Meta Platforms (Facebook’s parent company) continues to post robust advertising revenue growth in 2024–2025, even as usage on its flagship social apps shows signs of stagnation or decline. In 2024, Meta’s ad revenue jumped to $164.5 billion (up from $134 billion in 2023)sproutsocial.com, and the trend carried into 2025 (Q1 2025 ad revenue grew 16% year-over-year to $41.4 billion)ppc.land. This record growth persists despite “declining” user engagement on Facebook and Instagram – for example, Mark Zuckerberg has admitted that time spent on Meta’s apps has fallen since TikTok’s risesocialmediatoday.com, and Facebook’s usage has plateaued (total hours on Facebook were flat year-over-year in mid-2024)sensortower.com. Notably, Facebook’s monthly active users even saw a first-ever slight decline from Q3 to Q4 2024thesocialshepherd.com. The following report analyzes why Meta’s ad business remains on a growth trajectory amid these engagement headwinds, focusing on six strategic factors:
- AI and machine learning advancements in Meta’s ad platform (better targeting & optimization)
- Shifts in advertiser behavior and strategy (performance marketing focus, brand safety, cross-platform campaigns)
- The role of Reels, Stories, and new ad formats in capturing attention and revenue
- Global user base expansion and the contribution of non-U.S. markets
- Advertiser responses to engagement trends – overlooking declines vs. adapting tactics
- Insights from executives and investor reports (e.g. earnings calls commentary)
Each section below delves into these areas, with data and primary-source commentary illustrating how Meta converts its massive user base and technological investments into advertising dollars – seemingly regardless of softening engagement on individual platforms.
1. AI and Machine Learning Enhancing Ad Targeting & Performance
Meta has increasingly leveraged artificial intelligence (AI) and machine learning to boost the effectiveness of its advertising platform. These innovations have improved ad targeting, delivery, and conversion, allowing Meta to extract more revenue per user and per ad, even if user activity growth is slow. Key points include:
- Advanced AI-driven targeting: Meta’s algorithms now do much of the work in finding the right audience for ads. Mark Zuckerberg noted that Meta’s ad system can often “better predict who would be interested” in an ad than advertisers can manuallys21.q4cdn.com. In practice, AI has made Meta’s ads better at finding the right audiences and optimizing spend, as the company integrates AI across ad productscreativestrategies.com. This translates to higher return on investment (ROI) for advertisers, encouraging them to keep or increase ad budgets despite any user engagement dips.
- Algorithmic ad optimization: New machine learning models have significantly improved ad performance. In Q1 2025, Meta introduced a Generative Ads Ranking model (GEM) for ads. According to CFO Susan Li, this model uses a novel architecture that is “twice as efficient at improving ad performance” for a given amount of data/computeppc.land. Early results were impressive – testing GEM on Facebook Reels ads showed up to a 5% increase in ad conversionsppc.land. By improving conversion rates and outcomes, such AI optimizations boost the value of each ad impression. (Notably, in Q1 2025 ad impressions grew only 5% while the average price per ad rose 10%, indicating Meta is monetizing better via targeting/optimization rather than sheer volumeppc.land.)
- AI-boosted user engagement: Meta is also using AI to enhance the user experience, which indirectly supports the ad business. More powerful recommendation algorithms surface content that keeps users watching, scrolling, and returning. Internally, Meta reported that improvements to its AI-driven feed and video recommendations led to roughly an 8% lift in time spent on Facebook and Instagrams21.q4cdn.com. Zuckerberg highlighted that “advances in AI continue to improve the quality of recommendations and drive engagement” – for instance, a new unified video recommendation system increased engagement on Facebook Reels substantiallys21.q4cdn.com. By regaining some of the user attention (even as TikTok competes for it), Meta ensures a healthy supply of eyeballs for advertisers. In short, AI helps Meta squeeze more engagement and ad clicks out of a given user base.
