Behind the Numbers: Meta’s AI Investment Strategy, Snap’s Growth Secrets, and Why Pinterest Deserves More Attention

Audio by Marcus Johnson, Daniel Konstantinovic, and Minda Smiley | Feb 24, 2025

Episode Transcript:

Marcus Johnson:

Closing the intelligence gap between data and insights is the key to transforming marketing from a cost center into an engine for growth. But where to start, the age-old question. Well, you can find the answers in Zeta Global's latest playbook, Driving Growth In the AI Era. I read the whole thing. 18 pages, it's really good. Download it today, it's free. Hey gang. It's Monday, February 24th. Minda, Danny and listeners, welcome to Behind the Numbers, a marketer video podcast made possible by Zeta Global. I'm Marcus. Today we'll be checking in on Meta, Snap and Pinterest. We really should be talking about stop signs. Do we need them? Do you ever get used to stop signs, America? Been here for a long time and I still hate them. I like the idea of slowing down for people, but put a roundabout in. Traffic circle.

Daniel Konstantinovic:

You like the idea of a stop sign, but what, you don't practice?

Marcus Johnson:

Yeah, I try not to observe them. That's not true. I just think a roundabout's safer. Statistically there have been studies apparently that they're safer. Anyway.

Minda Smiley:

I don't think about stop signs that often.

Marcus Johnson:

That's because you have a life, Minda.

Minda Smiley:

Fun fact, I have not driven a car since 2019.

Marcus Johnson:

Wow. That's the one.

Daniel Konstantinovic:

That's great. I hate to drive. I hate driving [inaudible 00:01:20].

Minda Smiley:

I hate driving too. It's great.

Marcus Johnson:

Because of stop signs. That's the problem.

Daniel Konstantinovic:

Exactly.

Marcus Johnson:

I've identified it.

Daniel Konstantinovic:

No fun.

Marcus Johnson:

For the discussion, not just about stop signs, but about social media people, we have two people with us. Those two voices you just heard, those two faces that you can see if you're watching us on YouTube or Spotify, we have with us our senior analyst covering social media based in New York. It's Minda Smiley.

Minda Smiley:

Hello.

Marcus Johnson:

Hello there. And we have senior editor of the Marketing and Advertising Briefing based in the same town, it's Daniel Konstantinovich.

Daniel Konstantinovic:

Hello. Yes, the same small town.

Marcus Johnson:

Today's fact. Bananas are berries, strawberries are not. Botanically speaking, which is not how people talk. This one's really distressing. Stanford University said this, so it must be true. In botany, a berry is classified as a fruit, comes from a single ovary of a flower, has fleshy pulp and contains seeds inside. No pits or thick outer shell to speak of. Then what are we doing with the strawberry name?

Minda Smiley:

Yeah. I also just can't wrap my head around a banana being a berry. That's crazy.

Daniel Konstantinovic:

Feels wrong. Berries got to be small, it's got to be compact.

Minda Smiley:

Yeah.

Daniel Konstantinovic:

Banana's too big.

Minda Smiley:

Yeah.

Daniel Konstantinovic:

Yeah. That one hurt me too. It really took a lot of wind out of me right-

Minda Smiley:

Yeah. I already-

Marcus Johnson:

You've known this the whole time?

Minda Smiley:

Feel bad about this episode.

Daniel Konstantinovic:

No, when you said it, I was just like, oh-

Marcus Johnson:

That's okay.

Daniel Konstantinovic:

Distressing news like you said.

Minda Smiley:

Yeah.

Marcus Johnson:

Yeah. And yet somehow not as bad as stop signs. Anyway, today's real topic, the social media guys. All right, folks. We're talking about the social media people, Meta, Snapchat, Pinterest, and we'll talk about them all, but we'll start with the biggest one. It's Meta. Two years ago, Meta's revenue growth was dead in the water, believe it or not. Negative 1% for year 2022. Hard to wrap your head around given how they've been performing the last two years and the few years before that, but that was 2022, negative 1% ad revenue growth. 2023, they spiked to plus 16% year-on-year. And then 2024, the social giant achieved 22% growth. Staircase up into the right quite aggressively the last couple of years. Slice of pie is what we're playing throughout the show. We'll start with it for Meta, creating a pie chart as to the three reasons why Meta was able to reach this remarkable rate of ad revenue growth in 2024. Minda, do you want to go first for us?

