Episode Transcript:Marcus Johnson:This episode is made attainable by Awin. Unlock limitless advertising alternatives that attain customers all over the place utilizing Awin’s affiliate partnerships platform. Choose which companions finest match your advertising aims, management your prices by defining the way you pay, and customise your affiliate marketing online program utilizing Awin’s tech to mirror your distinctive targets, no matter they might be. Visit awin.com/emarketer to be taught extra and get began right now.Debra Aho Williamson:Meta’s has been speaking about reels and attempting to monetize reels for a while now. So these statistics caught my consideration as a result of I feel lots of people nonetheless consider reels as being a tragic me too to TikTok. And at the least from the promoting standpoint, it is positively getting much more traction.Marcus Johnson:Hey gang, it is Monday, August seventh, Debbie and listeners, welcome to The Behind the Numbers Daily, an eMarketer podcast made attainable by Awin. I’m Marcus. Today I’m joined by one in all our Principal Analysts who covers every thing social media, based mostly on the West Coast of the US in Washington state, it is Debra Aho Williamson.Debra Aho Williamson:Hey Marcus.Marcus Johnson:Hey, Debbie. Thanks for being right here. As I discussed, you are based mostly out of Washington state, and so I’ve a reality right now about Washington State and wine.Debra Aho Williamson:Uh-oh. Is this a check?Marcus Johnson:Maybe? So Washington State is, the place do you suppose it ranks when it comes to producers of wine within the nation? High up or low down?Debra Aho Williamson:I’m going to say second.Marcus Johnson:Wow. Bang. Debbie. Nailed it. Yeah, Washington state is the second-largest producer of wine within the nation. Was {that a} guess?Debra Aho Williamson:No.Marcus Johnson:Oh, you knew that.Debra Aho Williamson:I do know Washington wine a little bit bit.Marcus Johnson:Wow. Yeah, so it’s technically it is approach past California, which counts for 85% of all of the wine. But Washington has 5%, nonetheless places it in second place. New York is third in accordance to the Alcohol and Tobacco Tax and Trade Bureau. Is there a regional wine that is your favourite, Debbie?Debra Aho Williamson:Yes. It’s in a area known as Red Mountain and it is out east of Yakima. And it is a very small area, however produces superb purple wine, Cabernets and different kinds of purple wine.Marcus Johnson:Okay, good tip. Thank you for the advice, Debbie. Today’s actual matter, has Meta officially bounced again?So in right now’s episode, first In The Lead we’ll cowl Meta. Then for In Other News we’ll focus on TikTok including textual content solely posts and how ByteDance’s social media app Lemon8 is getting on within the US.But, Debbie, we begin with Meta. That’s the corporate that owns Facebook, WhatsApp, Instagram, Facebook Messenger, Oculus, all of these issues. But let’s speak about how they did when it comes to advert revenues. We’ll begin there. So Meta’s advert revenues grew 11% in Q2. The identical interval a yr in the past, progress was destructive one. So Debbie, what do you make of this 11% progress in worldwide advert revenues for Meta, prime line?Debra Aho Williamson:Yeah, I imply clearly a very nice quarter for Meta. We sort of anticipated it. Right earlier than earnings got here out, I printed my pre-earnings evaluation and we had been seeing some good indicators from the quarter. We noticed that Meta had, clearly, Reels had been doing fairly effectively. We’ll discuss a little bit bit extra about that later. But we all know we did see an uptick in advertiser curiosity in Reels. We additionally noticed that advert product known as Advantage Plus had been getting some traction. So Advantage Plus is an automatic approach of inserting, measuring, and focusing on promoting. And then usually the financial system has been selecting up and advertisers have been a bit extra constructive concerning the yr, perhaps a recession will not be occurring. And so all of those elements led me to suppose that Meta may doubtlessly get into the double digits this quarter in income progress. And it did at 11%. It was positively an excellent quarter. You referenced a yr in the past, 2022 was sort of a yr to overlook for Meta, and thus far 2023 has been off to a significantly better begin.Marcus Johnson:Yeah, it actually, actually has. And I imply you talked about the backdrop of an bettering advertisements market, Standard Media Index Ad Tracker exhibiting that May noticed constructive quantity for the primary time in about 11 months. I feel June truly was down a bit, however it’s beginning to hover nearer to zero and be much less seemingly to be within the purple. So that is constructive signal, a significantly better backdrop, in addition to some constructive earnings popping out of Google as effectively.11% as you talked