Meta has managed to defy gravity yet again.
On Wednesday, at the same time that ecommerce and DTC advertisers remained on tenterhooks after a major bug wreaked overspending havoc in Meta’s advertising platform over the weekend, the company’s stock soared by more than 11% during after-hours trading based on its first quarter results.
Meta’s total revenue for Q1 was $28.6 billion, up 3% year over year, the vast majority of which ($28.1 billion!) came from advertising.
Reely growing
Even newer formats, like ads in Reels, are starting to generate more revenue.
Although Reels still monetizes at a lower rate than in-feed ads, Meta has been investing in AI to improve Reels monetization. CFO Susan Li said Meta expects that its short-form video product will be “revenue neutral” by as soon as the end of this year.
According to Meta, AI has helped boost monetization efficiency on Instagram by 30% and by more than 40% on Facebook quarter over quarter.
Reels engagement is also on the rise.
Since launching Reels on Instagram in 2020, there’s been a more than 24% increase in time spent with the format thanks to AI-based rankings and recommendations that push people towards Reels content.
More than 20% of the content within Facebook and Instagram feeds is now being recommended by an AI and sourced from people, groups and/or accounts that users don’t follow. (Twitter is doing something similar.)
And sticking with the artificial intelligence theme, daily revenue from Advantage+ shopping campaigns, Meta’s AI-powered ad tool, is up by 7x over the past six months.
All in on AI
Meta’s investments in AI come amid ongoing layoffs.
During two rounds of layoffs in November and then March, Meta cut roughly 21,000 jobs, with plans for a third wave of layoffs and restructuring coming in May. Employee morale has reportedly plummeted (and the free perks are being pared back).
But the goal of all this “efficiency work,” as Zuckerberg referred to it, is to help Meta build better products faster and improve its financial performance.
“After this is done, I think we’re going to have a much more stable environment for our employees,” he told investors.
For the rest of this year, Zuckerberg said he expects “to focus on improving our distributed work model, delivering AI tools to improve productivity and removing unnecessary processes across the company.”
He also predicted that interest in AI-based customer support will grow “once we nail that experience.”
In the meantime, though, many advertisers are experiencing less-than-stellar customer service as automation replaces the human touch.
On Sunday, a glitch in Meta’s automated systems caused advertisers to collectively overspend their budgets by tens of millions of dollars between 2 a.m. and 8 a.m. Eastern across Facebook and the Audience Network.
Multiple advertisers told AdExchanger it’s been difficult to get ahold of account reps for information about the errors and that, in many cases, the only option they’re left with is to communicate with customer service chatbots.
