Research firm WARC has said that Facebook is on track to earn $US100.1 billion ($AU157 billion) in advertising revenue this year.
In the US, Facebook has seen an 11.6 per cent lift in ad revenue this year. For the 2023 financial year, ad revenue across all of Meta’s platforms—including Instagram and Whatsapp—was $US134 billion ($AU210 billion).
If Facebook does hit $US100 billion in ad revenue, it will be only the second platform to do so, after Google.
By 2026, it expects that the Meta-owned platform will top $US112.8 billion or more than $AU175 billion at the current exchange rate.
The firm’s innovations in AI and commerce are drawing spenders to the platform, WARC said. Retailers of all sizes have boosted their spending on Facebook this year and WARC said retailers will spend $US20 billion ($AU31.4 billion) on the platform before the year is out.
In particular, Asian brands are spending more on advertising on Meta platforms, including Facebook, but are targeting users in other regions.
Meta has placed a lot of effort in developing AI tools to boost ad targeting and effectiveness in recent months. Its Advantage+ Shopping Campaigns, it said, have driven a 12 per cent boost in ROAS in two years.
Locally, P&O Cruises have used the platform to great success.
“We tested their ASC campaign alongside their existing BAU conversion activity. We found this to be really effective for them in achieving their business goals. ASC delivered a 28 per cent higher return on ad spend — which is huge. We also saw a 57 per cent lower cost per action,” Melissa Hudson a client solutions manager at Meta told B&T last year.
Meta’s tools are apparently picking up steam. WARC said that more than a million advertisers used at least one of its tools in the last month. Meta said that brands using Image Generation saw a 7 per cent increase in conversions.
More than three-quarters of adults use Facebook in the US. It ranks in the top three commercial media brands for reach in the UK and is the most influential platform for purchases in APAC, according to GWI.
Growth slowdown, regulatory hurdles
However, it isn’t all good news. Its growth in the US has slowed and its share of global social spending has more than halved over the past decade as new platforms have emerged. Plus, it is facing pressure from the Canadian and Australian governments to pay publishers for news content.
Locally, Facebook’s decision to pull back from news content has been met with ire from the government. The News Media Bargaining Code, introduced in 2021 by Scott Morrison’s government, required tech giants, like Meta and Google, to pay for the use of Australian news content on their platforms.
Initially, the code resulted in commercial agreements worth an estimated $70 million annually for Australian news publishers. However, earlier this year, Meta announced it would not renew these deals, leaving the future of such payments in question.
Yesterday, the government announced a new “News Bargaining Incentive” that will apply a charge to digital platforms, which will be refunded by an offset if they pay news companies directly instead. The government said that this will serve as an attempt to prevent companies from side-stepping the news media bargaining code.
“The previous government legislated the news media bargaining code, an effective tool to facilitate commercial agreements between news, businesses, and digital platforms. Today, we announce measures to strengthen that code,” said Assistant Treasure Stephen Jones.
“Following today’s announcement, I will be contacting Meta immediately to seek to restart the commercial relationship with News Corp Australia that it walked away from earlier this year,” said News Corp exec chairman Michael Miller.
A Meta spokesperson told B&T after the announcement: “We agree with the government that the current law is flawed and continue to have concerns about charging one industry to subsidise another. The proposal fails to account for the realities of how our platforms work, specifically that most people don’t come to our platforms for news content and that news publishers voluntarily choose to post content on our platforms because they receive value from doing so”.
What happens next remains to be seen. However, if the removal of news content causes a drop in readership, perhaps Facebook’s ad revenue figures into 2026 might have to be adjusted.