Minda Smiley:

Yeah, sure. Yeah. I mean, Meta had a great quarter and I think in terms of the pie chart, I would say the majority of that, 70% probably can be contributed to the fact that they just have built a very strong ad business and the AI investments they've made there, whether it's for their algorithms or ad targeting are just really paying off and already Meta was a huge ad business. It has been a huge ad business for quite some time and I think those investments are just really supercharging that. And then more broadly, I think we're just seeing more ad spend go to social in general. I know our forecasts are predicting double-digit growth for social ad spend, so Meta is of course, as the biggest player in that, is of course benefiting from that. Really that's the big one for me. I think in terms of my other two slices of pie, I would say some probably can be contributed to the TikTok uncertainty we were seeing at the end of last year.

That was right before the uncertainty around the ban. Of course there's still uncertainty around the TikTok ban, but in December we really didn't know what was going to happen or how things were going to play out. I'm sure Meta benefited from that a little bit. And then going off of that, so I would give that about maybe 15% and then the other, I'm trying to make sure my math is adding up. Maybe the other 15% would just go to the fact going off of that, the fact that I do think a lot of creators have been slowly shifting more and more resources to Instagram, even to Facebook as they prepare for the uncertainty around TikTok and so I'm sure Meta also saw some tailwinds from that as well, or headwinds.

Marcus Johnson:

Okay. Danny, how does your pie chart line up?

Daniel Konstantinovic:

Mine looks fairly similar. I have less pieces of the pie, but not because I think that any of the things Minda said are not as important, but I gave the biggest chunk of the pie, 66% or 70% to all these AI initiatives that the company has. The AI investments, like Minda said, have definitely helped with targeting and content delivery, but I think something that it has also done that's benefited the company a lot is really opened up a huge pool of spending from smaller brands and advertisers. A lot of the AI tools are aimed at reducing the barriers to entry in terms of making an ad, making an ad that can run across Instagram and Facebook. You don't have to specify a certain platform. If you have a video ad, it can be repurposed to run other parts of its ecosystem. I think that's really opened up a whole world of spending that this company's really benefiting from.

Marcus Johnson:

Yeah. That's a great take.

Daniel Konstantinovic:

Yeah. And I think, well, I just said, yeah. Yeah, that is a great take. Thank you, Marcus.

Marcus Johnson:

Yeah, Marcus.

Daniel Konstantinovic:

And another thing that I have here, which almost could be wrapped up into the AI investments are developments to Advantage Plus ad format that Meta has. They made Advantage Plus shopping campaigns a big focus in the last quarter of the year. It overlaps with the holiday season and a big cyber five period and they saw price per ad jump a pretty significant amount. I think it was 14%. Just shows that there's strong demand for this ad format among retailers or eCommerce brands. Yeah, I think that AI is really helping this company out a lot.

Marcus Johnson:

Yep. Yeah, they sound good to me. And I was just looking at the raw numbers for Meta as well. They're still adding users at an insane clip. In the US we don't really think of it because it's the US and you've got a hit ceiling at some point, but the company added 160 million people to its app. Facebook, Facebook Messenger, Instagram and WhatsApp. That's half the population of America it added to its user base in the last 12 months. And so it's not reporting Facebook users anymore. It never really told us about Instagram users until it hits certain milestones. But it is reporting this family daily active people number, how many people use all of the Meta apps and that's still growing an astonishing rate. That's going to help push things forward. Ads are costing more as well, which is helping the company. Q4 2023 Meta's average price per added had grown 2% year-on-year.

This past Q4, it was up to 14% and the all-important US and Canada that's driving that, it was plus 2% a year ago, plus 12% this year. The price of its ads are helping to boost its revenue as well. What do you guys think of, Daniel, throw this to you first. Meta's AI spending plans, good or bad? Dear friend of the show, former workmate, Deborah Arhoe Williamson, founder of and chief analyst of Sonata Insights was saying "Meta's solid revenue growth in Q4 masks a looming problem, its revenue outlook for Q1 was lighter than Wall Street was expecting, and it is planning exorbitant capital expenditures over $60 billion for AI infrastructure in 2025. That adds up to a concerning situation." What do you make of its planned AI investments?