about, it is good. Actually, it is actually good. Yeah, Q2’s 11% progress is the biggest quarterly achieve since This fall of 2021. As you talked about final yr, a yr to overlook. Three out of the 4 quarters final yr, Meta noticed revenues fall yr on yr for the yr 2022 and posted that 0.1% progress and Q1 of this yr posted 4%, plus 4%. Now it is plus 11%. So it is positively not off course.Another factor price noting, Debbie, is Facebook’s common income per consumer rising almost 7% in an important US and Canadian market. That accounts for almost half of Meta’s cash. It was truly up, ARPU was up, healthily in all the opposite areas. And additionally income wanting wholesome once more, which the markets like. Profits grew 16% yr on yr to almost 8 billion quarterly income have seen staircase progress up since a 4 billion low level in Q3 final yr. They’re now double that at 8 billion as I discussed.Debra Aho Williamson:Well, you have got to keep in mind that this was the yr of effectivity for Meta and for Mark Zuckerberg.Marcus Johnson:Good level.Debra Aho Williamson:And so a variety of that purpose why it is worthwhile is as a result of they did have to let go numerous employees, sadly.Marcus Johnson:Yeah, superb level.Debra Aho Williamson:So the corporate has develop into extra worthwhile for positive, which is nice, however it’s a leaner, meaner, and a lot hopefully extra environment friendly firm, which I feel it is unhappy that people who find themselves let go, however I do suppose that this units Meta up for a significantly better second half of this yr.Marcus Johnson:Yeah, a variety of layoffs, about 20,000 odd, nevertheless it does appear to be having some sort of impact on the underside line, which is what they had been going for, as you talked about, the yr effectivity, as Mark Zuckerberg is phrasing it. Let’s transfer to the customers of Meta’s personal platform, Facebook. So Facebook is the one platform that it reviews on, nothing in the way in which of Instagram aside from a little bit piece right here and there and generally within the earnings on the earnings calls, however the principle platform they report on is Facebook. That crossed the two billion worldwide each day energetic customers market the tip of final yr. So we already crossed that milestone. It added an additional 37 million of us to Facebook each day energetic customers in Q1 and now 27 million in Q2. Your ideas, Debbie, on Facebook’s Q2 consumer progress including 27 million of us.Debra Aho Williamson:Yeah, i imply it is positively nonetheless rising. I feel that’s the large takeaway. Many folks suppose sort of that Facebook is outdated and drained and not related anymore, and there’s of some reality to that definitely, however it’s nonetheless managing to eke out a small little bit of progress each quarter. That’s about, I calculated it to be a few 1.3% quarter over quarter progress in each day energetic customers. But what’s extra attention-grabbing to me is the month-to-month energetic consumer determine.Marcus Johnson:Yes.Debra Aho Williamson:So Facebook went over 3 billion by their methodology, by their rely, within the quarter, and that was an enormous milestone for them. And that was a bit quicker progress than within the earlier quarter.Marcus Johnson:Yeah.Debra Aho Williamson:So about 1.4% versus I calculated at 0.9% progress in Q1. So that is also an attention-grabbing one since you actually have, once more, you have got indicators that Facebook is sustaining its relevance. And it is true that almost all progress is occurring in APAC. There are areas the place their progress isn’t occurring as a lot. So on month-to-month energetic customers Europe was down by 2 million within the quarter and US and Canada had been up by only one million quarter over quarter. But nonetheless including, not dropping.Marcus Johnson:Yeah.Debra Aho Williamson:And that I feel is the largest takeaway for me.Marcus Johnson:That month-to-month quantity jumped out to me as effectively. So you talked about they crossed 3 billion, however they added over 40 million MAUS, month-to-month energetic customers, to do it, which is the very best quarterly quantity in over two years. So had a very good month-to-month quantity. That 27 million each day new customers is 3 times greater than the identical interval final yr. If all these Facebook customers fashioned a state, an American state, it might be the third most populated state in America. So it is lots of people that they are including. And Debbie additionally attention-grabbing to see that North America, it is sort of persevering with that momentum that it had the earlier quarter and the quarters earlier than that. So North American Facebook customers had been caught at about 198 million from mid 2020 to mid 2022. Last quarter they crossed the 200 million mark, in Q2 they reached 202. So they even ticked up a little bit bit regardless of being a