Meta's advertising business in Europe is losing momentum now that people in the region can choose to let less of their personal data shape the ads they see. The company's latest quarterly results, released on Wednesday, showed the slowdown continuing through September.
Advertising revenue in Europe rose 18 percent year-on-year in the three months to September. That was slower than in each of the previous two quarters and well below the 33 percent growth reported in the US and Canada, meaning the region underperformed Meta's global figures.
Meta did not directly attribute the slowdown to its Less-Personalized Ads (LPA) model on Wednesday. However, chief financial officer Susan Li flagged the issue during the July call following second-quarter results. "We're seeing the impact of less personalized ads offering in Europe now that it's fully rolled out, and that may be an additional headwind," she said at the time. Over the two preceding quarters, European ad growth had fallen from around 40 percent to 24 percent, while in the US and Canada it edged up from 30 percent to 31 percent.
Dominic Ball, equity research director at market analysis firm Rothschild & Co Redburn, was more direct. "We believe the EU's free, personalized advertising option is contributing to the European slowdown," he told WIRED.
Meta began offering the LPA option to Instagram and Facebook users at the start of this year. The move followed a ruling by EU regulators that the company had breached its Digital Markets Act obligation to give consumers the choice of an equivalent service using less of their personal data, and a €200 million fine. The European Commission had found that Meta's approach, introduced in the EU in November 2023 and charging users who declined personalized ads for an ad-free service, did not meet that requirement. Meta does not disclose how many people have picked each option.
According to Meta, LPA uses 90 percent less data than personalized advertising. Ads are chosen based on what a person views in a given session, along with a few data points such as age, location and gender. In responding to the EU's ruling, the company warned that this would produce poorer returns for advertisers in Europe, with less efficient ads leading to fewer transactions and more ads being closed because they are irrelevant or repetitive. Wednesday's results also showed that the price advertisers are willing to pay per ad in Europe is not growing as quickly as in the US and Canada.
Li told investors the company has "a lot of runway" to improve ad conversions and efficiency, including by continuing to find ways to enhance the performance of its recommendation engine. Ball said he believes Meta can use AI to sharpen its ad targeting in Europe even with fewer personal data signals available.
Much of the call, however, centered on Muse, the personal AI agent Meta launched last month, as investors sought to understand how it fits into the advertising business. Li said the company is seeing high commercial intent from Muse users, who ask for product recommendations, research alternatives and compare options. She indicated this would eventually allow Meta to tap into the advertising market through the product.
