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Meta's Advertising Revenue Rises As Online Retailers Increase Spending
Increased Spending and Adoption of Advantage+ Service
Meta Chief Financial Officer Susan Li announced during the company's earnings call that their advertising revenue has risen. This increase can be attributed in part to online retailers and Chinese companies increasing their spending on ads. Li also mentioned that online advertisers are adopting Meta's Advantage+ service. Analysts have noted that this service has helped to improve the effectiveness of Meta's ad system following the iOS privacy change. Li stated, "We're seeing this work translate into results for advertisers as conversion growth remains strong in Q2."
Questions About the Metaverse Investment
Despite the rebound in advertising revenue, analysts raised questions about the business rationale for Meta's investment in the metaverse. Additionally, concerns were expressed regarding the growing losses in Meta's Reality Labs unit. CEO Mark Zuckerberg has consistently emphasized the importance of owning a platform, which inspired the company's name change to Meta. Zuckerberg believes that owning a platform is necessary as Apple has iOS and Google has Android. Previously, Facebook was forced to abide by the rules of these platforms to distribute its apps. Zuckerberg sees the metaverse as a place where this dynamic can change. However, he acknowledges that this investment could take a decade to fully materialize and admits that he cannot guarantee its success.
Snap's AR Projects as a Long-Term Investment
Snap CEO Evan Spiegel presented Snap's AR projects as a long-term focused investment. He stated that these projects are an extension of their core platform rather than brand new initiatives. However, concerns were raised about Snap's focus on long-term projects instead of resolving immediate financial concerns. Analysts pointed out Snap's struggles in achieving profitability, especially considering the significant infrastructure spending on AI technology. James Cordwell, an analyst at Atlantic Equities, expressed skepticism about Snap's ability to succeed in these areas while delivering attractive returns to investors.
By addressing concerns and focusing on improving the effectiveness of their ad system, both Meta and Snap aim to secure their positions in the evolving landscape of online advertising and emerging technologies.
Conclusion: Implications for New Businesses
A Changing Landscape for Online Advertising
The rise in Meta's advertising revenue due to increased spending by online retailers presents new business opportunities in the online advertising space. As companies allocate more resources towards ad campaigns, there is a growing need for innovative solutions that can effectively reach the target audience and drive conversions. New businesses that can offer unique value propositions in this evolving landscape have the potential to capture a share of the growing advertising market.
The Significance of Meta's Metaverse Investment
Meta's investment in the metaverse raises important questions for new businesses considering their future strategies. While the metaverse is still in its early stages, it holds the potential to reshape how technology platforms operate. New businesses should carefully evaluate the evolving metaverse ecosystem and consider how they can proactively position themselves for success in this space. However, it is important to approach such endeavors with a realistic timeline, as Meta's CEO Mark Zuckerberg acknowledges that metaverse investments may take years to fully materialize.
Long-Term Focus for Snap's AR Projects
Snap's emphasis on long-term focused investments in AR projects brings into focus the importance of having a vision for emerging technologies. New businesses should consider the long-term potential of technologies like augmented reality and determine how they can integrate them into their core platforms. However, it is crucial to balance long-term projections with immediate financial concerns. Striving for profitability while investing in promising technologies will be a challenge but is vital for sustainable growth and investor confidence.
In conclusion, new businesses can leverage the increasing ad spending, carefully evaluate metaverse opportunities, and strategically invest in emerging technologies to position themselves for success in the dynamic landscape of online advertising and emerging technologies. Flexibility, innovation, and a focus on delivering value to advertisers will be crucial in capturing opportunities in this rapidly evolving market.
Article First Published at: https://www.cnbc.com/2023/07/26/facebook-ad-rebound-gives-meta-ceo-zuckerberg-freedom-to-go-big.html