really saturated market, after all.Debra Aho Williamson:The solely different factor I’d level out that was attention-grabbing to me as effectively was, and I do know we have talked about this earlier than, is that they at all times publish the ratio of each day energetic customers to month-to-month energetic customers.Marcus Johnson:Stickiness ratio.Debra Aho Williamson:That ratio is now at 68% for 2 quarters in a row.Marcus Johnson:Oh wow.Debra Aho Williamson:It was at 67% all of final yr, and earlier than that it was caught at 66% for each single quarter.Marcus Johnson:Since the start of time, yeah.Debra Aho Williamson:And so the truth that they have been in a position to eke out will increase in that ratio of each day to month-to-month energetic customers, I’m unsure how they’re doing it, however they appear to be doing it. And that’s one thing to name out too.Marcus Johnson:Yeah.Debra Aho Williamson:A larger share of individuals are visiting Facebook each day than in years previous.Marcus Johnson:As I discussed, Debbie, they do not report any sort of official Instagram numbers, each now and once more, they’re going to throw out a milestone quantity of their earnings name, however have you ever seen something Instagram associated with regards to its latest efficiency?Debra Aho Williamson:Well, within the quarter they talked a little bit bit about Reels, so these had been the numbers that they appreciated to speak about. And Reels is offered on Facebook, nevertheless it’s actually largely an Instagram product. They did reveal some promoting numbers associated to Reels.Marcus Johnson:Okay.Debra Aho Williamson:And these had been truly fairly attention-grabbing to me. They stated that three quarters of Meta advertisers are actually utilizing Reels advertisements, and that Reels is on a income run charge of $10 billion, which is up from 3 billion final fall. So that is fairly sturdy progress.Marcus Johnson:Wow.Debra Aho Williamson:And that places Reels on monitor to develop into a lot greater and stronger competitor to TikTok.Marcus Johnson:Yeah.Debra Aho Williamson:Just by comparability, we estimate that TikTok had worldwide advert income of slightly below 10 billion final yr, and could have about 13 billion in income this yr. So a a lot stronger competitor and a very long time coming. Meta’s been speaking about Reels and attempting to monetize Reels for a while now. So these statistics caught my consideration.Marcus Johnson:Yeah.Debra Aho Williamson:Because I feel lots of people nonetheless consider Reels as being a tragic me too to TikTok.Marcus Johnson:Yeah.Debra Aho Williamson:And at the least from the promoting standpoint, it is positively getting much more traction.Marcus Johnson:I imply, yeah, much more traction. You talked about a a lot stronger competitor. Another quantity to level that out, going to hammer that time house, is a March survey from Raymond James that I noticed discovering that 44% of Americans 18 to 60, 18 to 60, use Reels, 44%. That’s a fraction behind TikTok at 46. That was a survey from March of this yr.The different quantity, Debbie, earlier than we transfer on to Threads, is the household of apps quantity, I simply discover fascinating. So that is the quantity that encapsulates all the totally different platforms beneath the Meta manufacturers, whether or not that is WhatsApp, Facebook, Instagram, Facebook Messenger, et cetera. And the household of apps quantity, they added a South Korea’s price of recent household each day energetic folks quantity, 50 million each day energetic folks is what they name them, 50 million they added. And South Korea is the twenty ninth most populated nation on this planet. So they now when it comes to you rely up all of their apps household each day energetic folks, there are over 3 billion. Their month-to-month quantity when it comes to all of the platforms that they’ve is nearer to 4 billion, is absolutely shut to crossing that, may doubtlessly cross that this yr.Debra Aho Williamson:That’s an enormous quantity. I imply, actually simply to cease and take into consideration that, 4 billionMarcus Johnson:It’s not possible to comprehend. Almost half of the folks on the planet Earth. It’s outstanding. And half the folks on the planet Earth do not have the web. So for those who consider the individuals who have the web, it is onerous to wrap your head round.Let’s speak about Threads, Debbie. So Meta’s newest app Threads, a Twitter or X rival, turned probably the most downloaded app in historical past final month when it reached 100 million customers in beneath per week. However, since then, engagement on Meta’s Threads has fallen 70%, notes our Senior Connectivity and Tech Analyst, Gadjo Sevilla . He factors out the common time spent on the iOS and Android apps fell to simply 4 minutes from a peak of 19 in accordance to Sensor Tower, per The Wall Street Journal. Daily customers additionally fell dramatically