- Automation of ad creation and delivery: Meta’s vision is that AI will eventually handle many aspects of advertising automatically. Zuckerberg has described a future where a business can simply specify its goal and budget, and Meta’s AI will “just do the rest”ppc.land – finding the audience, optimizing bidding, and even generating creative. While not fully realized yet, steps in this direction (like Advantage+ automated campaigns) are already attracting advertisers. This AI-driven automation makes advertising on Meta easy and efficient for marketers, which keeps demand high. Zuckerberg framed this as “redefining what advertising is into an AI agent that delivers measurable business results at scale”ppc.land – a strategy to capture more advertising dollars by outperforming traditional manual campaign setups.
Meta’s heavy investment in AI (it significantly raised capital expenditure guidance to build AI data centersreuters.com) underpins these improvements. In essence, better AI is allowing Meta to monetize each user more effectively, offsetting slower user growth or engagement. Advertisers are willing to spend more when the targeting and outcomes improve, which has propped up Meta’s revenue growth.
2. Shifts in Advertiser Behavior and Strategy
Changes in how advertisers allocate budgets and plan campaigns have also benefited Meta. In 2024–25, marketers are prioritizing platforms that deliver strong performance and broad reach, and Meta fits the bill – engagement concerns notwithstanding. Several strategic shifts on the advertiser side explain the continued revenue influx:
- Focus on performance marketing and ROI: Advertisers have increasingly gravitated toward direct-response and performance-based advertising, especially in uncertain economic times. Meta’s platforms (Facebook/Instagram) are highly developed for performance marketing – offering detailed targeting, conversion tracking, and sales-oriented ad formats. This makes Meta a top destination for advertisers who need to show concrete results (app installs, e-commerce sales, etc.). Indeed, even as overall marketing budgets tightened in 2024, advertisers saw Meta as a “reliable go-to” channel to drive outcomesreuters.com. The sheer scale of Meta’s user base (3+ billion daily actives) gives advertisers confidence they can find enough customers, even if individual user sessions might be shorter or people are more scattered across apps. In short, brands keep spending on Meta because it reliably delivers ROI, which matters more to them than time-spent stats.
- Advertisers largely undeterred by engagement dips: Notably, there has been little evidence of advertisers pulling back solely due to lower engagement metrics. Industry insiders suggest that even when Meta makes controversial changes or faces usage stagnation, most advertisers don’t make major spending shiftsbusinessinsider.com. For example, when Meta announced looser content moderation (a potential brand safety concern), ad buyers expressed worry but “generally didn’t expect the changes to hurt Meta’s [ad] business”businessinsider.com. The same appears true for engagement declines – advertisers are aware of the trends but are not fleeing. Meta’s advertising reach is too valuable, and no comparable alternative can yet match its combination of scale and ad efficacy. Essentially, advertisers are willing to “ride out” any dips in user engagement as long as their ads continue performing well on the platform.
- Brand safety improvements and stability: Meta has taken steps to reassure advertisers on issues like brand safety, which helps keep big brand budgets in the ecosystem. In late 2024, Meta introduced new brand safety tools – for instance, giving advertisers control to mute comments on their ads and block ads from appearing alongside certain contentemarketer.com. These measures address advertisers’ concerns about ad adjacency to toxic content, which had led to boycotts in the past. By 2025, many marketers seem to have accepted Meta’s safeguards; there is a sense that “brand safety is a myth” and that leaving Meta would hurt reach more than it helps safetydigiday.com. The outcome is that advertisers continue spending on Meta instead of shifting budgets elsewhere, further fueling revenue growth.
