(Bloomberg) — Meta Platforms Inc. will show advertising on social network Threads for the first time, opening up a new revenue stream for the company and increasing competition for Elon Musk’s X.
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The ads will come from a “handful of brands” and appear only in the US and Japan to start, according to a post Friday from Instagram boss Adam Mosseri, who called the move a “test.”
Meta will be “closely monitoring this test before scaling it more broadly, with the goal of getting ads on Threads to a place where they are as interesting as organic content,” Mosseri wrote on the platform.
The company’s Instagram team launched Threads, a clone of Musk’s X, in mid-2023 after Musk bought the social network formerly known as Twitter in October 2022 and struggled to maintain its advertisers. Meta has teased the idea of bringing ads to Threads for months, but held off to focus on expanding the network’s user base. As of December, Threads had 300 million monthly users, and more than 100 million daily users, Chief Executive Officer Mark Zuckerberg said at the time.
It’s not clear what the revenue potential for Threads will be long-term, but the service will benefit from Meta’s existing pool of advertisers and its ability to hyper-target messages to specific consumers. Twitter never succeeded in building the kind of massive advertising business Meta has achieved with Facebook and Instagram. At its peak in 2021, Twitter revenue was $5.1 billion. Meta’s global revenue in 2024 is estimated to be about $163 billion, so Threads will likely be a small part of the company’s business for some time.
The move may take advantage of volatility in the social media industry, given X’s issues and questions about TikTok’s future, said Jasmine Enberg, an analyst at Emarkerter. Still, Meta’s recent decision to abandon content moderation in the US may cause some hesitancy among advertisers, she said.
“The timing will likely be questionable for many brands, who may no longer view Threads as a safer alternative to X,” Enberg said. “Many users are also already skeptical about Meta, and the launch of ads on Threads is likely to elicit backlash.”
Meta has been enthusiastic about growth prospects for Threads. Its user base has been increasing, particularly in the US and Japan, which are among its key markets, Chief Financial Officer Susan Li told investors during an earnings call in October.
