Why Meta Reported a Strong First Quarter for 2023

Why Meta Reported a Strong First Quarter for 2023

Meta

Meta’s ad business is back on the upswing, and AI is a big reason. On April 26, Meta reported its first increase in sales in nearly a year because of an improvement in its advertising business. This happened because Meta’s short-form video feature, Reels, is gaining more engagement thanks to Meta’s use of AI to target Reels more carefully to its user base. More engagement means more ad revenue. 

What Meta Announced 

Meta reported revenue of $28.6 billion, up 3 percent from a year prior and ahead of expectations of nearly $27.7 billion, according to analysts surveyed by FactSet. That snapped a streak of three quarters in which Meta’s revenue had declined from the year prior (The drop was the only time that has occurred since the company went public in 2012.) The 3 percent increase is an improvement from the 4.5% drop in revenue that the company posted in the final quarter of 2022. This is a notable turnaround for a company that spent the better part of 2022 regrouping after Apple’s consumer privacy controls ate into Meta’s ad revenues.

In his formal comments on the quarter, CEO Mark Zuckerberg attributed the growth largely to the popularity of Reels, which is Meta’s answer to TikTok’s influential short-form videos. He said that Reels are growing quickly on both Facebook and Instagram.

“Reels also continue to become more social with people resharing Reels more than 2 billion times every day, doubling over the last six months,” he said. “Reels are also increasing overall app engagement and we believe that we’re gaining share in short-form video too.”

He also said that more than 3 billion people use at least one of Meta’s apps each day.

Meta daily active users

Zuckerberg attributed the uptake of Reels to the way AI makes more personalized Reels recommendations for Meta users to watch, which, in turn, encourages advertisers to create targeted ads.  

He observed, 

Our investment in recommendations and ranking systems has driven a lot of the results that we’re seeing today across our discovery engine, Reels, and ads. Along with surfacing content from friends and family, now more than 20% of content in your Facebook and Instagram feeds are recommended by AI from people, groups, or accounts that you don’t follow. Across all of Instagram, that’s about 40% of the content that you see. Since we launched Reels, AI recommendations have driven a more than 24% increase in time spent on Instagram.

Our AI work is also improving monetization. Reels monetization efficiency is up over 30% on Instagram and over 40% on Facebook quarter over quarter. Daily revenue from Advantage+ Shopping Campaigns is up 7x in the last six months.

Meta Advantage+ Shopping Campaigns, introduced in 2022, are automated shopping campaigns that use machine learning by dynamically serving your ads to audiences most likely to convert while better utilizing your advertising budget. The product eliminates manual ad creation steps and according to Meta, “automates up to 150 creative combinations at once.”

Why the Meta News Matters

This news matters for two reasons:

Meta’s growth amid a challenging economic climate is also good news for the entire digital advertising industry. It’s a sign that advertisers are willing to continue investing in their brands during economic uncertainty.

What Advertisers Should Do

  • Experiment with products such as Meta Advantage+ Shopping Campaigns to understand how AI is influencing the advertising landscape.
  • Be open to trying other new Meta ad opportunities depending on how you engage with your customers and prospects. For example, Mark Zuckerberg told investors on the April 26 earnings call that Meta is building out business messaging “as the next pillar of our business.” He noted that last quarter its click-to-message ads reached a $10 billion revenue run-rate. Since then, the number of businesses using our other business messaging service — paid messaging on WhatsApp — has grown by 40 percent quarter-over-quarter.

At True Interactive, we advocate for our clients that invest in Meta and other platforms. We will continue to monitor developments and adapt our ad strategies as needed.

Contact True Interactive

To succeed in the ever-changing world of online advertising, contact True Interactive. Read about some of our client work here.

Image source: Alexander Shatov on Unsplash

The Most Popular Social Media Apps for Teens

The Most Popular Social Media Apps for Teens

Social media

How are teens spending their time on social media these days? This is an important question for advertisers. That’s because teens spend money. They talk about their favorite brands with each other. Their preferences influence the popular cultural trends that advertisers need to understand in order to stay relevant. And if advertisers play their cards right, they can, in turn, influence teen behavior.

