Meta Advertising Growth Slows in Europe as Users Choose Less Personalized Ads

Meta advertising growth is slowing in Europe as residents gain the option to limit the personal data used to determine which ads they see.

Meta’s European ad growth trails North America

Meta said Wednesday that advertising revenue in Europe continued to slow during the three months to September, falling below its global figures. Advertising revenue in the region increased 18% year over year, down from the previous two quarters and well below the 33% growth reported in the United States and Canada.

Meta did not explicitly criticize the introduction of less personalized advertising on Wednesday. However, Chief Financial Officer Susan Lee warned during a second-quarter earnings follow-up call in July that “we are seeing the full rollout and impact of less personalized advertising offerings in Europe, which could create further headwinds.”

Over the previous two quarters, advertising growth in Europe fell from about 40% to 24%. In the United States and Canada, growth accelerated from 30% to 31%.

“We believe the EU’s free and personalized advertising options are contributing to Europe’s economic slowdown,” Dominic Ball, director of equity research at market analysis firm Rothschild & Company Redburn, told WIRED.

EU rules give users more control over ad personalization

Meta began offering less personalized advertising (LPA) options to Instagram and Facebook users earlier this year at the request of EU regulators. The company was fined €200 million for breaching its obligations under the Digital Markets Act to give consumers a choice of comparable services that use less personal data, according to the European Commission.

Sales growth in the region has slowed since the beginning of the year, when Meta rolled out the option. The European Commission said that charging EU users who do not want their personal data used for personalized ads for ad-free services—a measure Meta introduced in the EU in November 2023—does not meet this requirement. Meta does not disclose how many users chose each option.

Less personalized ads may reduce advertiser efficiency

Meta said LPA uses 90% less data than personalized advertising. Ads are shown based on what users view during a given session, along with data points such as age, location, and gender.

In its response to the EU ruling, Meta warned that the changes would hurt EU advertisers. Less personalized ads are less efficient, generate fewer transactions, and may be closed more often because users find them irrelevant or repetitive.

Wednesday’s results indicated that the price advertisers are willing to pay per ad in Europe is not increasing as quickly as it is in the United States and Canada.

Meta looks to AI to improve ad performance

Lee told investors on Wednesday that Meta has “a lot of room” to improve ad conversions and efficiency as it “continues to explore ways to improve the actual performance of its recommendation engine.” Ball of Rothschild & Co. Redburn believes artificial intelligence could help Meta improve ad targeting in Europe, even with fewer personal data signals.

Investors also focused on how the changes could affect Meta’s personal AI agent, Muse, which the company launched last month. Questions about Muse dominated the conference call.

Lee said Meta sees strong commercial intent among people using Muse to ask for product recommendations, research alternatives, and compare options. She added that Muse could eventually give Meta a way to participate in the advertising market through its products.