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Meta’s Ad Rebound, Gains Huge Assist From China Even Though Its Services Are Banned There

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Meta is seeing significant growth from the second-biggest economy in the world despite being prohibited from doing business in China.

Sales increased 23% from a year ago, according to Meta’s third-quarter financial report, which showed that the company could withstand a challenging digital ad market better than smaller competitors like Snap and X, formerly known as Twitter.

Susan Li, the head of finance at Meta, stated on the earnings call that Chinese businesses were crucial this quarter, maintaining a trend from previous times.

According to Li, spending by Chinese advertisers to reach consumers in foreign markets “benefited online commerce and gaming.”

This indicates that Chinese businesses are heavily investing in Meta’s social media platforms, including as Facebook and Instagram, in order to reach the billions of consumers the company has worldwide with tailored advertising.

Li claimed that among all Meta’s geographical areas, the rest of the world category saw the most growth, coming in at 36%. North America came in at 17%, Asia-Pacific at 19%, and Europe at 35%. South America is included in the first group, and Li claimed that China had a significant role in the region’s quick growth.

“Brazil was a strong contributor to the region’s acceleration due in part to increased advertisers demand from China advertisers targeting users in Brazil,” Li said.

Because of China’s Great Firewall, Facebook, Google, and Twitter are all restricted throughout the nation. Since 2009, Facebook and its sister apps are not available there.

Despite certain “periods of volatility,” Li stated that Meta has seen a “longer-term trend of overall growth” from the China market. She mentioned, for example, that the Covid epidemic, which also brought with it stringent lockdown regulations in China, had caused greater shipping costs during the previous two years.

However, as China opens up more this year and the issues with global supply chains become less severe, Chinese enterprises are eager to grow internationally and are turning to Meta as a key instrument.

The third quarter saw a further acceleration in expenditure from Chinese marketers, according to Li, who also noted that “lower shipping costs and easing regulations on the gaming industry have served as tailwinds here.”

Li emphasized “the potential for volatility in the future,” citing the difficulty in predicting the several macro elements at play.

Li specifically referred to the Middle East’s unpredictability as a result of the Israel-Hamas conflict, which prompted Meta to increase the range of its revenue projections.

“We have observed softer ads in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook,” Li said. “It’s hard for us to attribute demand softness directly to any specific geopolitical event.”

Li’s admonishing remarks caused Meta shares to plummet more than 3% during extended trading, erasing any prior gains.

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