Meta ad growth pulls ahead of Google Search

Meta’s advertising revenue increased by 26% in the third quarter, compared with 12% growth for Google’s Search and other businesses. Meta generated $63.1 billion in advertising revenue, approaching Google’s $63.4 billion from Search and other services. The growth gap reached 14 percentage points, the widest in Meta’s favour since 2021.

Meta credits AI investments with improving advertising performance on Facebook and Instagram. CFO Susan Li said advertisers following its AI business assistant’s recommendations recorded almost 5% more conversions and increased spending by 9% compared with similar advertisers who did not follow them. Nearly 10 million advertisers used at least one of Meta’s AI tools during the third quarter.

Google faces potential disruption as users turn to ChatGPT, Claude and Meta’s Muse for direct answers. Its AI Overviews and AI Mode could also reduce incentives to click traditional links and advertisements. Google said search queries reached a record high during the quarter, but Search revenue growth is slowing. It is integrating Gemini across its advertising infrastructure, including YouTube.

Infrastructure spending is intensifying investor scrutiny. Google expects capital expenditure of up to $205 billion this year, while Meta expects as much as $145 billion. Both are seeking revenue beyond advertising: Meta is exploring paid AI subscriptions, while Google Cloud reported quarterly revenue of $31 billion, with growth of more than 100%.