What Happened to the Metaverse? A 2026 Reality Check for Marketers

In digital marketing, few names hold as much weight as Meta, formerly known as Facebook. For years it has been a powerhouse for marketers, offering a trove of data and tools to reach highly targeted audiences. When the company renamed itself around the metaverse, the question on every marketer's mind was whether to start planning for virtual worlds. Five years later, we have an answer.

Here is the short answer. For marketers, the metaverse never became a channel. Meta's Reality Labs division kept losing billions, Meta cut its metaverse budget and staff, and the company moved its money and attention to AI and AI glasses such as Ray-Ban Meta. What matters for your budget today is Meta's AI-driven ad system across Facebook, Instagram, and WhatsApp. Put your effort into feeding that system good data and good creative, measure it independently, and treat smart glasses as something to watch rather than something to buy.

1. What did Meta promise marketers with the metaverse?

In October 2021, Facebook changed its company name to Meta to signal a future beyond social media, built around immersive virtual spaces where people would work, play, and shop. For marketers, the pitch was branded virtual experiences, digital products, and new ad placements inside VR worlds such as Horizon Worlds. When I first wrote about this, I focused on Meta's ad tools and on rivals such as TikTok, Snapchat, LinkedIn, and Reddit pulling attention away. Those rivals still matter, but the bigger story turned out to be what Meta did with its metaverse bet.

2. What actually happened to Reality Labs?

The numbers tell the story. Reality Labs, the division behind Quest headsets and Horizon Worlds, lost $17.7 billion in 2024 and $19.193 billion in 2025. In the second quarter of 2026 it lost another $4.62 billion on just $431 million in revenue.

Meta has pulled back. In December 2025, Bloomberg reported that Meta planned to cut the 2026 Reality Labs budget by roughly 30%, with the cuts aimed at Horizon Worlds and the Quest unit. In January 2026, Meta began cutting more than 1,000 Reality Labs jobs, about 10% of the division, to redirect resources from virtual reality and metaverse products toward AI wearables and phone features. Reporting at the time said Meta also closed several of its VR game studios, including Twisted Pixel, Sanzaru, and Armature, and shifted Horizon Worlds toward lighter, mobile-friendly experiences.

VR still exists, but the mass-market virtual world that marketers were told to prepare for didn't arrive, and Meta itself has moved on.

3. Where did Meta put its bets instead?

Two places: AI and AI glasses. On AI, Meta expects 2026 capital expenditures of $130 billion to $145 billion, and Mark Zuckerberg's summary of the quarter was that "AI is accelerating our core business today."

On hardware, the growth is in glasses. EssilorLuxottica, which makes the glasses with Meta, reported that more than seven million Meta smart glasses were sold in 2025. In September 2025, Meta launched the Meta Ray-Ban Display at $799, with a small in-lens screen and a wristband that reads muscle signals for control. At Connect in September 2026, the headline products were again glasses and AI: a third generation of Ray-Ban Meta, a Ray-Ban Meta Audio model, and Muse, Meta's personal AI agent, which Meta plans to bring to its glasses. Meta also showed lightweight VR glasses, so VR wasn't dropped, but it was no longer the main event.

4. What does this mean for Meta advertising today?

Meta's ad business is doing fine without the metaverse. In the second quarter of 2026, Family of Apps revenue was about $60.4 billion, ad impressions rose 14% and average price per ad rose 12% year over year, and an average of 3.60 billion people used at least one Meta app each day. If your buyers are on Facebook, Instagram, or WhatsApp, Meta still belongs in your plan.

What's changing is how much the machine does for you. In 2025, the Wall Street Journal reported that Meta aims to let AI handle ad creation and targeting by the end of 2026, with advertisers supplying little more than a goal, product images, and a budget. Since December 16, 2025, Meta has also used people's conversations with Meta AI to personalize ads across its apps, excluding sensitive topics and excluding the EU, UK, and South Korea.

For marketers, that shifts the job. Detailed audience targeting matters less, while three things matter more: the quality of the conversion data you send back to Meta, the variety and quality of your creative, and your ability to check Meta's own reporting. If you'd like a broader view of where AI is changing marketing work, my post on how to use AI in marketing in 2026 covers it.

5. Should marketers do anything with AI glasses now?

Not much directly. Meta hasn't positioned its glasses as an ad channel in its announcements, and the audience, while growing, is small next to Meta's apps. The indirect effect is worth watching, though. People wearing these glasses ask Meta AI questions by voice and about what they're looking at, which means more product and local discovery may happen through an AI answer instead of a feed or a search results page.

The preparation for that is the same work that helps you in every AI assistant: clear, accurate, consistent information about what you sell, who it's for, and where to buy it. My guide on how to optimize for AI answers in D2C and B2B walks through it. Beyond that, assign someone to track what Meta announces for glasses and Muse, and revisit if an ad or commerce product appears.

6. What shouldn't marketers do now?

Don't build branded virtual worlds or VR experiences unless you have clear evidence your customers are there, because Meta itself is scaling that back. Don't buy a "metaverse strategy" from anyone still selling one. Don't hand every decision to Meta's automation without a way to check it, because a platform that builds the ad, picks the audience, and reports the results is grading its own work. And don't treat privacy as a footnote. Personalization based on AI chats is new territory, and in healthcare and other sensitive categories you need to know exactly what data you send to Meta and why.

7. What should marketers do now?

If Meta is a meaningful part of your spend, here is a practical checklist:

• Send clean conversion data through the Conversions API, using real business events such as purchases and qualified leads.

• Give the system enough creative variety, with several concepts and formats rather than small tweaks of one ad.

• Run holdout or lift tests at least twice a year to see what Meta adds beyond demand you'd have anyway.

• Compare Meta's reported results with your own sales data and, at scale, a marketing mix model.

• Keep testing other channels where your buyers spend time, such as TikTok, LinkedIn, Reddit, and search.

• Make your product and business information clear and consistent for AI assistants.

• Review Meta's glasses and AI agent announcements each quarter, and act only when there's a product to buy.

If measurement is the weak spot, my explainer on marketing mix modeling shows how to see what each channel contributes, and my paid search and paid social management page covers how I approach Meta accounts.

8. So does Meta still matter for marketers?

Yes, but for different reasons than the metaverse pitch suggested. Meta matters because billions of people still use its apps every day and its AI-driven ad system is where Meta is putting its effort. The metaverse turned out to be an expensive detour, and the real change for marketers is AI running more of the campaign. The brands that do well will be the ones that feed that system good inputs, check its outputs, and don't get distracted by the next round of hype.

If you want an honest look at your Meta spend and whether it's earning its share of the budget, you can book a free 30-minute introductory call here.

Dr. Linda Orr, PhD, is the founder of Orr Consulting, a fractional CMO and marketing analytics practice serving brands from $5M to $500M in revenue. She built Upwork's first enterprise marketing mix model, covering an $88M annual media portfolio, and spent about 20 years as a marketing professor before moving fully into consulting.