Facebook is selling new types of ads on Instagram and Messenger as revenue declines

Technology

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Facebook parent Meta is opening up new avenues for advertising on Instagram and Messenger as the company seeks to reverse a downward trend in revenue that recently pushed the stock price to its lowest since early 2019.

In an event for advertisers on Monday, Meta introduced a new way for advertisers to display ads on Instagram’s explore page, which shows content to users based on their preferences and routines, and on the profile pages of Instagram influencers with whom they have deals.

On the Messenger messaging service, Facebook is launching a tool that uses machine learning software to show ads intended to “reach people who are most likely to make a purchase,” said Maz Sharafi, Meta’s vice president of marketing and growth for business messaging. Sharafi noted that “the important thing here is that we do not use message content for ads,” implying that the company will not analyze Messenger messages to determine which ads get placed.

The announcements come just three weeks before Meta is scheduled to release its third-quarter earnings report, which is expected to show a second straight period of declining revenue. The company gets substantially all of its sales from mobile ads, a business that’s been hammered this year because of Apple’s privacy updates to its operating system as well as a sputtering economy and rising competition from TikTok. Meta’s stock has lost close to 60% of its value this year.

As Meta looks to the future, the company is banking on the emergence of virtual reality and the metaverse to drive growth. It’s now starting to experiment with how advertisers will exist in that world.

Meta said it’s testing augmented reality ads within Instagram’s main feed and stories feature, said Nicola Mendelsohn, Meta’s vice president of the global business group, at the ad event. Most consumers experience AR today when they interact with the digital filters that decorate the photos and videos they see on social media services like Facebook and Snapchat.

“Through the AR experience, brands can encourage people to actually try out and try on that product or interact with effects from their surroundings,” Mendelsohn said.

Another new option for businesses on Instagram is an ad product called multiadvertiser ads that will show users a carousel of related promotions to accompany the original ad. Meta didn’t providing pricing details on any of its new offerings.

One of Facebook’s primary challenges this year has been its hefty investments in its TikTok competitor called Reels, because there isn’t yet an established ad format for short-form, viral videos.

To try to take advantage of the growing popularity of Reels, Meta is debuting what it calls post-loop ads, a new ad format for creators and companies. A creator can run these short video ads of their partners in between their Reels. That feature is only available on the core Facebook app.

Additionally, businesses have the option of embedding a carousel of ads onto the bottom of a creator’s Reels if approved by the creator.

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