- Cross-platform campaign integration: Advertisers today approach Meta’s Family of Apps as an integrated marketing channel. Rather than buying Facebook or Instagram in isolation, they use Meta’s unified Ads Manager to run campaigns across Facebook, Instagram, Messenger, and the Audience Network simultaneously for maximum reach. Meta has made this extremely simple – adding Instagram or Reels placements to a Facebook campaign is “as easy as checking a box,” according to analystsreuters.com. This ease of cross-platform advertising means marketers can follow user attention within Meta’s ecosystem without friction. For example, as Instagram Reels gained popularity, advertisers quickly expanded campaigns into Reels ads. Meta’s CFO noted that over 75% of Meta’s advertisers were running ads in Reels by mid-2023reuters.com – reflecting rapid adoption. This cross-app flexibility lets advertisers maintain effective reach even if engagement shifts from one Meta app/surface to another. In effect, advertisers are not abandoning Meta due to engagement changes – they’re adapting within Meta (e.g. shifting spend from Feed to Reels or Stories) while keeping overall budgets in the Meta family.
- Reliance on Meta amid industry shifts: Broader industry trends (like Apple’s privacy changes limiting third-party tracking and the deprecation of cookies) have paradoxically made Meta more important for advertisers. With less visibility into open web ads, many brands turned back to “walled gardens” like Meta that have rich first-party data and AI to optimize targeting. Additionally, during economic volatility or events (e.g. in 2024 some advertisers cut spend on experimental channels), those budgets often flowed to the known performers – with Meta benefitingreuters.com. In summary, advertiser strategy in 2024–25 has been to consolidate around platforms that drive results at scale, and Meta’s dual focus on performance and brand accommodations keeps it at the top of that list.
3. The Role of Reels, Stories, and Emerging Ad Formats
Meta’s introduction and monetization of new content formats – particularly Reels (short-form video) and Stories (ephemeral photo/video posts) – has been crucial in sustaining ad revenue growth. These formats help capture user engagement that might otherwise be lost (e.g. to TikTok or Snapchat) and create new inventory for ads. Key observations:
- Reels driving video engagement: Reels (vertical short videos on Facebook and Instagram, akin to TikTok) have exploded in popularity. By mid-2024, Meta’s data showed that on Facebook, 30% of a user’s time was spent on Reels – double the share from January 2024sensortower.com. Instagram has effectively become a “video-first” platform, with users now spending about two-thirds of their time on Instagram watching videos (Reels or longer form)emarketer.com. This shift addresses the TikTok threat by keeping users engaged with Meta’s own short-form videos. While Reels initially launched in 2020 to skepticism, by 2023 Meta was touting huge usage: the number of Reels plays across FB and IG reached 200 billion per day (up from 140B/day in late 2022)reuters.com. This surge in Reels engagement provides Meta a fresh avenue to show ads, compensating for any decline in scrolling the news feed.
- Monetization of Reels (and Stories): Meta has rapidly ramped up advertising in these new formats. Zuckerberg revealed that by mid-2023, Reels reached a $10 billion annual revenue run rate – a steep climb from about $3B in late 2022 and just $1B in mid-2022reuters.com. In other words, Reels went from a zero-revenue format to a significant chunk of Meta’s business in ~18 months, nearly catching up to TikTok’s ~$10B in ad revenuereuters.com. Stories (the 24-hour posts copied from Snapchat) have also become a mature revenue driver: by 2024, Instagram Stories contributed roughly 25% of Instagram’s ad revenueemarketer.com. (Feed ads were ~54% and Reels/Explore ~9.6%, with Reels share rising fastemarketer.com.) The success of Stories over the past few years proved Meta could introduce a new format and monetize it heavily; now Reels is on the same path. These emerging formats expand the total ad inventory and help offset any revenue loss from users spending less time in feeds. Even if a user’s feed scrolling dropped, the ads they now see in Reels or Stories can make up the difference.
