Meta, despite being banned in China, has managed to achieve significant growth in the country’s ad market. In the third quarter earnings report, Meta reported a 23% increase in sales compared to the previous year. This growth rate surpasses that of smaller rivals such as Snap and X (formerly known as Twitter). Susan Li, Meta’s finance chief, emphasized the influential role played by Chinese companies in driving this success. Notably, online commerce and gaming have thrived due to increased advertising spend by Chinese advertisers aiming to reach customers in other markets. As a result, Meta’s platforms, including Facebook and Instagram, have become popular choices for Chinese companies to effectively target their advertisements towards billions of users worldwide.
Among Meta’s geographic regions, the rest of the world category experienced the highest growth, reaching an impressive 36%. Following closely behind was Europe at 35%, Asia-Pacific at 19%, and North America at 17%. It’s worth noting that the rest of the world category includes South America, with Brazil being a significant contributor to the region’s advancement. The increased demand from Chinese advertisers targeting users in Brazil has fueled growth in this region. It is evident that China has played a pivotal role in Meta’s expansion, despite the company being inaccessible within the country due to the Great Firewall.
While Meta has faced some volatility in the past, especially during the height of the Covid-19 pandemic, it has witnessed a longer-term trend of overall growth in the Chinese market. This year, as China gradually opens up and global supply chain challenges ease, Chinese companies are actively expanding their businesses internationally. Meta has emerged as a vital tool for Chinese advertisers in this endeavor. Furthermore, lower shipping costs and relaxed regulations in the gaming industry have provided additional support for the growth of Chinese spending on Meta’s platforms.
Despite the optimistic outlook, Susan Li emphasized the potential for future volatility, attributing it to numerous macro factors that are challenging to predict accurately. One example of such unpredictability is the Middle East, with the recent Israel-Hamas conflict impacting Meta’s revenue guidance range. As observed, softer ads were witnessed at the beginning of the fourth quarter, coinciding with the conflict. The implications of these factors on Meta’s Q4 revenue outlook prompted the company to widen its revenue guidance range.
Meta’s success in the Chinese ad market demonstrates its resilience and ability to navigate challenges better than its competitors. Despite being banned, the company has managed to tap into the spending power of Chinese advertisers by leveraging its global reach through platforms like Facebook and Instagram. As China continues to open up and Chinese companies seek expansion opportunities worldwide, Meta is poised to benefit from the growing demand for targeted advertising. The ever-evolving nature of the digital ad market presents both opportunities and challenges for Meta, emphasizing the need for adaptability and readiness to tackle future uncertainties.