Meta's Ad Revenue Growth in Europe Slows After Rollout of Less Personalized Ads
Meta's advertising revenue in Europe grew 18% in the third quarter, versus 33% in the US and Canada. An analyst links the slowdown to the less personalized ads option offered to EU users.
Meta, the company behind Facebook and Instagram, is seeing its advertising revenue growth in Europe continue to slow. In the quarter ended in September, revenue in the region rose 18% year-on-year, while the US and Canada grew 33%, the company said on Wednesday in its quarterly results. An analyst attributes the gap to the option European users now have to choose ads that draw on less of their personal data.
What changed
Meta began offering the option, called Less Personalized Ads (LPA), to Instagram and Facebook users at the start of this year. European Union regulators had ruled that the company was breaching the Digital Markets Act by failing to offer consumers an equivalent service using less personal data, and fined it €200 million. The European Commission said that Meta's paid ad-free version, introduced in the EU in November 2023, did not meet that requirement.
Meta says LPA uses 90% less data: ads are shown based on what a person sees in a given session, plus data points such as age, location and gender. The company warned that this lowers returns for advertisers. It does not disclose how many users have chosen each option.
Impact on results
In the two preceding quarters, European ad growth fell from around 40% to 24%, while in the US and Canada it rose from 31% to 33%. The price advertisers are willing to pay per ad in Europe is growing more slowly than in the US and Canada. Chief financial officer Susan Li warned about the effect of LPA in July, but on Wednesday said the company has "a lot of runway" to improve ad efficiency. Dominic Ball, equity research director at Rothschild & Co Redburn, believes Meta can use AI to improve targeting even with fewer data signals.
Investors were also keen to discuss Muse, Meta's personal AI agent launched last month. Li said Muse users often ask for product recommendations and compare options, which will eventually let the company tap the advertising market with the product.