- Advertiser adoption of new formats: A major factor in monetization success is that advertisers have been quick to embrace Reels and Stories. Meta’s integration of formats means advertisers don’t need a whole new strategy – they can use existing assets or slightly tweaked creatives to run ads in Reels and Stories. According to Meta, more than three-quarters of its advertisers were placing ads on Reels by 2023reuters.com. Analysts noted “it’s as easy as checking a box” in the ad interface to extend a campaign to Reelsreuters.com. This high adoption rate shows that advertisers followed the user shift into short-form video instead of pulling spending. Zuckerberg had predicted this behavior: when Reels usage started cannibalizing some feed time, he told investors he expected advertisers to “embrace the format over time, as they had with…Feed to Stories” transitionsreuters.com. That prediction came true – advertisers adapted by spreading budgets across Feed, Stories and Reels, ensuring that even if one surface (like traditional feed) saw lower engagement, the overall campaign could still reach users elsewhere in Meta’s apps. This adaptability has been key to Meta retaining ad dollars that might have otherwise left for TikTok or other platforms.
- Emerging platforms and ad opportunities: Beyond Reels and Stories, Meta is also exploring entirely new platforms and ad formats – which, while nascent, represent future growth potential. For example, Meta launched Threads (a Twitter-like text social app) in mid-2023 and quickly amassed 275 million users by Q4 2024jonloomer.com. As of late 2024 Threads had no significant ads and Meta does not expect Threads to contribute meaningful revenue until it scales further in 2025jonloomer.com. However, when the time is right, Threads could open another revenue stream (eMarketer predicts Threads ads will roll out cautiously, likely contributing modestly by late 2025)emarketer.com. Similarly, WhatsApp and Messenger are being monetized via “click-to-message” ads and business messaging. These allow advertisers to pay to start conversations with users in chat apps. While small today, the segment is growing fast – the WhatsApp Business Platform’s revenue grew 55% YoY to $519 million in Q4 2024fifthperson.com (though that sits outside “advertising” in Meta’s reporting). The key takeaway is that Meta is continually adding new ad real estate – whether within its main apps (Reels/Stories/Explore) or in new apps (Threads) or services (messaging). This pipeline of formats ensures that if user engagement shifts, Meta has somewhere to monetize it. Reels and Stories have proven this strategy effective, capturing user time that might have been lost and converting it into revenue.
In summary, Meta’s agility in product innovation has kept its platforms sticky to users and attractive to advertisers. Reels and Stories helped Meta retain users (especially younger ones) and gave advertisers new ways to reach them. The rapid monetization of these formats is a critical reason ad revenue rose in 2024 even though Facebook usage was flatsensortower.com – Meta simply monetized different behaviors (short videos, ephemeral sharing) instead of the old news feed scrolling.
4. Global User Base Expansion and Non-U.S. Markets’ Impact
Meta’s advertising growth is also fueled by its vast international user base, which continues to expand. While Facebook and Instagram may be saturating in North America or seeing engagement declines in some cohorts, the global scale and growth in emerging markets provide a counterbalance. Key points on global dynamics:
- Sheer user growth overseas: Meta’s family of apps is still adding users worldwide, especially in Asia-Pacific, Africa, and other emerging regions. As of early 2025, 3.43 billion people use at least one Meta app each day (Family DAP), an increase of 6% year-over-yearreuters.com. Monthly active users on Facebook hit ~3.08 billion in 2024thesocialshepherd.com (Instagram and WhatsApp add even more on top). Most of the new users are outside the U.S. Even if an average user in, say, India spends less time or sees fewer ads than an average American user, the volume of new users helps drive up total ad impressions. In Q4 2024, for example, ad impressions delivered across Meta’s apps rose 6% overallfifthperson.com – primarily driven by usage growth in Asia-Pacific (APAC). More people coming online and using Meta in populous countries like India, Indonesia, and Brazil directly translates into more ad views globally.
