- Meta's ad business is firing on all cylinders.
- That's despite rolling out major content moderation changes that could have spooked advertisers.
- Nope! Advertisers spent more than $41 billion with Meta in the first quarter.
Meta's content-moderation mishaps used to be the talk of Madison Avenue, when advertisers would lambast the tech giant over its so-called brand safety concerns.
But it's a new era, and advertisers are spending through it.
The company's first-quarter revenue, which is almost entirely derived from advertising, reached $42 billion in the quarter, ahead of analysts' expectations and up 16% year over year.
In January, Meta said it was replacing third-party fact-checkers with an X-inspired community notes system on Facebook, Instagram, and Threads. The company said it also planned to bring back more political content to users' timelines and was easing content moderation rules around topics like gender identity and immigration.
Advertisers and industry analysts told BI in January that while the changes made them feel uneasy, they'd likely continue to spend with Meta as long as it delivered the large audiences and ad performance they've come to expect from the platform.
Meta's bumper earnings, released Wednesday, confirmed the theory.
On the earnings call, Meta's execs credited the momentum of its AI-powered suite of ad tools, Advantage Plus. These tools automate many aspects of creating an ad campaign, from identifying the types of users to target to creating the images in the ads themselves.
Susan Lee, Meta's chief financial officer, said there had been some spending reductions from Asia-based e-commerce advertisers targeting US users, likely in anticipation of President Donald Trump ending the de minimis tax loophole on May 2. The exemption had allowed the likes of Temu and Shein — huge Meta advertisers — to ship orders under $800 from China without paying duty fees.
Meta said its ad business would remain strong, pushing aside fears of a tariff-induced advertising slowdown. It's expecting to post revenue of between $42.5 billion and $45.5 billion next quarter, ahead of the $44 billion analysts had anticipated.
Nick Manning, a former ad agency exec and founder of the marketing consultancy Encyclomedia International, told BI that major advertisers still have deep concerns about user safety and the type of content that gets published on major tech platforms.
Part of Meta's resilience, he said, is that it's less reliant on blue-chip companies and more on the millions of small and medium-sized businesses that advertise across its sites and apps. Indeed, the company said Wednesday that online commerce companies were the largest contributors to its ad sales growth in the quarter.
"Meta, for certain kinds of advertisers, still delivers the goods — and those advertisers aren't really bothered about user safety and brand safety," Manning said.
Meta said in January that it continued to be focused on ensuring brand safety and suitability by offering a range of tools for advertisers.
While it faces the same macroeconomic uncertainty as many other businesses, Meta is doing so from a position of strength.
"Advertisers will allocate more ad dollars to proven, sophisticated networks like Facebook and Instagram — all while pulling back spend on smaller social platforms — while they navigate uncertainty," said Minda Smiley, a senior analyst at the research firm EMARKETER, a BI sister company.
Just take a look at the contrasting fortunes of Snap. Its shares plummeted Tuesday after it reported first-quarter revenue and earnings that were in line with expectations but said it wouldn't share guidance for the second quarter, blaming the macroeconomic uncertainty.
