- Meta revenue climbed 22% 12 months over 12 months to $39 billion in Q2, in accordance with an earnings statement. The results topped Wall Street’s expectations.
- Ad impressions delivered across the Facebook and Instagram owner’s app ecosystem increased 10% year-over-year while the typical price-per-ad was also up 10%. Executives cited the e-commerce, gaming and entertainment and media verticals as driving the best growth amongst advertisers.
- Meta said Q3 revenue should land between $38.5 billion and $41 billion, a sturdy forecast. The company continues to deal with artificial intelligence (AI), which it says is improving marketing performance and could eventually reshape its promoting fundamentals.
Meta offered further detail on its vision for AI in marketing as a part of a Q2 earnings report that beat analyst estimates. The tech giant currently breaks out AI into two areas: core AI, or the systems it has used to support its ecosystem for years, and generative AI, a more moderen technology that is expensive to develop and not yet a meaningful revenue driver, but positioned by executives as transformative.
“In the approaching years, AI will have the ability to generate creative for advertisers as well, and will even have the ability to personalize it as people see it,” said Meta CEO Mark Zuckerberg on a call discussing the outcomes with investors. “Over the long run, advertisers will mainly just have the ability to inform us a business objective and a budget, and we’re going to go do the remaining for them. We’re going to get there incrementally over time, but I believe that is going to be a really big deal.”
Analysts view generative AI as a potentially powerful tool for digital ad platforms, though some express concern over delegating an excessive amount of work to automation. Marketers themselves could also be reluctant to remove the degree of oversight as envisioned by Zuckerberg.
“Meta is well positioned to drive value with genAI for advertisers but let’s be clear that it’s a ways off, if ever, before CMOs will simply hand over the keys to an AI agent that may autonomously generate ad creative on their behalf,” said Mike Proulx, vp and research director at Forrester, in emailed comments. “While genAI’s technical capabilities meaningfully mature at an accelerated pace, Meta cannot lose sight of the responsibility and importance of the human touch in the promoting process.”
Currently, much of Meta’s AI heavy lifting is finished behind the scenes. The company’s ad-ranking framework, Meta Lattice, helped improve ad efficiency and performance in Q2, in accordance with CFO Susan Li. More advertisers are also now using Advantage+, a set of AI-powered ad products that features tools that optimize ads for various formats and surfaces. In terms of user-facing AI experiences, Meta boasted that its Meta AI assistant, made broadly available last quarter, is on pace to grow to be the most-used offering in its category by the top of 2024.
AI can be a key piece of Meta’s plans for realizing the metaverse, certainly one of its long-term strategic goals. But the metaverse continues to be an enormous money loser: Reality Labs, the Meta division tasked with developing augmented and virtual reality hardware and software, incurred expenses of $4.8 billion in Q2, up 21% year-over-year. The unit generated revenue of $353 million over the period, making for its highest operating loss in two years, and has grow to be a little bit of a sore spot as scalable consumer use cases remain elusive while costs soar.
“It would appear prudent at this point for Meta to pivot its metaverse ambitions to a way more narrow focus,” said Proulx.
Meta made progress in streamlining other features of its ad business in Q2. The company has fine-tuned what ads to indicate users as they jump between properties like Facebook and Instagram, which may grow conversions and revenue without increasing ad load. It also recently unified video recommendations on Facebook, bringing together the TikTok lookalike Reels, long-form videos and livestreams right into a single experience.
On the advertiser demand front, e-commerce brands continued to dump money into Meta to succeed in latest users. China-based marketplaces like Temu and Shein have attracted troves of U.S. shoppers with aggressive social media marketing. Asia-Pacific and other global regions were the biggest drivers of ad impression growth in Q2, Li said.
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