- High growth in ad revenue from non-U.S. regions: Advertisers in emerging markets are also ramping up spending on Meta as those digital ad ecosystems mature. Meta’s financials show faster ad revenue growth internationally than in its home market. In Q2 2024, Meta’s worldwide ad revenue was up 22% YoY, but U.S. & Canada ad revenue was up a lesser 17%sensortower.com – implying regions like APAC, Latin America, and Europe grew well above 20%. Indeed, in some quarters Europe and “Rest of World” (Latin America, Africa, etc.) saw 30%+ year-over-year ad revenue growthsensortower.com as advertisers in those regions increased their Meta budgets. By contrast, North America’s ad revenue growth was in the teens. This means an increasing share of Meta’s incremental revenue is coming from outside the U.S. For instance, Asia-Pacific ad demand (especially from e-commerce and gaming advertisers) was very strong in 2024, helping boost pricing and fill more impressionss21.q4cdn.com. Meta’s global diversification has thus mitigated the impact of any stagnation in U.S. user engagement – even if Facebook usage is flat in the U.S., the company can still grow ad sales by expanding in markets where Facebook/Instagram usage is still rising.
- Majority of revenue now international: Meta’s monetization of its international user base has improved over time, to the point that the majority of ad revenue now comes from outside the U.S.. In 2024, roughly $72 billion of Meta’s ad revenue (about 44%) was generated in the U.S. & Canada, while the remaining ~56% came from other regionsbusinessofapps.com. (Notably, North America accounts for only ~9% of Meta’s usersbusinessofapps.com, but yields a high ARPU; still, non-North America collectively contributes more dollars now.) This global revenue mix means Meta’s growth is less beholden to any single region’s engagement levels. Even as North American usage is mature, there are billions of users in APAC and other areas where advertising on Meta is still gaining traction. In markets like India, where Facebook’s user base grew ~16% from 2022 to 2024 (to over 400 million MAUs)statista.com, Meta is just beginning to tap into the ad budgets of local businesses and global brands targeting those users. Increasing internet penetration and digital ad spend in emerging economies funnel directly into Meta’s ad revenue.
- Lower ARPU offset by volume and growth: It’s true that average revenue per user (ARPU) is lower in non-U.S. markets, and engagement per user may also be less in developing regions. However, the gap is narrowing. As smartphones become ubiquitous and e-commerce grows globally, advertisers from all industries (CPG, fintech, entertainment, etc.) are pouring money into Meta to reach these new online consumers. Meta’s ability to localize ads (supporting local languages, local businesses advertising on WhatsApp, etc.) has improved, which helps monetize international users more effectively. The strategy of focusing on “monetizing engagement over time”warc.com pays off here – Meta often grows user engagement first in a market (sometimes with years of user growth with minimal ads), then gradually increases ad load or ARPU. We saw this with Instagram: between 2015 and 2025, Instagram’s U.S. user base grew 142%, but its ad revenue grew many times that, as ARPU climbed to surpass Facebook’s by 2019emarketer.com. A similar dynamic is occurring in international markets now. Thus, even if engagement per user is not skyrocketing, Meta is better at monetizing each user each year – especially outside the U.S. – leading to overall revenue gains.
In summary, Meta’s global expansion ensures that “flat” engagement in one region doesn’t translate to flat revenue. The company’s reach into every continent provides a growth engine: new users and new advertisers coming on board worldwide. Non-U.S. markets both expand the user base and increasingly contribute to ad revenue growth, offsetting any engagement fatigue in core Western markets.
5. Advertisers: Overlooking Engagement Trends or Adapting to Them?
A critical part of this puzzle is how advertisers react to reported engagement declines. Are they ignoring these warning signs, or actively adjusting their strategies? The evidence suggests advertisers are aware of engagement shifts but remain confident in Meta – largely because they can adapt their advertising tactics within the platform to still achieve results. Key insights:
- Outcomes matter more than engagement metrics: Advertisers ultimately care about their own marketing objectives (sales leads, app installs, brand lift) more than they do about Facebook’s internal engagement stats. As long as campaigns on Meta continue to deliver strong outcomes, advertisers will keep spending, even if time spent per user is down. Meta’s Q1 2025 results underscore this – ad revenue rose 16% YoYcreativestrategies.com at a time when some engagement indicators (e.g. Facebook friend content consumption) were down. This implies advertisers were still getting value. Analysts have noted that Meta’s unmatched scale (3.4B daily users) makes it a “go-to ad venue” for marketerscreativestrategies.com. From an advertiser’s perspective, a modest decline in average user session length doesn’t outweigh the fact that almost everyone is still on Facebook/Instagram. Advertisers appear to be overlooking soft engagement trends because Meta’s platforms remain one of the only ways to reach billions of people with sophisticated targeting. In short, so long as Meta ads yield a positive ROI, advertisers aren’t overly concerned with whether users spent 5% less time on the app this year.