A new survey of Americans aged 13-17 from Pew Research Center reports some eye-opening findings about where and how teens are spending their time online. Key findings:

  • YouTube reigns. 95 percent of teens use YouTube, followed by TikTok, Instagram, Snapchat, and Facebook.

Social Media Apps

  • Only 32 percent use Facebook, compared to 71 percent in 2014-15. Not only is there a smaller share of teenage Facebook users than there was in 2014-15, teens who do use Facebook are also relatively less frequent users of the platform compared to the other platforms covered in this survey. Just 7 percent of teen Facebook users say they are on the site or app almost constantly (representing 2 percent of all teens). Still, about six-in-ten teen Facebook users (57 percent) visit the platform daily.

Leading Social Sites

  • Many teens are always on. 46 percent of teens say they’re on the internet “almost constantly,” up from 24 percent in 2014-2015.  Roughy one in five teens are almost constantly on YouTube, which leads all platforms.

Social Media Usage

  • The vast majority of teens have access to digital devices, such as smartphones (95 percent), desktop or laptop computers (90 percent) and gaming consoles (80 percent). Since 2014-15, there has been a 22 percentage point rise in the share of teens who report having access to a smartphone (95 percent now and 73 percent then). While teens’ access to smartphones has increased over roughly the past eight years, their access to other digital technologies, such as desktop or laptop computers or gaming consoles, has remained statistically unchanged.
  • More affluent teens are particularly likely to have access to all three devices. Fully 76 percent of teens that live in households that make at least $75,000 a year say they have or have access to a smartphone, a gaming console and a desktop or laptop computer, compared with smaller shares of teens from households that make less than $30,000 or teens from households making $30,000 to $74,999 a year who say they have access to all three (60 percent and 69 percent of teens, respectively).
  • U.S. teens living in households that make $75,000 or more annually are 12 points more likely to have access to gaming consoles and 15 points more likely to have access to a desktop or laptop computer than teens from households with incomes under $30,000.
  • Habits vary by demographic. Teen boys are more likely than teen girls to say they use YouTube, Twitch and Reddit. Teen girls are more likely than teen boys to use TikTok, Instagram and Snapchat. Higher shares of Black and Hispanic teens report using TikTok, Instagram, Twitter and WhatsApp compared with white teens.

Implications for Brands

  • Short-form content on TikTok is popular, but so is longer-form content on YouTube. Within just a few years, TikTok has famously rocketed to popularity by featuring videos that are about 30 seconds in length (often shorter). But YouTube’s popularity demonstrates that teens also like more in-depth video content, as Mashable points out. Longer-form content lends itself to content marketing, such as “how to” topics and podcasts, as noted here. On the other hand, shorter-form TikTok videos lend themselves to catchy, engaging micro-moments. To use a television analogy, TikTok is the place for 30-second spots, and YouTube for advertorials. As one influencer on LinkedIn wrote, “If digital media is hunger, TikTok feels like McDonalds, and YouTube feels like [insert fairly decent quality restaurant]. TikTok gives you dopamine hits. It’s addicting, you can become consumed by it, but it doesn’t mean you’re satisfied with the quality. Each swipe is, ‘okay, now what’s next.’ Before you know it, it’s an hour. YouTube, even with most videos watched being through recommendations, provides a deeper connection with the viewer. If you watch a video for >1min, you’re truly invested. This also means that creators will build more meaningful viewer connections through YouTube. All data shows that Gen Z appreciates the quality and connections of YouTube.”
  • Teens are not all the same. Variances exist by income level and demographic, as noted above. It’s important to understand the differences depending on your audience. In addition to the statistics cited above, we also noticed the popularity of gaming consoles among more affluent teens. And overall, Hispanic (47 percent) and Black teens (45 percent) are more likely than white teens (26 percent) to say they use at least one of the five most popular social media online platforms almost constantly. And teen girls are most likely to be social media loyal than teen boys: teen girls are more likely than teen boys to express it would be difficult to give up social media (58 percent versus 49 percent). All of these nuances influence any company that wants to launch a credible multi-cultural marketing strategy.
  • Facebook still matters, but Instagram does even more. Even though it’s less popular among teens than it was in 2014-15, it’s still more popular with teens than Twitter, Twitch, WhatsApp, Reddit, and Tumblr. As teens get older, they may very well spend more time on Facebook. And Facebook the platform still enjoys widespread usage among adults, as seen in other recent Center studies. However, it’s clear that among Meta’s brands, Instagram is more important for reaching teens, especially as Instagram morphs into a social selling site.

