In November, Meta launched an ad-free subscription model for Facebook and Instagram in the European Union, but it was quickly met with backlash.
Last Thursday, the European Consumer Organisation (BEUC) filed a complaint with the Consumer Protection Agency (CPC), alleging that the subscription fee for Meta's ad-free service was unreasonably high, indirectly infringing on users' privacy rights. If the charges are successful, Meta will face fines and the risk of costly business changes.
About 97% of Meta's revenue comes from advertising, and apps such as Facebook and Instagram are the top positions in its advertising business. Sticking with an ad-free subscription service will have a huge impact on the entire advertising market.
Meta's ad-free service costs $9 per month on **99 euros (10.)$96) and $12 on the app99 euros, which can currently be shared between Facebook and Instagram accounts.
Photo by Thomas Ricker
"Ad-free subscription service" sounds like a mouthful, but in layman's terms, it's actually "spending money on advertising". Prior to this, Meta was free to use for many years, mainly monetizing through advertising on the platform, and the ad-free model seemed to be able to open up new revenue for Meta while reducing ads**.
Why should the good end cut the ads?It's not a meta conscience finding, it's mainly because the policy is pressed too tightly.
Advertisements on the platform need to collect user data for "personalized" delivery, and many domestic apps will also have such pop-up windows, and users often need to agree to the platform's use of privacy data in order to continue to use products and services.
This comes after the EU data regulator passed a law that already threatens the very foundations of Meta's business model:Tech companies can't ask users to consent to tracking data and targeted advertising in order to use their products. That is, the user must have the freedom to refuse, and this freedom cannot come at the cost of giving up the use of the service. The law proposes to have "equivalent alternatives" and specifically mentions the version of the product that needs to be paid.
The starting point of the policy to protect privacy is right, but the foothold seems to be a little biased, and it has evolvedLet users pay for privacy and security. Meta seized on this loophole and launched an ad-free subscription. Everyone gradually came back to their senses, which also became the fuse for BEUC's accusation against Meta.
Noyb, the European Center for Digital Rights, has also filed a lawsuit with Austria's privacy regulator, arguing that one in five people in the EU is at risk of poverty and cannot afford so-called "pay or ok" regimes, which force users to choose between "pay and privacy."
Faced with accusations of excessive charges, Meta argues that these are in line with paid services from YouTube, Spotify and Netflix. Meta said it launched the subscription to comply with EU privacy laws while continuing to provide personalized products and services to people, regardless of revenue.
But no matter how Meta tries to disconnect subscriptions from revenue, this model will bring new revenue to it.
If it continues, a fee may be charged**. As of March 1, 2024, Meta's paid payments will no longer be available to accounts, and linking other accounts to the subscription will incur an additional €6 per month on ** and an additional €8 per month on iOS and Android. In addition to the simple and crude price increase, Meta will also promote an ad-free subscription service in India in 2024 to further expand the market.
Meta compares its own ad-free subscription service to YouTube, Spotify, Netflix, but their logic is completely different. The biggest difference is that Meta's selling point is simply "ad-free", while the latter mainly attracts users with content.
Netflix, for example, used to be the industry's "ad-free benchmark: use high-quality content to attract users to pay instead of advertising, and then the revenue is fed back into content production, forming a virtuous circle, emerging a number of representative works such as "House of Cards" and "Stranger Things". For a long time, "ad-free" was the golden rule that Netflix adhered to.
Domestic Aiyouteng also often mentions "content-driven", but they are not resolute and still focus on Internet advertising. The long-term ** platform is several positions ahead of foreign countries in the exploration of advertising models, such as patch, implantation, information flow advertising, brand, effect, and customized marketing ......Membership payments are mostly just the icing on the cake. However, despite the long-term ** platform exploring "membership + advertising" for many years, it has only barely made a profit this year, and most of them are still based on losses.
Netflix, which insists on no ads, can't hold up either. With subscriber growth peaking and fierce competition in the market, Netflix tried to keep increasing its membership** and eventually turned to ad monetization.
Netflix's ads launched on November 3 last year at $6 per month$99 for a lower charge than the base**. On average, subscribers to the service watch 4 to 5 minutes of ads per hour, with each ad lasting 15 to 30 seconds. This is for users who want to make episodes more affordable, but don't mind watching some ads.
Source: Netflixcom
In May, Netflix executives said that the launch of low-priced ads** had worked well, with 5 million monthly active users. While attracting customers and increasing revenue, this part of the resource will be for advertisers to take advantage of Netflix's rich programming content and earn more profits.
The success of Netflix's ads** shows that users who have been immersed in the Internet for many years have gradually become Xi to the existence of ads, and the difference lies in the quality of the user experience. At this time, Meta launched an ad-free subscriptionIn the absence of content or other advantages, users are simply "kidnapped" with social connections on the platform. With X (ex-Twitter) precedent in place, Meta struggled to attract a large number of paid subscribers.
External regulation has also made it difficult for Meta to go ad-free. Noyb has been complaining about the privacy of Meta's personalized ads since 2018, and as of January this year, the Irish Data Protection Commission (DPC) has issued a total of about 1.3 billion euros (about 10 billion yuan) of fines to Meta.
As a tech giant, Meta's initiatives have a certain exemplary role for the industry. Some time ago, X launched a premium membership for $16 per month, which includes an ad-free browsing experience. TikTok is also performed overseas 4$99 depersonalized ads subscription test.
Noyb estimates that with an average of 35 apps installed on each phone, it could cost 8,815 euros a year to protect privacy and security, or 35,000 euros for a family of four, which is more than the average full-time income in the EU.
Regulators are concerned that if other social platforms follow Meta's lead in launching paid de-advertising services, the domino effect will make privacy more and more expensive, and privacy will eventually become a "privilege" for the wealthy.
Sitting on the world's largest social platform, Meta's ad-free trend will have the most direct impact on advertisers.
First of all, this will reduce the popularity of traditional advertising on social platforms such as Facebook and Instagram, and will require advertisers to adjust their investment. The introduction of an ad-free subscription option on Meta's platform will result in a decrease in the reach of ads, and with it, increased competition for ad space. More advertisers are likely to spend more on Google and other social platforms, such as Snapchat, LinkedIn, X, etc.
Although X also has Premium+ for $16 per month, before it, there were two buffered versions, Basic and Premium, that didn't completely drop ads. This kind of comparison forms an "anchoring effect", allowing users to choose a compromise between payment and advertising in the trade-off. This kind of cost-effective formulation plan is also something Meta needs to Xi.
Secondly, content creators, influencers, and KOLs on the platform will be more important. Due to the reduction of platform facilities for advertising, the reduction of traditional advertising has provided new opportunities for advertising content such as creativity and KOL collaboration. If the quality and tonality can be ensured, high-quality advertising content can become the main form of communication between brands and consumers.
At the same time, paid subscriptions become a filtering mechanism for users, and users who stay on the ad-supported version are more receptive to the ads, resulting in higher engagement rates. Brands need to effectively cooperate with KOLs to target the right user groups and enhance the appeal of the advertising format.
Brands and affiliates should diversify their strategies to focus on quality content and explore alternative advertising channels. Staying informed about Meta's growth and user adoption of subscription plans is crucial, and in this ever-changing environment, flexibility and innovation will be key for brands to connect effectively with their target audiences.