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SENSOR TOWER · ABRAHAM YOUSEF · MAY 2024
META and SNAP Q1 2024 Advertising Trends and Earnings Results
Meta and Snap both exceeded street estimates on EPS and revenue in 1Q24. Sensor Tower data shows that Reels now dominates user time spent on Instagram, contributing significantly to strong engagement growth. The looming TikTok ban could drive more traffic, engagement and advertising dollars towards Meta and Snap.
Key Takeaways:
META shares fell more than 12% after its 1Q24 earnings despite blowing past street estimates for both EPS and revenue. Meta’s projected increase in total expenses and capex in FY24 eclipsed positive growth in the quarter
Reels continued to be a key business driver for the company with CEO Mark Zuckerberg remarking during its 1Q24 earnings call that “On Instagram, Reels and video continue to drive engagement, with Reels alone now making up 50% of the time that’s spent within the app.” Sensor Tower’s proprietary panel data largely corroborated this statement, with the majority (43%) of US Instagram user time spent in Mar’24 taking place on Reels
For the fifth consecutive quarter, Instagram outpaced all its peers in growing user engagement, driven by the continued popularity of Reels. Instagram worldwide hours engaged per day increased 18% YoY in 1Q24, far greater than competitors such as Snapchat (+9%), TikTok (+2%), Facebook (flat), and X (Twitter) (-5%). A looming US TikTok ban could further accelerate Instagram’s engagement growth, perhaps also driving advertiser activity and demand
Per ST data, average ads placed per daily session, a metric which provides a unique window into mobile advertising volume (or load) on social media ad networks, increased 34% and 31% YoY in the US for Facebook and Instagram, respectively, in 1Q24. This was in line with growth in Meta’s reported advertising revenue both globally (+27% YoY) and in the USCAN region (+22% YoY)
SNAP shares soared +20% after the company reported 1Q24 EPS and revenue which surpassed street estimates, driven by a reacceleration in demand for advertising on its platform. Snap’s reported global and North America revenue in 1Q24 increased 21% and 16% YoY, respectively, which was in line with a 16% YoY increase in ST’s average ads placed per daily session for Snap in the US
Per ST’s data, the bulk of US Snapchat user time spent in Mar’24 was on the legacy Chat feature at ~46%, compared to 13% on Stories, 7% on the short-form video feature Spotlight, 6% on the Snap Editor, 5% on the Camera, 2% on Memories and 21% on others (such as the Snap Map, My AI, and Profile). This indicates that the company has room for improvement in terms of driving engagement towards its Spotlight feature. Should Snap successfully unify features such as Spotlight and Stories into the user experience, both user engagement and advertising activity could flourish
For more information, request the full report from reports@sensortower.com.