shortly after it is dream launch. Debbie, what’s your place on Threads at this level?Debra Aho Williamson:Yeah, Threads was an attention-grabbing one. And Mark Zuckerberg spent fairly a little bit of time speaking about it on the earnings name. He referenced the way it had, “unprecedented progress out of the gate,” in his phrases, however he did say that they are now centered on retention and “bettering the fundamentals.” So that tells me, and I feel this has already been reported, however simply to recap, Threads was launched in a short time. They noticed a chance with Twitter, now X, as you talked about, with Twitter is absolutely struggling and determined that regardless that Threads did not have all the options that individuals would need, that they might go forward and launch it.And in order that’s I feel why we’re seeing this large curiosity firstly with folks sort of going, “Ooh, okay. Well, no, it would not have every thing I need, so I’m going to take a backseat and watch and wait.” So now it is actually on Meta and Instagram to construct out these options to persuade folks to come again, to guarantee that its creators and Meta’s creators, and then any Twitter creators who had been disillusioned and joined Threads are utilizing the platform as a result of that finally is what’s going to be drawing folks in.Marcus Johnson:Yeah.Debra Aho Williamson:And I feel that as Zuckerberg stated within the name, he says, “We have a variety of work to do to actually make Threads attain its full potential.” I’d 100% agree with that. I do suppose it is also attention-grabbing that he stated on the decision that, and he truly named title checked Twitter, which he not often does in these calls, is to speak about particular different corporations, however he did say that there hasn’t been an app for public discussions that has reached 1 billion folks. So he simply dropped that trace there, that he thinks that Threads may doubtlessly develop into one other 1 billion app, similar to all of its different properties have develop into.Marcus Johnson:Interesting.Debra Aho Williamson:So one to look ahead to positive.Marcus Johnson:Yeah. Debbie, let’s finish the lead by speaking concerning the Metaverse. Meta signaled that spending for its Metaverse unit would surge in 2024 and the losses would enhance. What’s your take right here?Debra Aho Williamson:Wow. Yeah. So as soon as once more, sure, Zuckerberg reiterated his dedication to the Metaverse. He talked about how it might be discomfort, it might present discomfort to traders, that he was spending a lot cash on it. He additionally stated he could not assure that he is going to be proper concerning the guess.Marcus Johnson:Yeah.Debra Aho Williamson:But he did say that he’s dedicated to it, that he does consider that the Metaverse and what it will possibly do and the place they are going is one thing that they’re dedicated to and that they consider will finally occur. In the meantime, the losses are mounting. I consider Reality Labs, which is the unit that oversees all the Metaverse associated actions, the working loss for Reality Labs has gone over $40 billion in whole, which is loopy. Just within the quarter misplaced 3.7 billion on income of simply 276 million. So these are enormous losses.Marcus Johnson:Yeah.Debra Aho Williamson:And it is actually going to take loads, I feel, for traders to persist with Mark Zuckerberg on this, however he’s very adamant that the Metaverse is coming and that they’re going to proceed constructing for it.Marcus Johnson:Yeah. Revenue, as you talked about, shut to 300 million within the quarter, however that was down almost 40% yr on yr, worse than Wall Street was anticipating. I knew that they’d misplaced shut to 4 billion within the quarter, Debbie, however 40 general is surprising. Mr. Zuckerberg, CEO, pointing to decrease Quest 2 gross sales. Reality Labs will launch the Quest 3 VR headset on the firm’s Connect Conference in September, apparently. That’s all we have time for for The Lead. Time now for The Halftime Report.Debbie, what to you is the principle takeaway from the primary half of right now’s present?Debra Aho Williamson:Well, talking of first half, the primary half of the yr was a very fairly good yr for Meta. And it exhibits that the yr of effectivity is off to a robust begin. So if the corporate can proceed to keep this momentum for the remainder of the yr, it is going to exit this yr 2023 in significantly better place than it entered the yr.Marcus Johnson:Yeah. Fair to say, I feel Meta has safely shifted into second gear and it’s preparing to maybe shift into third. We’ll see. That’s what we have time for the primary half. Time for the second. Today, In Other News, TikTok provides textual content solely posts and what occurs to social media app Lemon8?Story one, TikTok has added text-only posts. So now you’ll be able to submit movies, images, or textual content. Dustin