Daniel Konstantinovic:

I'm a little torn on it, I think. It's uncertain how it will play out. I know that I was just saying that its AI investments so far have been a big success for the company and I definitely think that's true

Marcus Johnson:

Before DeepSeek hit the scene and changed the thinking, the math on the AI investment.

Daniel Konstantinovic:

Yeah, I think it's definitely harder post DeepSeek for a company like Meta to justify the huge spending on AI. And some of the statements that Zuckerberg made during the earnings call I think are also interesting. He said that the company expects to have a billion Meta AI users by the end of the year, I believe, which is a huge number. I mean they could theoretically get to that fairly easily if they just really surface this feature to a bunch of users.

Marcus Johnson:

Yeah.

Daniel Konstantinovic:

They could certainly do that. But I think the bet there is that Meta AI can drive revenue in some way that it can be a significant ad vehicle and it's certainly possible, but we haven't seen that proven yet, I suppose. And all of these other user oriented AI features that are launching at other digital ad companies like Google with AI overviews, we don't really have a sense of how much revenue those features are adding to what the company is already making.

Marcus Johnson:

Luckily net income is doing good things for them. That's probably calming things down on one side whilst terrifying investors on the other with these investments in Capex. Net income $21 billion in Q4 in just pure income. And that's high, but it's 50% higher than the previous year For the last five quarters it's been hanging out in the 12 to 15 billion range. This is a market step change going up above 20 billion for the first time in a while.

Daniel Konstantinovic:

Yeah. If I could just say one more thing about Meta AI, I think it's important to clarify that this spending is not all going to the AI assistant, I'm sure.

Marcus Johnson:

Mm-hmm.

Daniel Konstantinovic:

It's going to be spread across the company and they are communicating things about their goals with Meta AI that I think are setting up the idea that it will be eventually a strong vehicle for advertising. They've talked a lot recently about how this assistant will have a deep memory and will store the conversations it has with users very specifically and if they can get users to engage with this as much as the company is hoping that they will, that personal assistant will have theoretically a lot of intimate knowledge or data around specific users that could make it a good place to target ads. But as a counterpoint to my own point, the question is if you're asking this AI assistant for recommendations or for help or whatever, and it's delivering you sponsored results, does that reduce the utility and desire to use this feature? It's a careful balance to walk and we haven't seen any company come out on the other end of that yet. Like Minda said, it is very abstract. It's just hard to picture what the end result there looks like.

Marcus Johnson:

Yeah, yeah. Playing devil's advocate with yourself. You're all over the place, Danny, but great points. Let's move to Snap. Last year, Snap's revenue growth was also dead in the water, 0% for four year 2023. This year it grew 16%. Again, quite the turnaround. Slice the pie. Minda, I'll start with you again. Creating a pie chart, three reasons max why Snap was able to bounce back in 2024.

Minda Smiley:

Yeah, for sure. I mean I would say about 60% definitely majority just goes to the fact that they've been working on strengthening their ad platform for quite some time and it is paying off clearly. I mean they saw a double-digit revenue growth and so I think that's a big part of it, especially when it comes to small businesses, especially when it comes to lower funnel. I think just the fact that they've really been investing is a big reason why we saw that jump. I also think Snapchat+, it's still a small part of their mix, but they're certainly seeing a lot of momentum there. I want to say that they said that they're expecting an annualized revenue run rate of 500 million, which for Snapchat that's not small potatoes. I think it's a slow burn, but I think they are really seeing some success there with Snapchat+ and they're investing in it and I think we're seeing revenue growth from that and we will continue to see more in the future.

I would give that about probably 25% in terms of just why they saw some growth this year. And then I would say the rest probably would go to just the fact that they've invested. Snap's an interesting one. It feels like they always are rolling out a lot of ad formats. They seem to have a really experimental test and learn mindset. They are constantly rolling out new ways for advertisers and brands to jump in, creators as well. They've definitely been investing in creators, especially in light of the TikTok stuff. I think they've been able to attract brands in that way as well.

