Preview|META 4Q24: Intact Fundamentals Could Drive 4Q Beat But Risk In Guidance

Solid Agency Survey, Also Analyzing TikTok and Applovin Impact

We conducted thorough research on META's 4Q24 results and 1Q25 guidance, covering 4Q24 ad spend survey summary, 2025 ad spend outlook, potential TikTok impact, Applovin impact, progress on META's key ad products, and our 4Q24 and 1Q25 revenue forecasts.

4Q24 Ad Spend Survey

We interviewed 4 ad agencies we continuously track, including a North American agency, a global agency, a European agency, and an Asia-Pacific agency.

Our conversations suggest 4Q24 was a decent quarter, with signs pointing to accelerated ad revenue growth.

Agency 1 - North American platform lead handling >$100M annual ad spend:

• "4Q performance significantly exceeded expectations. We previously expected 20% y/y growth but achieved 24%. Better sentiment entering 4Q after recession worries in Q3 boosted advertiser willingness."

• "About half the outperformance stemmed from efficiency gains from CRM platform integration driving better attribution and ROI."

• "The U.S. macro sentiment was better than Europe's overall. Most verticals grew well, with e-commerce retail (35% of spend) up 28% y/y - a key AI beneficiary. Travel also did very well at +28% y/y."

Agency 2 - Global agency with >$10B annual ad spend:

• "Growth was lackluster in the first three quarters of '24, but advertiser confidence surged in 4Q, with spend growth accelerating from 3-5% y/y in Q3 to 10-13% in 4Q. Advantage+ and Reels were the main contributors."

Agency 3 - European agency with >$100M ad spend:

• "Our Q3 growth underperformed expectations as some clients shifted budgets to Google, which saw y/y growth rise from 5.8% in Q3 to 12.3% in 4Q."

Agency 4 - Asia-Pacific agency focused on Chinese advertisers with >$5B ad spend:

• "4Q24 revenue growth exceeded initial 12%+ expectations at 15%, with CPMs up ~10% y/y. Growth was higher for SMBs at ~15% vs. ~8% for large clients, driven by outbound apps outside e-commerce and gaming."

2025 Ad Spend Outlook

The 2025 outlook also appears decent, with most agencies remaining optimistic. 1Q25 growth could lag due to FX headwinds, high base effects, and the leap year, but fundamentals look solid, which the market should look through.

Agency 1:

• "We remain optimistic for 2025, forecasting META's ad spend to grow 18%, 24%, 25%, and ~25% in the four quarters."

• "The 2024 base wasn't too high, leaving room in '25. Market sentiment is also positive."

• "Continued AI-driven ROI improvements from CRM integration, etc., should drive incremental spend."

• "Other new META products like Business Messaging and social commerce ads also have significant potential."