Google search revenue growth in the U.S. accelerated over 400 basis points quarter-over-quarter to +15% growth. Meta’s U.S. advertising (Facebook, Instagram, etc.) accelerated +150 basis points to +18.5%. Given the large size of these two businesses ($167B in revenue annualized), the only way that momentum can pick up by +$5B is if the economy is as well. It is, which we reported on last week. Moreover, Meta’s guidance for revenue acceleration (+27% overall, including low-20% growth in the U.S.) indicates that its quarter ended strongly. The growth in advertising was led by the retail vertical (inclusive of retailers, digitally native brands, and Temu/Shein). Meta shared that China-based advertisers added 5 points of growth for the year. For Q4 2023, we estimate this was about +$2.3B to the U.S., or 11 points of growth (nearly two-thirds of total growth). We wrote about the Temu effect on Q3 2023’s result for retailers and Halloween. Recently, we’ve read that Temu’s consumer trialing/growth has peaked; however, that will still be a factor for the first half of 2024 as it wasn’t a factor during the first half of last year.
Also of note, Meta CEO Mark Zuckerberg shared, “Ray-Ban Meta smart glasses are also off to a very strong start, both in sales and engagement. Our partner, EssilorLuxottica is already planning on making more than we both expected due to high demand. Engagement and retention are also significantly higher than the first version of the glasses. The experience is just a lot better with Meta AI in there as well as there's a higher resolution camera, better audio and more. And we also have an exciting road map of software improvements ahead, starting with rolling out multimodal AI and then some other really exciting new AI features later in the year. I said this before, but I think that people are going to want new categories of devices that seamlessly engage with AIs frequently throughout the AI without having to take out your phone and press a button and point it at what you want to see. And I think that smart glasses are going to be a compelling form factor for this, and it's a good example of how our AI and metaverse visions are connected.” We will remind readers that EssilorLuxotttica recently acquired a hearing assist company with the intention of integrating hearing aids into the glasses. It will be fascinating to watch the mash-up of Meta and EssilorLuxotttica on this where the connected glasses/ assist is boosted by some form of connected AI inference.