- Adaptation within Meta’s ecosystem: Advertisers have proven very nimble in adapting to how users use Meta, rather than abandoning it. When engagement shifts, they shift their ad placements accordingly. For example, as users devote more attention to Reels videos and less to the news feed, advertisers have expanded into Reels ads (as discussed, 3 in 4 advertisers now run Reels ads)reuters.com. This flexibility means advertisers can follow the user journey within Meta’s walled garden. If engagement declines in one format, they increase focus on another. Zuckerberg gave the example that when Stories first gained popularity, advertisers eventually moved budget there from feed; the same pattern is happening with Reelsreuters.com. The ability to serve ads across multiple surfaces (Feed, Stories, Reels, Messenger, etc.) insulates advertisers from platform changes – they don’t have to leave Meta to find the eyeballs, they just redistribute how they buy inside Meta. Thus, advertisers are effectively mitigating the engagement issue by aligning their campaigns with whatever part of Facebook/Instagram is most engaging at the moment. This adaptability has been critical in Meta retaining ad dollars. Rather than panic about TikTok stealing user time, advertisers waited to see Meta offer a competing format (Reels) and then swiftly adopted it, thereby neutralizing the risk of lost reach.
- Selective attention to engagement metrics: It’s also worth noting that “user engagement” is multifaceted, and not all declines are relevant to advertisers. For instance, one reported trend is that people spend less time on content from friends and more on algorithmic content. From a brand’s perspective, that shift might even be positive (users paying more attention to public content where ads live, versus private friend updates). In fact, Meta has stopped emphasizing time-spent metrics publicly, and advertisers mostly focus on ad performance metrics. Mark Zuckerberg’s acknowledgment that Meta’s share of social media time has declined with TikTok’s risesocialmediatoday.com was a notable public admission, but advertisers seem to have taken it in stride. Part of the reason is that no single competitor has significantly eroded Meta’s advertising efficacy yet. TikTok, for example, is growing but still smaller in ads (estimated ~$13B revenue in 2023 vs. Meta’s $117B in just the first nine months of 2024). Advertisers typically trial new platforms but often keep the bulk of budgets on proven ones. So while engagement trends are monitored, advertisers appear to be betting that Meta’s innovations (AI, Reels, etc.) will keep users sufficiently engaged. Many advertisers also discount some engagement stats as short-term fluctuations or demographic specifics that don’t affect their particular campaigns.
- Confidence in Meta’s countermeasures: Advertisers take cues from Meta’s leadership on how the company is addressing engagement challenges. When Zuckerberg outlines plans to improve content discovery with AI or sees Reels as key to winning back young users, advertisers gain confidence that Meta is proactively working to increase engagement again. The fact that Meta’s leadership prioritized “increasing user engagement… before turning to monetization” of new experiencesreuters.com shows a long-term commitment to keeping the user base active. Advertisers are thus willing to stick with Meta, trusting that these efforts (e.g. the pivot to video, AI chatbots to spur interaction, etc.) will bear fruit. Furthermore, the lack of a significant user exodus – Facebook is “dying” slower than predicted, still over 3 billion users – reassures advertisers that they won’t find comparable scale elsewhere. As one industry expert put it, Meta’s ad business has “proven reliability” even in tough timesreuters.com. This reliability makes advertisers tolerant of engagement dips. They assume (so far correctly) that Meta will adapt and user activity will stabilize or shift into new forms that Meta can monetize – and thus they don’t pull their budgets at the first sign of trouble.