Marcus Johnson:

Mm-hmm. Danny, what about yours?

Daniel Konstantinovic:

Yeah, I have a similar split. I think I attributed about 50% to, I could probably split this 50% into two 25s 'cause I have two things. I have an and joining something else with this 50%. One of those is like Minda said, focusing on smaller businesses and down funnel clients. Snap said at some point in the second half of the year that, which is something that a lot of companies said, that they're focusing less on these big top of funnel clients who have a lot of competition for spending and can be pretty volatile, like the biggest of the big name brands that you or I could think of. And they're really trying to open the platform to a wider pool of marketers, which just leads to more consistent spending.

Marcus Johnson:

Yeah.

Daniel Konstantinovic:

I think that's definitely a benefit of the company.

Marcus Johnson:

[inaudible 00:15:07]. Mm-hmm.

Daniel Konstantinovic:

I give that about 25% from splitting my 50 in half. And then the other 25%, which is something that I think is also interesting about the next company that we'll talk about, is Snap is just really trying to lean into its own unique distinctive qualities as an ad platform I think with things like AR marketing and sponsored lenses, things like that, a lot of new ad formats like Minda said. I think that something that these second tier of social platforms have really learned is that it's really hard for them to go toe-to-toe with Meta. And if they can offer something that is really distinct, they can benefit from that and carve out a unique and consistent place in marketers budgets.

Marcus Johnson:

Yeah.

Daniel Konstantinovic:

The threat to that, I suppose, is that there's nothing stopping Meta with its enormous amount of money from copying any feature that really takes off and starts to grow rapidly. Although they have already committed to spending a ton of money on AI. Maybe their ability to copy and be flexible that is a little more limited.

Marcus Johnson:

We talk about them in the same breath. I mean, Snap according to our numbers, sorry. Yeah, Snap according to our numbers is 20 plus times smaller than Meta. Snap actually is the 12th largest digital ad player in the list of ones that we track. LinkedIn makes twice as much money in ad dollars than Snap. We talk about them a lot and they make the headlines a lot, they're very innovative company. They're a social player, so that's why we talk about them alongside folks like Meta, but they're in a different grouping almost. And so they have to behave that way. They have to try to do all they can to get some attention and to make sure they're still part of advertisers budgets. The three things that jumped out to me quickly with Snap from digging around in their financials. North America average revenue per user was very strong.

That was up 10% year-on-year in Q4. That was huge. The second thing, which is probably, I buried the lead here because the second thing is huge, international users are the story for Snap. And they've been so for two and a half years now, 'cause if you look at the user side, Snap hit the ceiling for North America users back in the summer of 2022, if we can remember that far back. Since then, they've added no more North American users, but at the same time they've added a hundred million rest of world users. Folks outside of North America and Europe. On the revenue side, that's translated to 25 to 30% international revenue growth each of the past three years. Now international revenue accounts for 20% of their total. It was up from 14 a couple of years ago, so that's a huge part of the story. And then thirdly, Snap has made the first course of the profit in Q4 in three years, which is huge.

Daniel Konstantinovic:

Yeah. The other 50% of my pie was split between Snapchat+ and international users, which are definitely linked. I mean, a ton of the Snapchat+ subscriptions are coming from markets like India. And I mean, I have been very surprised to see that this has grown so consistently quarter after quarter. Messaging apps like this are notoriously difficult to monetize. I mean, which you can see in Snap's own previous struggles in 2022, I believe, to your point. Remember Meta and Snap and so many social platforms were reeling from the Apple tracking changes that really reduced their limit to target ads and forced these companies to rethink their advertising businesses or diversify their revenues, and Snapchat+ came out of that.

Marcus Johnson:

Yeah.

Daniel Konstantinovic:

And I certainly remember at the time thinking, is anyone really going to subscribe to a paid version of Snapchat? What benefits could they add to that to really drive subscriptions? But it appears to be working for them and I'm sure it's something that they're going to cling on to very tightly as long as it grows.

