New drip king, Mark Zuckerberg, strikes again.
Meta reported Q3 earnings today after hours and beat expectations with record revenue of $40.59 billion.
Unsurprisingly, advertising accounted for about 96% of the company’s total revenue. That business performed well, of course, with ad impressions across Meta’s family of apps, like Facebook and Instagram, jumping by 7% year-over-year, while the average price per ad rose by 11%.
Still, it’s notable that the growth rate in ad revenue in Q3 slowed from 23.52% in 2023 to 18.54% in 2024.
Meta’s stock dipped in after-hours trading, likely due to rising costs from the company’s substantial AI investments rather than issues with ad spend.
Why This Matters:
Meta’s slowing ad growth—though still quite good—could be natural compression for a business of its scale or a signal of growing competition.
Or maybe it’s competition-driven?
With positive ad earnings reported by platforms like Google, Reddit, and Snap, Meta faces increased competition in social (let’s not forget TikTok either). It’s also contending with new kids on the block like CTV and an ever-expanding field of retail media.
Experts React:
TechRadar’s Lance Ulanoff had an interesting take on the earnings, highlighting the need for Meta to do more to bring ads to its other experiences.
“Look at the revenue generated from Reality Labs as compared to the losses,” he says. “Advertising is still the key revenue driver (by a mile) so, obviously, it’s critical that Meta integrates ad opportunities into its AI and AR offerings.”
The chart in question:
Our Take:
Is there ever concern that the AI focus undercuts the ads focus?
Granted, Meta is constantly rolling out new AI-powered tech and toys for advertisers. They’re not mutually exclusive focus areas. But it does sometimes feel like there’s a lot of innovation going towards Meta AI while the Meta ads strategy is much more modest and less innovative.
