TikTok and YouTube see usage up in Q2, but Instagram and Facebook see declines: MS

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Investment firm Morgan Stanley noted that the time spent on TikTok by ByteDance (BDNCE) and Google (NASDAQ:GOOG) (GOOGL) YouTube continued to grow in the second quarter, but Meta Platforms (NASDAQ: META) Facebook and Instagram saw declines, citing recent third-party data.

A group of analysts, led by Brian Nowak, noted that YouTube (GOOG) (GOOGL) saw engagement growth for the third consecutive quarter and 20% above 2019 levels, with total time spent growing 3% year-over-year.

Analysts said the trends were “encouraging”, noting YouTube’s large base, as 74 million users have already spent 72 minutes a day on the platform and competition from ByteDance’s (BDNCE) TikTok continues.

ByteDance’s (BDNCE) TikTok saw a 14% year-over-year increase in total time spent during the period, as US daily users grew around 11% year-over-year other to reach 95M and that the average time spent increased by 3% to approximately 91 minutes per day, although this is a “significant deceleration” compared to the growth of approximately 45% d year-on-year observed over the past two years.

“This shows how the second engagement risk derived from TikTok to other platforms may begin to decline,” the analysts wrote, adding that from a monetization perspective, the focus is on the ability to TikTok to “evolve ad products, build programmatic tools, and ultimately drive advertiser ROI.”

In total, time spent on social media increased 4% year over year in the second quarter to 2.5T minutes across the top six platforms.

Conversely, meta platforms (META) saw a 1% year-over-year decline, with analysts noting that the risk has been increased of Reels cannibalizing other products.

Analysts noted that total time spent on Instagram and Facebook are 12% and 16% higher than Q2 2019 levels, but year-over-year growth for Instagram “has slowed significantly” to just 2%. year-over-year, down from around 20% in the first quarter.

Facebook’s blue app continues to see a decline in total time spent, falling 3% year-over-year in the second quarter, compared to a 5% year-over-year drop in the first quarter .

“In our view, these slowing time-spending trends combined with META’s growing and successful efforts to emphasize Reels indicate a growing tactical risk that Reels’ engagement will be more cannibalistic for short-term time and revenue. (given that Reels still monetizes at significantly lower rates than basic Feed/Stories offerings),” the analysts wrote.

Other social networks also did not perform well in the second quarter, such as Snap’s (NYSE: SNAP) Snapchat saw a 1% year-over-year drop in time spent in the second quarter, though that’s better than the company’s 3% to 13% year-over-year declines. experienced last year.

Pinterest (PINS) saw a 9% year-over-year drop in total time spent during the second quarter, which Morgan Stanley said was “the lowest number of minutes since 2017.”

“Continued engagement challenges have contributed to our downgrade and we remain cautious as PINS focuses on shifting to lower monetization short video offerings on the platform,” the company said.

Earlier this week, it was reported that Alphabet (GOOG) (GOOGL) intended to slow its hiring in the second half of 2022, noting that it was not immune to global economic headwinds.

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