3 big ad stories from Metas earnings report Reels catches up to TikTok

What were the three biggest ad-related takeaways from Meta’s stellar Q2 2023 earnings report? Reels’ revenues, AI ad products, and a return to ad growth in Europe.

Reels has finally become a true TikTok competitor
More than three-quarters of Meta’s advertisers now use Reels ads, and the annual revenue run rate for Reels now exceeds $10 billion, up from $3 billion last fall, per Meta. That brings Reels into much closer contention with TikTok, which we forecast will have $13.16 billion in ad revenues worldwide this year, up from $9.89 billion in 2022.

The big red flag for future monetization growth is that Meta continues to expect time on Reels to monetize at a lower rate than its Stories and Feed since people tend to scroll more slowly through video content. Time spent is another factor: US adult Instagram users will spend 33.1 minutes per day on the app this year, well below the 53.8 minutes TikTok users spend, according to our forecast.

3 big ad stories from Meta earnings report Reels catches up to TikTok

AI ad products are gaining traction
AI was a huge topic during the earnings call, particularly Advantage+, Meta’s suite of AI-powered ad automation tools.

Meta is seeing strong adoption for Advantage+ in the e-commerce and retail verticals, and consumer packaged goods advertisers are also showing interest. After Advantage+ Shopping, the company plans to roll out other products under the Advantage+ umbrella. The feedback and results that it’s seen from advertisers have been good, and Meta considers it a promising area worthy of continued investment.

Outside of Advantage+, Meta has also launched Lattice (which learns to predict an ad’s performance across data sets and optimization goals) and AI Sandbox (where marketers can test generative AI-powered tools like automatic text variation, background generation, and image outcropping).

Credit: https://www.insiderintelligence.com/content/3-big-ad-stories-meta-earnings-report-reels-tiktok

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