Weak advertising demand and competition from TikTok and other rivals yielded lower fourth quarter revenue and profit for Meta, Facebook’s parent company.
Ad revenue was down 4% to $31.3 billion at Meta’s advertising-supported properties, including Facebook, Instagram, Messenger, and WhatsApp. Advertising revenue was 97% of Meta’s total revenue in the quarter.
Ad revenue in North America was flat, declined 16% in Europe and 3% in the Asia-Pacific. Revenue increased by 5% elsewhere (“Rest of World” in the table below).
The decline was attributed to “weak advertising demand, which we believe continues to be impacted by the uncertain and volatile macroeconomic landscape,” by Meta CFO Susan Li.
Strategy shift for Facebook and Instagram content. “Facebook and Instagram are shifting from being organized solely around people and accounts you follow to increasingly showing more relevant content recommended by our AI systems,” Meta CEO Mark Zuckerberg said on the company’s earnings call.
Reels growth. Zuckerberg also said that Reels plays across Facebook and Instagram have more than doubled over the last year, and the social component of people resharing Reels has more than doubled on both in just the last 6 months.
The challenge for Reels is “improving monetization efficiency, or the revenue that’s generated per minute of Reels watched,” according to Zuckerberg.
The future for Meta ads. Meta will continue to monetize WhatsApp as well as messaging ads by utilizing an in-app feature allowing consumers to interact directly with businesses.
- Plans to continue monetizing messaging with click-to-message ads, which currently generate revenue of $10 billion
- Onboarding more businesses to the WhatsApp Business Platform, where businesses can answer customer questions, send updates and sell directly in chat
Apple’s App Tracking Transparency measures still reducing revenue. “I think what I would say is there is still certainly an absolute headwind to our revenue number,” Li said when asked whether Apple’s ATT (app tracking transparency) measures were reducing revenue.
“Having said that, we are lapping its rollout and adoption, and we’re making progress in mitigating the impact due to a lot of the work that … I just talked about, including the different advertiser tools, including ad formats that bring conversions on site and including the longer-term AI investments in privacy-enhancing technologies.”
Dig deeper. You can review the earnings transcript on Meta’s Investor Relations site.
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Nicole Farley is an editor for Search Engine Land covering all things PPC. In addition to being a Marine Corps veteran, she has an extensive background in digital marketing, an MBA and a penchant for true crime, podcasts, travel, and snacks.