In summary, advertisers are neither blind to engagement trends nor alarmist – they are pragmatic. They continue to allocate large budgets to Meta because it remains essential for reaching audiences and driving results. If anything, engagement declines have prompted advertisers to become more agile in how they use Meta (embracing Reels, leveraging cross-platform ads, etc.), rather than prompting them to abandon ship. As long as Meta provides the tools to reach users effectively (which it has, via AI and new formats), advertisers appear content to maintain or even increase their spending, effectively overlooking the engagement noise in favor of the signal: marketing performance.
6. Executive and Investor Commentary
Meta’s leadership and financial reports have provided insight into the strategy behind sustaining ad revenue growth and how the company communicates about engagement. Comments from Meta executives and industry analysts on earnings calls reveal the deliberate approach Meta is taking:
- Zuckerberg on AI’s role in ads: Mark Zuckerberg has repeatedly emphasized that AI is the key driver of Meta’s advertising momentum. In late 2024, he noted on an earnings call that advances in AI recommendation models had “increased engagement on Facebook Reels” significantlys21.q4cdn.com, underscoring that boosting engagement is foundational. He also explained that on the advertising side, “our ads system [can] predict who would be interested [in an ad] better than the advertisers could themselves” thanks to AIs21.q4cdn.com. This was a candid way to assure investors that Meta’s AI targeting makes the platform extremely effective for marketers. Zuckerberg has even described Meta’s evolving ad strategy as turning advertising into an AI-driven agent for business outcomes. “If we deliver on this vision…AI will make advertising a meaningfully larger share of global GDP than it is today,” he told investorsppc.land – a bold statement reflecting confidence that AI will unlock more advertiser spend. Such commentary signals that Meta is doubling down on AI to both keep users engaged and keep ads relevant, which in turn gives investors confidence that the company can navigate engagement headwinds (with AI as the solution).
- CFO on engagement vs. monetization strategy: Meta’s Chief Financial Officer, Susan Li, has explicitly broken down the formula for revenue growth in terms of user engagement and monetization efficiency. On an earnings call, she highlighted two primary factors driving Meta’s revenue: “our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time.”warc.com She noted that AI is crucial to both – it helps make the apps more engaging and also powers better ad delivery. This reflects Meta’s classic playbook: first grow or maintain engagement (e.g. get people watching Reels), then monetize that engagement more and more effectively (e.g. improve Reels ads yield). Li has frequently updated investors on the monetization gap between new formats and old ones. For example, she acknowledged that Reels was still less monetized than Feed/Stories, but closing the gap was a priorityreuters.com. By Q4 2024, she reported ad prices rising 14% on average, partly due to improved ad performance, even as impressions grew 6%fifthperson.com. That indicates Meta was successfully monetizing existing engagement better – a point she tied to investments in AI and infrastructure. Investor takeaway: Meta’s finance chief is effectively saying “we know engagement isn’t growing like before, but we are making more money per unit of engagement”, and that’s how revenue keeps rising. This clear messaging has kept Wall Street on board with Meta’s strategy.
- Analysts on advertiser demand and Meta’s position: Industry analysts and observers on earnings calls have provided context that supports why Meta’s ad revenue can grow amid engagement questions. For example, one eMarketer principal analyst noted in December 2024, “As other social platforms flood their services with more ad placements, Meta is focused on making its ads more efficient, primarily through AI.”emarketer.com Reels was cited as a major driver of Instagram’s growth in that comment. This suggests that outsiders see Meta taking a quality-over-quantity approach with ads, which tends to win long-term advertiser dollars. Another analyst remarked that Meta’s huge user base makes it uniquely resilient: during a period when marketers were wary of the economy, Meta’s scale and reliability meant it “rode strong advertising performance” to beat revenue expectationscreativestrategies.com. Advertisers consolidating spend to the biggest platforms played to Meta’s advantage. Additionally, Reuters reported an analyst observation that Meta’s “proven advertising reliability means it stands to gain” even when companies tighten ad budgets elsewherereuters.com. These external commentaries echo the themes that Meta’s executives push – namely, that Meta remains a must-buy for advertisers, and its focus on AI-driven efficiency is yielding tangible revenue benefits.
