- Meta Platforms saw revenue up 11% year-over-year within the second quarter, an indication that the tech firm’s turnaround plan is producing positive results, in accordance with an earnings statement.
- Strong demand from online commerce, entertainment and media and consumer packaged goods verticals drove the promoting resurgence. Total ad impressions across Meta’s apps, which include Facebook, Instagram and WhatsApp, ticked up 34% YoY while the typical price-per-ad decreased 16%, reflecting more activity centered around less well-monetized features and regions.
- One of those features is the TikTok lookalike Reels, which is now utilized by greater than three-fourths of Meta’s advertisers, CFO Susan Li said. Meta also received praise for early progress on the generative AI front and with Threads, a competitor to Elon Musk’s X (f.k.a. Twitter).
Meta’s robust Q2 offers one other sign that the digital ad market has began to get better following a very anemic post-pandemic period that resulted in revenue declines, a situation that began to turn around for the corporate in Q1. The social media giant forecast third-quarter revenue within the $32 billion to $34.5 billion range, above analyst estimates. Google’s YouTube, which had also been in a slump, similarly bounced back in Q2 with revenue up 4% YoY.
A sunny report from Meta follows several tough quarters last yr that were hampered by weak advertiser demand and technological challenges stemming from Apple policies that make running ad campaigns harder. Meta has undergone several rounds of layoffs on account of these headwinds, with CEO Mark Zuckerberg promising a “yr of efficiency” through a leaner, more focused organization. That approach appears to be producing results.
A small team was in a position to quickly develop and launch Threads earlier this summer, for example. The X rival drew a slew of early sign-ups as consumers and advertisers sought a substitute for Elon Musk’s embattled platform, though engagement slid within the weeks following the buzzy debut. Meta is within the midst of adding more features to the service to enhance retention and the user experience.
“Only after that can we work on monetization,” said Zuckerberg on a call discussing the outcomes with analysts. Several brands have already run marketing efforts on Threads, including Chipotle, which used the microblogging app for a recent promotion around National Avocado Day.
Bets on artificial intelligence (AI) were one other area that received a heavy amount of investor attention. Like many digital platforms, Meta has used AI for years, however the hype around generative AI software like ChatGPT has set off an arms race within the sector. Meta has built out its AI-powered Advantage+ offerings for marketers, and, in May, unveiled an AI Sandbox tool for quickly creating and editing campaign assets, like images or copy.
“Almost all our advertisers are using at the very least one in all our AI-driven products,” said Zuckerberg on the earnings call.
The executive imagined three key scenarios where AI could further enhance monetization: through virtual agents that help connect users with brands and content creators; through more features like AI Sandbox; and by helping Meta improve internal efficiency and productivity.
“In terms of how quickly a few of these new products scale, that is one in all the massive unknowns for the business and one in all the things that we’re debating heavily,” Zuckerberg said.
AI investments are inclined to be steep on account of the computing power and talent required to implement and manage the technology. Tech firms are faced with weighing the prices of spending more on experimental AI in a fragile market.
On the fee front, Meta was also pressured about its vision for the metaverse. Zuckerberg has stated that Meta’s two chief priorities are AI within the short term and the metaverse over the long term, however the strategy across the latter continues to lack focus. Reality Labs, the unit answerable for Meta’s virtual reality (VR) products, saw revenue down 39% in Q2 on soft Quest 2 sales while costs rose 23% to $4 billion. Zuckerberg still believes VR adoption and the interest in shared virtual social experiences will increase down the road, but looked as if it would acknowledge that scenario may not be coming together as quickly as he would have hoped.
“I’d say the signals that we’re getting from the market are it’s actually not getting adopted lots faster than we expected, in order that’s kind of the somewhat sobering signal,” Zuckerberg said.
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