Marcus Johnson:

Yeah. That's Snap, as I mentioned, the 12th largest. A lot of other folks making more in ad dollars than them. One of them is Pinterest. Pinterest is a company we should probably be talking about more mind. I'm curious to know what you think of that statement because they've been making more, Pinterest, more in ad dollars than Snap for the last seven years according to our figures, which I was shocked to learn when I went back and looked. In summary in terms of how they've been doing more recently, four year 2024 revenues for Pinterest were up nearly 20%, global Monthly users were up over 10%. Mindy, yeah, what do you make of just the conversation around Pinterest and how we speak about them versus Snap and then also what jumps out to you about Pinterest and their most recent performance?

Minda Smiley:

Yeah, I know, it's funny. I think you're right. I mean, I feel like Snap does a good job at maybe making a lot more noise than some of these other second tier-

Marcus Johnson:

[inaudible 00:20:11] themselves the headlines, yeah.

Minda Smiley:

Platforms because yeah, they actually are pretty small when compared to some of these other platforms. But I think just because of historically within the social landscape, they pioneered a lot of things and they've just been able to keep that reputation. But yeah, they are quite small comparatively. In terms of Pinterest though, yeah, Pinterest is super interesting. I think, not to sound like a broken record, but I think they're benefiting from a lot of the same things that the other ones are benefiting from, namely focusing on those lower funnel goals that are really appealing to advertisers of course. And then the fact that they have a unique position within the social commerce landscape because they're seen as a place where people go for inspiration, for product recommendations and whatnot. They certainly have their own little lane there. And then I also think one thing that's interesting about Pinterest, they're leaning into this idea of them, I don't know if social listening platform is the best way to describe it, but I think they really have put a lot of resources into positioning themselves as these culture forecasters almost.

Every year they do this big push around here are the trends we think are going to be big next year based on our searches. And it's always really fun stuff like cherry red is going to be a huge color, pickles are going to be on cupcakes. It's always silly fun stuff.

Marcus Johnson:

Yeah.

Minda Smiley:

But I think that is really valuable for a lot of marketers. And I think Pinterest does have a lot of data that can help forecast some of those trends.

Marcus Johnson:

Yeah.

Minda Smiley:

I know that's a little bit abstract in terms of how it ties to their ad revenue, but I do think it plays a part.

Marcus Johnson:

No, absolutely. I mean, Danny, our colleague, Jeremy Goldman, who's with you on the briefings, he was saying Pinterest is evolving into a product discovery engine, giving brands a more intent driven alternative to social media ad platforms. I think this ties into what Minda's saying, it's not social media in the traditional sense, and advertisers are starting to really pay attention to that.

Daniel Konstantinovic:

Yeah. And I think Minda's definitely right that they have carved out a unique niche in social commerce. And as social commerce continues to grow in the US thanks to in large part efforts at TikTok shop, Pinterest will definitely benefit from a runoff of that. I think. And like I said, with Snap, this is a company that's definitely leaning into its unique qualities as a product discovery platform to drive growth. And it's really focusing on that. I think something that is interesting and that it warned about in its earnings call is that they still appear to be fairly reliant on Google search traffic, which is definitely something you can say of some other platforms like Reddit. But they said that the changes that Google is making to search with generative AI and whatever else could pose a threat to its business. I think the fact that they called that out maybe is a sign, I mean, correct me if I'm wrong or if you think differently, but maybe is a sign that they're struggling to generate consistent organic traffic that a lot of people are coming to the platform from an outside source first and not just going to Pinterest naturally when they're looking to start a shopping journey.

Marcus Johnson:

Yeah. Yeah, it's an interesting point, really interesting point. That's where we have to end the conversation unfortunately, gang. But thank you so much for your time in talking about some of the social folks with me. Thank you first to Minda.

Minda Smiley:

Thank you.

Marcus Johnson:

And thank you to Danny.

Daniel Konstantinovic:

Yeah, thank you.

Marcus Johnson:

Yes, sir. And thank you to the whole editing crew, Victoria, John Lance, and Danny Stewart who runs the team, and Sophie does our social media. Thanks to everyone for listening in to Behind the Numbers, an e-marketer video podcasts made possible by Zeta Global. Tune in Wednesday for the February edition of the Retailer Rankings episode with your host, Sarah Lieber.