Why Facebook Marketplace and Groups were top of mind on Meta’s Q2 earnings call

The news: Facebook Marketplace and Groups got an unusual amount of airtime from executives and analysts during Meta’s Q2 2024 earnings call.

“We’ve seen healthy growth in young adult app usage in the US and Canada for the past several quarters. And we’ve seen that products like Groups and Marketplace have seen particular traction with young adults,” Meta CFO Susan Li said.

What it means: Meta is trying to change the narrative that young people aren’t using Facebook.

In May, Meta announced that 40 million 18-to-29-year-olds in the US and Canada use Facebook daily. Meta stopped reporting total monthly and daily active Facebook users in Q1.

Why it matters: It’s true that young people are on Facebook more than many people think, but they use it for a specific purpose, such as buying secondhand goods on Marketplace, rather than scrolling the feed.

• Just over half (51.9%) of US 18- to 24-year-olds will use Facebook at least once per month, per our estimates, but they will only spend an average of 11 minutes on the app per day.
• Three-quarters of US 15-to-26-year-old Facebook shoppers had made a purchase on Facebook Marketplace in the previous 12 months, per our March 2024 “Social Commerce” survey, compared with 81.3% of 27-to-42-year-old shoppers.
• Some 28.9% of US social users ages 15 to 26 said they engaged in online communities, including groups, per our June 2023 “Gen Z Social Media” survey.

Yes, but: Marketplace and Groups are two undermonetized spaces on Facebook, meaning Meta makes less money there than on the main feed, for example.

• During the earnings call, Meta’s Li sidestepped an analyst question about Marketplace monetization, saying that “Marketplace is one prong in a broader commerce strategy.”
• Meta allows advertisers in most industries to place ads in Marketplace, but most shopping is consumer-to-consumer. Advertisers also have the option to run ads in Facebook Groups’ feeds.
• We expect the main feed to account for 82.2% of Facebook’s worldwide ad revenues in 2024.

The big picture: Marketplaces and groups have become critical to user growth and retention as overall Facebook user growth has slowed.

• Marketplace is the single largest reason for Facebook’s continued lead in the US social commerce market. Without it, Instagram and TikTok would have more social shoppers, per our March 2024 survey.
• As social usage continues to become more private and community-driven, groups will remain central sources of Facebook user engagement.
• The challenge for Meta is directing those users to more monetizable areas of the app, namely the Feed.

Stay tuned: For more on Facebook Marketplace, see our upcoming report, “Consumer Approaches Toward Social Commerce,” coming in August.