Meta's Europe Ad Growth Slows After Less-Personalized Option

Meta Platforms told investors Wednesday that advertising revenue growth in Europe is decelerating now that EU users can choose a Less-Personalized Ads (LPA) option, a free setting that limits how much personal data informs the ads they see, according to Wired.

What is the Less-Personalized Ads model?

LPA lets Facebook and Instagram users in the EU opt out of broad personal-data-based targeting without paying for an ad-free tier. Under the setting, Meta says ads are chosen using data from a person's current browsing session plus limited signals such as age, location, and gender — a reduction the company says amounts to 90 percent less personal data than its standard personalized model, per Wired's report.

How much has Meta's European ad growth slowed?

Advertising revenue in Europe grew 18 percent year-over-year in the quarter ending in September, down from roughly 24 percent the prior quarter and about 40 percent two quarters earlier, Wired reported. That trails the 33 percent growth Meta posted in the US and Canada over the same September quarter, where growth actually accelerated from 30 percent to 31 percent in the prior comparison period.

Data box

• EU ad revenue growth: 18% (latest quarter) vs. 33% in US/Canada
• EU growth trajectory: ~40% → ~24% → 18% over three quarters
• LPA data reduction claimed by Meta: 90% less personal data used
• EU fine tied to the dispute: €200 million

Why did the EU require this option?

Meta introduced LPA at the start of this year after EU regulators found the company was not meeting its Digital Markets Act obligation to offer users a genuine alternative to personalized ads that uses less personal data, Wired reported. Regulators fined Meta €200 million over the issue. The European Commission had separately found that charging EU users for an ad-free Facebook and Instagram subscription — a option Meta rolled out in November 2023 — did not satisfy that requirement, according to the report.

What does Meta say is driving the slowdown?

Meta has not formally attributed the slowdown to LPA, but chief financial officer Susan Li flagged the risk in July. "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," Li said on the second-quarter earnings call, as quoted by Wired.

"We believe the EU's free, personalized advertising option is contributing to the European slowdown." — Dominic Ball, equity research director, Rothschild & Co Redburn

Meta has separately told the EU that less-personalized ads perform worse for advertisers, resulting in fewer transactions and more ads dismissed as irrelevant or repetitive, according to the report. Wednesday's results showed the price advertisers are willing to pay per ad in Europe is not rising as quickly as in the US and Canada.

How is Meta responding to weaker European ad performance?

Li told investors the company has "a lot of runway" to improve ad conversions by refining its recommendation engine even with fewer personal data signals, Wired reported. Ball said he expects Meta to lean on AI-driven targeting improvements to offset the loss of granular data in Europe. Meta does not disclose how many EU users have selected LPA over personalized ads, according to the report.

Glossary

• Digital Markets Act (DMA): EU law regulating large "gatekeeper" tech platforms, including data-use and consumer-choice rules.
• Less-Personalized Ads (LPA): Meta's free ad setting using session-based and limited demographic data instead of broad personal-data targeting.
• Ad conversion: The rate at which a shown ad leads to a desired action, such as a purchase or click.

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