Q1: Facebook Is Banking On Reels – And Reeling From Signal Loss

In touting Meta’s metaverse investment, Mark Zuckerberg told investors about a virtual restaurant that Wendy’s launched in Horizon Worlds earlier this year as part of a March Madness campaign.

Signal loss – and dealing with it – was a big theme during Meta’s first quarter earnings call on Wednesday.

Mark Zuckerberg referred to signal loss due to Apple’s privacy changes as a “meaningful headwind.”

Even so, Meta’s stock surged in after-hours trading – up nearly 18% from market close – on better-than-expected daily user growth and a slight year-over-year increase in ad revenue for the quarter, which was up 6% to $27 billion.

Meta ended the first quarter with 1.96 billion DAUs, just a smidge higher than the 1.95 billion analysts were expecting.

But hey, growth is growth, and it’s better than last quarter, when Meta reported its first-ever decline in DAUs plus a bleak forecast, including the prediction that privacy-related changes on iOS will likely have a roughly $10 billion overall impact on Meta’s business this year alone.

COO Sheryl Sandberg outlined what Meta is doing to mitigate signal loss, which includes three main priorities: investing in AI and machine learning to support Meta’s ad infrastructure, evolving its ad systems “to do more with less data” and doing a better job monetizing Reels (its answer to TikTok).

On the theme of doing more with less, Sandberg name-dropped the Conversions API, which allows ad buyers to send offline and web events directly from their server to Meta. Advertisers can then track people across devices after they click on an ad on Facebook or Instagram without having to rely on cookies or pixels in the browser.

Meta also recently introduced what it calls the Conversions API Gateway to make it easier and faster for small- and medium-sized businesses to use the solution.

Over the longer run, though, Meta is also working on developing privacy-enhancing technologies to “minimize the amount of personal information we process while still allowing us to show people relevant ads and measure performance,” said Sandberg, who pointed to collaboration with other industry folks on standards and specs to support “this next era of personalized advertising.”

For example, Meta is partnering with Mozilla on a proposal called Interoperable Private Attribution, which is currently being discussed at the World Wide Web Consortium.

The total number of ad impressions served across Meta’s services increased by 15% in Q1, driven mainly by engagement in Asia Pacific and other markets outside of North America. The average price per ad decreased by 8% due to the ongoing mix shift toward regions and inventory that monetizes at a lower rate, at least for now, like rest of world countries and Reels.

Sandberg said Meta is “optimistic” that Reels monetization will eventually ramp up, just like Stories did.

“We have great consumer engagement on Reels, we have fast growth and we have a playbook for taking that kind of consumer engagement and rolling out ads into the experience,” she said.

Sounds good. Just don’t make me visit the “Wendyverse” in the meantime.

In touting Meta’s metaverse investment, Zuckerberg told investors about a virtual restaurant that Wendy’s launched in Horizon Worlds earlier this year as part of a March Madness campaign. The campaign reached 52 million people, Zuck said, and helped Wendy’s raise brand awareness.

“While we’re focusing on the biggest opportunities and challenges of today,” he said, “I think it’s important to build the foundation for the next era of social technology as well.”

Which apparently involves hanging out at a virtual reality fast-food joint where your avatar can go behind the counter (for some reason) and also lob virtual bacon cheeseburgers from half court (or something like that).

The future’s gonna be great.

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