Meta’s ad revenue rebounded in Q2

Advertising revenue was up 12% across the company’s apps, or 13% on a constant currency basis. North American ad growth was 11%.

Daily active users across all apps were up 1.7% from the previous quarter and 6.6% year-over-year, with monthly active users up 1.8% from last quarter and 6.3% year-over-year (Meta’s “family of apps” includes Facebook, Instagram, Messenger and WhatsApp, and does not include the recently launched Twitter competitor Threads).

In Q2, the total number of ad impressions served across the company’s services increased by 34% year-over-year, though the average price per ad decreased by 16%. Susan Li, Meta’s CFO, attributed to pricing decline to the fact that there was strong impression growth from services and regions that monetized at lower rates.

Developing Reels has been a major priority for Meta, with the company saying it has been driving incremental engagement with three quarters of advertisers now using the format. However, the short-form video format does not monetize as highly as Feed and Story ads do, something the company expects to continue for “the foreseeable future,” though it is says it is “narrowing the gap”

Another factor the company says will help with pressure on ad pricing is improvements to targeting and measurement, with a focus on AI and on-site conversions. On the AI front, the company is using larger models to deploy performance improvements more quickly, along with further adoption of AI in its Advantage+ tool. The company is also seeing “strong results” with click-to-messaging ads, with revenue up 80% year-over-year in WhatsApp alone.

The other major development for Meta this quarter was the launch of Threads. Meta CEO Mark Zuckerberg said during the call with investors that while he was pleased with the progress on Threads so far, the company still had “a lot of work to do” and “basic functionality to build” before it reaches its full potential, a reality that was not yet a foregone conclusion.

“We’ve tried a bunch of standalone experiences over time, and in general, we haven’t had a lot of success with building kind of standalone apps,” he said. “So part of me wonders if this is just a kind of classic venture capital portfolio question, where you try a bunch of things and a bunch of them don’t work. And then every once in a while, one hits and is a much bigger success. It could be that.”

Zuckerberg added that developing that functionality and ensuring that users who have signed up continue to use Threads is the main priority. Monetizing the platform – which company executives have previously said would likely be through advertising – will come after that, which Zuckerberg said could be in “a few years” when it has reached “hundreds of millions” of regular users.

The ease of signing up through an Instagram account helped Threads reach over 44 million daily active users shortly after launch, but an analysis by market intelligence firm Sensor Tower estimated that number had dropped to roughly 13 million late last week.

Looking forward, Meta told investors that it expects to take a total of $4 billion in charges related to facilities consolidation, severance and other personnel costs as part of the “year of efficiency” the company has planned to reduce long-term expenses.