Welcome to the latest edition of State of the Screens.  

Estimated reading time: 3 minutes [754 words]

Please forward this to friends and encourage them to sign up here. 

Onward,

Michael Beach

Meta: The World's Greatest Ad Machine

In late 2022, a team at Meta looked at a chart and saw bad news. People on Instagram were barely watching Reels. They spent ten times more time on TikTok instead. One report inside the company said "most Reels users have no engagement whatsoever." The product looked like a flop.

Things outside the office were worse. Meta's stock had crashed. The metaverse was a joke. Teens were leaving Facebook. Everyone in advertising thought Google would stay on top forever. Search and YouTube were just too strong.

Three and a half years later, Reels makes more ad money than all of YouTube. And Meta is about to surpass Google as the world's largest ad company. For the first time. Ever.

Let's break it down into 4 big questions:
1) What happened?
2) Why is Meta growing so fast?
3) How did Meta do this without TV and without big brands?
4) What about everyone else, and what's next?

What happened?

Meta is about to pass Google as the largest ad company in the world.

Global ad revenue (eMarketer):
1) Meta - $244B
2) Google - $240B

 Share of ad spend for Google / Meta (eMarketer):
1) Global - 53%
2) U.S .- 41%
3) U.S. (video only) - 18%

Why is Meta growing so fast?

Meta is growing faster than any ad company its size ever has.

Ad growth in 2026:
1) Meta - $47B (↑ 24%)
2) Google - $26B (↑ 12%)

Some might say Google had a head start. Google launched self-serve ad buying in 2000, seven years before Meta (2007). So I compared how fast Google was growing 19 years after it launched self-serve. Even with that head start, Meta is growing 54% faster.

Amazing: Meta keeps grabbing a bigger share of ad dollars even though people spend less time on its apps.

Digital share for Meta (eMarketer):
1) Time - 7%
2) Ad spend - 23%

How? They show more ads and charge more per ad.

YoY change (Mobile Dev Memo):
1) Ad impressions - ↑ 18%
2) CPM - ↑ 6%

Meta CPMs in U.S./Canada:
1) 2023-Q4 - $20.00 
2) 2024-Q4 - $22.80  (↑ 14%)
3) 2025-Q4 - $24.17  (↑ 6%)

How did Meta do this without TV and without big brands?

Meta built the largest video ad business in the world without touching TV. Let that sink in. This should give a truckload of perspective to everyone in New York who is having another shitfit over which calibration panel Nielsen is using.

Mike Shields made a few good points recently:
1) Meta has almost no presence on TV screens
2) Meta spends almost nothing on original content
3) It stays out of the metrics wars and public fights with Nielsen

More: Meta Completely Ignores TV, and Other Ad Wisdom. Its the Biggest Ad Player Anyhow

Even without premium video or the big screen, Meta makes 79% more money per hour of attention.

Ad revenue per hour (eMarketer):
1) Meta - $1.34
2) YouTube - $0.28

Perspective: Meta ads (mostly on phones) make twice as much per hour as regular TV.

Ad revenue per hour:
1) NFL Football - $2.95
2) Meta - $1.34
3) Linear TV - $0.57

The NFL charges $12B per year for its content.  Meta pays almost nothing.

I still think social video can steal attention on streaming TV, but the platforms (Meta, TikTok, etc.) may not think it is worth the effort to fully commit. By 2027, American advertisers will spend more on social video than linear and streaming TV combined.

What about everyone else, and what's next?

The four largest ad companies now take 66% of all ad spending.

Ad revenue (eMarketer):
1) Meta - $243B (25%)
2) Google - $240B (25%)
3) Amazon - $82B (9%)
4) Bytedance/TikTok - $72B (7%)
5) Total - $637B (66%)

OpenAI wants to turn this into a fearsome five. They plan to build a $102B ad business by 2030. That would be 36% of their total revenue ($284B).

Wow: It took Google 20 years to build a $100B ad business.  OpenAI wants to do it in 5.

To pull that off, OpenAI would need to generate $356 in ad revenue per year ($30 per month) from each U.S. user.

Bottom line

The biggest ad business in the world didn't get there by making great content, winning TV budgets, or dominating search. It got there by building a machine that made ads feel like content, and making that machine so easy to use that 10M small businesses showed up.

A decade ago, everyone laughed at Facebook passing Google. No one is laughing now.

Somewhere in Menlo Park, that chart looks a little different now.