- Meta’s guidance and engagement commentary: In investor communications, Meta’s management has also addressed the engagement concern directly at times, aiming to set expectations. Zuckerberg has stated that for newer initiatives (like the AI chatbot features or potentially Threads), Meta will prioritize user growth and engagement “for the next year” before ramping up monetizationreuters.com. This kind of statement is meant to reassure investors that the company is mindful of not squeezing the golden goose too soon. It also implies Meta believes it can increase engagement through product improvements given some time, and that monetization will follow naturally. Such commentary is essentially saying: short-term, we focus on keeping users interested; long-term, we’ll make money off those users. This patient approach was validated by past successes (e.g., Instagram Stories was unmonetized at launch, then became a major ad vehicle). Investors, hearing this, can tolerate flat engagement in the immediate term if they trust Meta’s plan to reignite engagement. And indeed, by late 2024, Meta was reporting some turnaround in engagement: new AI recommendations and video features were boosting time spent on Instagram and Facebook againcreativestrategies.com. That narrative – “we fixed the feed to show more Reels and it’s increasing time spent” – has been emphasized to alleviate concern that TikTok had permanently stolen growth. In essence, Meta uses its earnings calls not just to report numbers but to convince stakeholders that engagement is under control or will be won back, thanks to strategic product moves, and that meanwhile ad business is thriving.
In conclusion, executive and investor commentary underline a coherent picture: Meta acknowledges engagement challenges but presents a strategy (largely AI-powered and format innovation) to overcome them, and consistently highlights the ongoing strength of the ad business. This transparency and strategy have kept investors optimistic. Meta’s stock performance rebounded in 2024 as the company demonstrated it could navigate Apple’s privacy changes, cut costs, and still grow revenue double-digits with AI and Reels at the forefrontcreativestrategies.comfifthperson.com. The confidence from the C-suite, backed by real financial results, illustrates why Meta’s advertising revenue not only continues to grow in 2024–25 but accelerates, seemingly defying the headwinds of user engagement declines on its core social platforms.
Conclusion:Meta’s ability to grow advertising revenue in 2024–2025, despite flattening engagement on Facebook/Instagram, boils down to strategic execution on multiple fronts. Advanced AI and machine learning are extracting more value from each user and each ad (better targeting, higher conversion rates), which keeps advertisers spending. Advertisers themselves have shifted toward a performance-driven mindset and have shown loyalty to Meta – adapting their campaigns across Facebook and Instagram’s evolving formats rather than cutting budgets. Meanwhile, new engagement surfaces like Reels and Stories have given users fresh ways to spend time on Meta’s apps, and Meta has monetized these vigorously to offset any decline in legacy feeds. The company’s expansive global user base ensures that growth continues in regions where engagement is still climbing, balancing out saturation in the U.S. Ultimately, advertisers appear to be “looking past” engagement dips, trusting Meta’s massive reach and AI-enhanced ad platform to deliver results. Meta’s leadership has reinforced this trust by openly addressing challenges and investing heavily in solutions (AI, product innovation). All of these factors combine into a robust strategic story: Meta has effectively decoupled revenue growth from the need for ever-increasing user engagement by improving the quality of ad delivery and expanding what “engagement” means (to new formats and markets). This strategy has so far proven successful, as evidenced by Meta’s strong 2024 financials, and provides a template for how the company can continue to thrive even in a world where the Facebook/Instagram of old are no longer the shiny new thing
