Social ads are down

Social media giants are adapting to a world where ad money is hard to come by. 

Driving the news: Meta’s share price surged almost 20% after better-than-expected revenue last quarter and Mark Zuckerberg’s commitment to efficiency left Wall Street happy to turn a blind eye to the company’s third quarter of sinking sales numbers.

• Meanwhile, Snap shares plummeted 10.29% on the news of missed revenue expectations (despite adding ~2 million paid users to its premium service). 

Both companies have been facing a dearth of ad dollars since Apple users were suddenly granted the ability to opt out of being tracked by their apps. When the economy slumped, ad-supported businesses went into crisis mode—spending less on workers (by firing them) and pulling back on projects that involve any kind of reality but the one we’re currently in. 

• Meta's management theme "is the ‘Year of Efficiency,’ and we’re focused on becoming a stronger and more nimble organization,” said Zuckerberg.
   
• Snap says it “has a path to adjusted ebitda break-even,” or breaking even before adjusting for interest, taxes, depreciation, and amortization. 

Meta is also cooking up ways to make up for lost revenue by aiming to run more cost-efficient data centres, the backbone of the company’s AI projects, while using (surprise) some of that AI, to improve recommendations and ad-targeting. 

• Meta said it has successfully used AI to increase the time users spend on Reels, which now accounts for 20% of the time users spend on the app.  

What’s next: Alphabet and Amazon will wrap up earnings from the major ad platforms today, which will solidify the general vibe in the industry. Our bet is social giants are going to try to grab your attention through other creative means.