness as it deals with an ongoing PR crisis and difficulties in targeting and measuring ad campaigns. These latter struggles reflect broader trouble felt by digital platforms over the past quarter.

Dive Insight:

Despite the hullabaloo over Facebook's shift to the metaverse, marketers will likely see no immediate change to how the company operates its advertising business.

Zuckerberg opened Connect by explaining why his company plans to build a broader virtual world — defined by nonfungible tokens, virtual goods, blockchain and decentralized platforms — over the next decade but didn't address the myriad problems currently plaguing the company.

"[Facebook] is an iconic social media brand but increasingly it just doesn't encompass everything we do," Zuckerberg said during the event.

While the CEO touted virtual social experiences in the metaverse, noticeably absent was mention of the big blue social networking site itself. The rebrand doubles as a way to distance itself from the tarnished legacy of Facebook as a social platform amid an onslaught of scrutiny and negative press stemming from whistleblower documents, lawmakers, regulators, civil rights groups and digital watchdogs. Zuckerberg in recent weeks teased how Facebook in the coming years will shed its image as a social platform and evolve into a company focused on the metaverse. This week, he painted somewhat of a clearer picture of where the company is heading.

"It's the next chapter for our company," Zuckerberg said. "Today, we are seen as a social media company. The metaverse is the next frontier."

But reframing its corporate identity may only go so far, as many outstanding questions remain around whether Facebook can successfully transition to Meta. The tech world is no stranger to companies attempting to make structural changes alongside a new name change — take MySpace, for example — before fading away.

AR/VR isn't new to Facebook, which has invested heavily in the tech by buying companies like Oculus. It established a product team to work on the metaverse earlier this year, and this month said it will hire 10,000 employees in Europe over the next five years to work on the initiative. The Oculus brand will be sunset in favor of the Meta moniker with the change. 

"This is not an investment that is going to be profitable for us any time in the near future," Zuckerberg previously told analysts. "But we basically believe that the metaverse is going to be the successor to the mobile internet."

Meta will instead lean on products like Horizon Worlds, Home and Workrooms, which are game-like platforms accessible through AR/VR hardware.

Earlier this week, the company spun Facebook Reality Labs into its own division, likely with the goal of walling off its profitable legacy business from the potential financial drain of its future gambles. It's also a way to lay the groundwork for a company that's not anchored down by its old social network, which has a reputation as being mostly for older users without the necessary reach among the young folks who may one day populate the metaverse.

Meta's introduction arrives as Facebook's main advertising business faces uncertainty, showing the platform in a weakened state and signaling potentially broader implications across the mobile tech world.

Facebook, which reported third-quarter ad revenue up 33%, warned that Apple's privacy changes would weigh on its digital business in the current quarter. The company reported quarterly revenue below market expectations, which executives said was largely due to the iOS changes that made it harder for brands to target and measure their ads on Facebook. 

The company's total Q3 revenue, which comes from mostly ad sales, rose to $29.01 billion from $21.47 billion a year earlier but missed estimates of $29.57 billion. Advertisers on Facebook also felt the brunt of global supply chain disruptions and labor shortages, which hurt advertising demand across nearly every industry and region.