Meta Platforms continues to show strength in its advertising business, despite navigating a volatile global trade environment and facing growing regulatory pressure.
Meta’s Q1 2025 revenue grew by 16% year-over-year, reaching $42.31 billion, bolstered by an increase in ad impressions (5%) and a rise in average price-per-ad (10%). The company’s growing user base also helped, with daily active people (DAP) increasing by 6%, reaching 3.43 billion by March 2025. However, shifts in trade policy, particularly with Asia-based e-commerce firms scaling back ad spending in the U.S., impacted revenue growth in some sectors.
Online commerce remains the largest driver of Meta’s ad revenue growth, particularly in the Asia-Pacific region. Despite some challenges, such as the reduction in ad spend from Asia-based firms due to trade battles, Meta’s advertising solutions, including the newly launched Generative Ads Recommendation Model, have seen success. This tool has led to a 5% increase in ad conversions on Reels and is now being rolled out across other platforms.
In addition to improving its ad performance, Meta has been focusing heavily on AI, announcing advancements in AI-powered tools like Smart Bidding and incremental attribution. The company believes these tools will help advertisers achieve better results, with CEO Mark Zuckerberg stating, “Our goal is to make it so that any business can basically tell us what objective they’re trying to achieve, and then we just do the rest.”
Despite its strong ad performance, Meta faces significant regulatory challenges, especially in the European Union. The company’s ad-free subscription model was recently ruled non-compliant with the Digital Markets Act, a decision that could impact Meta’s business in Europe. CFO Susan Li warned of a potential significant hit to European revenues by Q3 2025, depending on how the appeal progresses.
Looking ahead, Meta’s shift towards AI is expected to drive future growth, with the company aiming to redefine advertising as a tool powered by artificial intelligence that delivers measurable business results at scale. However, the company’s ongoing antitrust case in the U.S. and its struggles in the metaverse space may create additional challenges for the platform’s long-term trajectory.
For more details, visit the source: Meta’s Ad Biz Stays Strong But Economic & Regulatory Uncertainty Looms