Contact True Interactive

We deliver results for clients across all ad formats, including social mediavideo, and mobile. To learn how we can help you, contact us.

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Why Google Is Integrating Search and Shopping

Why Google Is Integrating Search and Shopping

Google

Google is as big and influential as ever. But one of the downsides of being big and influential is that Google must fight battles on multiple fronts. We recently blogged about Google’s latest moves to combat the threat of TikTok. At Google’s recently conducted Marketing Live event, the company also took aim at Amazon.

Google versus Amazon

Google practically invented search. Google Search remains the engine that drives Google’s multi-billion dollar advertising business. When people use Google to search billions of times a day, advertisers want to appear alongside their search results. But, in recent years, Amazon has emerged as a powerful search engine all its own, especially for when people are searching for things to buy. Most product searches begin on Amazon, not Google. This is a problem for Google. When people search on Amazon, they search with intent to buy. And they’re not shopping as much on Google. Oh, and Amazon is building off that search activity to grow (impressively) the third largest online advertising business.

Google has been trying to change all that.

At Marketing Live, Google announced a number of developments intended to make Google a more attractive destination for shoppers. To wit:

  • Swipeable shopping ads in search. A new ad display pairs organic shopping results with shopping ads, which makes online shopping more visual. The new swipeable shopping feed is available for apparel brands via Search or Performance Max campaigns. These will be clearly labeled as ads and will be eligible to appear in dedicated ad slots throughout the page. This ad type is coming later in 2022.

A Google ad

  • Product feeds for a shoppable YouTube experience. Also at some point in 2022, advertisers will have the ability to connect product feeds to campaigns in order to create shoppable video ads on YouTube Shorts. With YouTube Shorts, people can quickly and easily create short videos of up to 15 seconds, similar to how TikTok and Instagram Reels are used. Shoppable video ads on Shorts helps Google capitalize on social shopping.
  • 3D models of products in Google Search: merchants will be able to have 3D models of their products appear directly on Google Search, allowing shoppers to easily see them in their spaces. In launching this feature, Google said that more than 90 percent of Americans currently use, or would consider using, augmented reality for shopping.
  • Promoting loyalty benefits. In the coming months, merchants will be able to promote their loyalty benefits to potential customers in the U.S. when they’re shopping across Google. Loyalty programs encourage repeat purchase. Google believes that integrating them into Google Ads will benefit retailers. According to Google, using Performance Max campaigns— along with a product feed — businesses will be able to drive more online loyalty sign-ups across YouTube, Display, Search, Discover, Gmail, and Maps.

A loyalty offer

These developments represent the latest wave of changes taking aim at Amazon. Another occurred in the third quarter of 2021 (more about that here). Google’s strategy is to capitalize on its reach. As popular as Amazon is, Google can rely on more touchpoints for advertisers to connect with consumers, ranging from YouTube to Gmail.

Google’s advertising business overall remains very strong although YouTube has been underperforming against analysts’ expectations. One of the reasons Google has grown so well is that the company does not rest on its laurels. The announcements from Marketing Live are evidence of that.

Contact True Interactive

All these developments are exciting, but It can be a challenge for advertisers to sort through the ever-evolving landscape. True Interactive works with businesses all the time to succeed with digital advertising, and that includes advertising in the Google universe. To succeed with online advertising, contact True Interactive. Read about some of our client work here.

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