Jones of NPR notes that customers can diversify their posts by including sounds and music stickers and hashtags, in addition to tagging places. The text-only submit lets of us publish 1000 characters versus 500 for Threads or 280 for X or Twitter. But Debbie, probably the most attention-grabbing sentence on this BBC article I despatched you on TikTok including textual content solely posts is what and why?Debra Aho Williamson:Well, it is admittedly not probably the most scintillating sentence within the article, nevertheless it’s significant. The sentence was, “TikTok customers will now be supplied three choices on the app, whether or not to submit images, movies, or textual content.” So by itself, it sort of sounds boring, however I feel it is actually a momentous assertion. Because what will we consider TikTok as? A video app.Marcus Johnson:Not textual content, yeah.Debra Aho Williamson:A brief video app. Everybody calls it a brief video app. It’s even complicating for us now as a result of we estimate social video advert spending and social video customers and we embody TikTok in that. And so now we’ve got to take into consideration, effectively, will we parse out the TikTok textual content posts and the picture posts from the video posts to actually come to quite a few how a lot cash is being spent there? But it actually, at a much bigger body, it does present that for social apps to succeed, I feel they do want to supply greater than only one exercise. And we’ve got seen social video develop fairly considerably prior to now couple of years, however there is a ceiling to that progress. And folks do need to do different issues in social media and I feel TikTok is recognizing that.Marcus Johnson:Yeah, one supply I noticed saying textual content remains to be folks’s favourite sort of social media content material. This was in accordance to an April YouGov ballot. Text was barely forward of pictures and then video. So it is nonetheless obtained it is place, even on TikTok apparently.Story two, what occurs to social media app Lemon8? Our Senior Director of Briefings Jeremy Goldman notes that ByteDance’s app, typically likened to a mix of Pinterest and Instagram, is seeing declining recognition within the US, with each day energetic customers dropping from 12,000 to 6,000 since April, in accordance to Rest of World. One of their reporters, Kai-Wai Chen, reminds us that by the tip of March, Lemon8 had skyrocketed to the highest 10 most downloaded apps on Apple’s App Store within the US. But Debbie, probably the most attention-grabbing sentence on this article from Jeremy about Lemon8 is what and why?Debra Aho Williamson:The sentence that I picked from this text was, “Time spent with social media cannot enhance eternally and new apps want to wrest loyalty from different platforms to achieve success.” I feel that is true of Lemon8, that is true of Threads, that is true of every other app.We do see that there’s a plateau coming in time spent on social networks. We have a forecast that was simply printed in June that this yr US grownup social community customers will spend an hour and 47 minutes per day on social networks. There’s been a reasonably important enhance since say 2019 earlier than the pandemic when it was solely 82 minutes. But after this yr, the will increase are going to be very small, lower than a minute per yr by 2024 and 2025. So it’s a 100% true that each social app is now competing with one another to get folks to spend extra time. Time is not growing a lot on social networks. And that, I feel is among the largest challenges that any new app faces.Marcus Johnson:Yeah. And it is a fantastic level. My takeaway was that ByteDance may nonetheless want a TikTok backup as a result of a quote from Jeremy saying, “Despite this downturn ByteDance stays dedicated to reviving the platform, frequently recruiting influencers, and posting job listings.” And Ms. Chen at Rest at World saying that Lemon8 has additionally been in contrast to Xiaohongshu, the Chinese social media and e-commerce platform with over 200 million MAUs referred to as the nation’s life-style bible. And so I feel ByteDance does nonetheless consider in it, and TikTok may in idea nonetheless get banned, proper, Debbie? So perhaps they do want a backup if that occurs.Debra Aho Williamson:Good factors. Very good factors as at all times, Marcus.Marcus Johnson:Yeah, they are going to want a break glass in case of emergency. But we’ll see. That’s what we have time for this episode. Thank you a lot to Debbie for hanging out.Debra Aho Williamson:Yeah, thanks for having me.Marcus Johnson:And thanks to Victoria who edits the present, James who copy edits it, and Stuart who runs the crew. Thanks to everybody for listening in. We’ll see you guys tomorrow hopefully for the Behind The Numbers Daily, an eMarketer podcast made attainable by Awin.
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