Meta Bearish Signal? The Company's Struggle Against TikTok's Rising Influence

According to a report by Statutebrew, Meta's suite of social platforms commands the lion's share of the global social media user base.

Despite having the largest user base, advertising revenue correlates more closely with user engagement duration. Data from Sensor Tower indicates that, on average, users in the U.S. spend 87 minutes per day on TikTok, which surpasses the combined daily usage of Facebook and Instagram at 39 and 45 minutes, respectively.

Meta's products have captured 19.5% of the U.S. online advertising market share, yet account for only 7.6% of user engagement duration, a twitter user says (@foxshuo) . This discrepancy is one of the reasons some investment banks maintain a long-term bearish stance on Meta.

Facebook users aged 25-54 make up55.9% of Facebook's users.

The percentage of U.S.-based TikTok users by age

Source: App Ape

Per Statista, TikTok's U.S. digital ad market share tripled from 1% in 2021 to 3.1% in 2023, driven by growth in active users, viral content, and engagement with Gen Z and Millennials. Statista forecasts that TikTok will capture 3.5% of U.S. digital ad spend by 2024. This increase in digital advertising share is likely to compress Meta's market share.

TikTok share of digital ad spend in the U.S. 2021-2024

Although many economists believe that the U.S. economy may be poised for a soft landing, inflation has not yet achieved the 2% target, leaving the economic landscape with considerable uncertainty. In the event of an economic contraction, the resultant contraction in user spending capacity could substantially curtail Meta's advertising income. Bloomberg data shows that from Q2 2023, while ad prices rose, Meta's ad impressions significantly fell, with a continued drop expected in the next quarters. However, should the macroeconomic environment tighten, average price per ad is likely to face downward pressure as well.

Source: Bloomberg

Instagram Reels, a feature for sharing longer video content than Stories, is Instagram's counterpart to TikTok's short video functionality. Research by Emplifi indicates that longer Reels, specifically those exceeding 90 seconds, garner a median view count twice as high as that of TikTok videos.

Moreover, Insider Intelligence reveals that 97.6% marketers plan to use Instagram, leveraging its array of content options like videos and images, and its creative tools. While TikTok stands as a contender with its Reels feature, Instagram overall remains the preferred choice for marketers. This data suggests that the network effects of social applications are significantly stronger than those of TikTok.