Meta spotlights how AI investments are paying off for advertisers

Following a "year of efficiency" in 2023, Meta has made artificial intelligence (AI) its top theme for 2024, investing aggressively in technology that touches every facet of its business, from users and creators to businesses and developers, CEO Mark Zuckerberg stated on the company’s recent earnings call.

AI — especially the generative kind — already fueled a 24% year-over-year increase in Meta’s ad business in Q4 for a total of $38.7 billion. Executives from Meta delved further into its plans for AI, explained what advertisers and agencies can expect from the tech this year and shared several success stories during a virtual roundtable on Feb. 7.

"2023 was a clear inflection point for us, and our Q4 earnings showed that Meta is really making it count for advertisers that use our tools,” said Alvin Bowles, vice president of Meta's global business group. “Our investments in AI are paying off for both advertiser performance and for our community with a more relevant discovery engine more than ever before."

Along with growing ad revenue, Meta saw increases in users and watch time in the last quarter, with daily watch time across all video types growing over 25% year-over-year and users resharing Reels 3.5 billion times per day. Meta attributes the engagement growth to investments in AI and its discovery engine that have been at the heart of its businesses for years and are now paying off.

“We are absolutely in the middle of our AI journey, not the beginning."

Alvin Bowles

Vice president, global business group, Meta

"We are absolutely in the middle of our AI journey, not the beginning. This is not a new thing for Meta; it's a cornerstone of what we do," Bowles said. "AI certainly improved the performance of our ad system and is behind personalized content that people see in all of our apps… AI is a fundamental part of the experiences we provide to both people and businesses."

Similarly, multiyear investments in machine learning, automation and AI that Meta made in its ad products to address changes in the digital ad industry are driving successes for advertisers. But those investments might not have paid off in full if the company was not able to take in feedback from hundreds of millions of users — a benefit of Meta's massive global scale.

"The feedback is a big part of how we improved our AI systems so quickly, especially in Reels and ads, where we had to re-architect around new rules," Bowles explained. "What you're seeing now is a result of those strategic decisions we made over the last number of years, and now nearly all of our advertisers are already using AI tools to help create and target their ads."

An AI-powered holiday season

Much of the AI and automation work in ads has enhanced Meta's Advantage suite of tools, including the Advantage+ Shopping solution that functions as an "easy button" that can automate campaign creation, as many advertisers did during last year's "AI-powered holiday season," per Bowles.

For example, Felicity, a small business specializing in jewelry around consumers' passions, leaned heavily into the Advantage suite through the Cyber Five period of Thanksgiving through Cyber Monday and saw a 24% increase in revenue and a 20% boost in customer return rate versus the same period in 2020. Meanwhile, Swiss sportswear brand On tested Meta's Advantage+ Catalog ads and product-level video solution en route to a 41% increase in return-on-ad-spend and a 45% decrease in cost-per-purchase compared to business as usual campaigns.

Meta has also started rolling out generative AI features including text variation and image expansion across its ad suite, and plans to broaden the availability of background image generation later this quarter.

During Cyber Five, cosmetic brand Fresh used Advantage+ Shopping Campaigns and the generative ad text variation feature to diversify ads and optimize for performance, driving a 5-times higher return on ad spend and a 42% jump in purchases compared to business-as-usual campaigns. Likewise, J.C. Penney used Messenger and Instagram to bridge the digital-physical divide with a custom gift bot that drove nearly 4X higher conversion rates during the holiday period.

"These are all extraordinary experiences, and you can see from the examples of small and large businesses, we're really focusing on businesses of all sizes," Bowles said. "Building AI driven products and services that connect people with businesses that they care about and help businesses grow will remain a top goal for us as a company."

Supercharging spend

Direct-to-consumer cosmetics brand Jones Road Beauty has been an early test-and-learn partner of Meta's AI tools and Advantage+ Shopping Campaigns solution. During the roundtable, CMO Cody Plofker spoke highly of how Meta's tools helped the brand navigate a Q4 that had initially been marked with caution over concerns about the consumer spending environment.

"I love [Advantage+] because we can really just focus on creative, we can really focus on overall strategy and concepting, but not necessarily need to be spending too much time in the platform media buying," the executive said. "Shop ads… has been another really cool thing to have in the mix… It's been another great way to reach new people."

Plofker and Jones Road Beauty work with Meta to build the ad and creative strategies to meet its evolving business goals, leaning into Meta's expertise around its own tools to test-and-learn new tactics. Along with investing in shop ads, the brand is running bid-cap campaigns and testing new bid strategies to boost return-on-ad-spend that have made it more confident in increasing its level of spend on the platform.

"During Black Friday, we spent some record days, amounts that we had to call AmEx and ask for a line of credit because the performance was there. But I wouldn't necessarily have been comfortable spending such a high figure if performance wasn't there," Plofker explained. "The fact that I was confident enough, and because I knew that we would only spend that amount If Meta was confident that the performance would be there, that's been a really big thing that's allowed us to make the most of our budget and spend it at the most appropriate times for us."

What to expect in 2024

Meta used the roundtable to lay out tips for agencies and advertisers around AI and beyond. Per Goksu Nebol-Perlman, Meta's vice president of product marketing, ads & business products, these include:

Accelerate investments in creative velocity to realize performance gains
Curation is the most important skill in this new era of generative AI
It’s necessary to share more brand insights with AI models to generate creative that better reflects a brand’s identity, voice and style
It’s time to begin putting headcount against generative AI roles within marketing organizations

Generative AI could also help advertisers navigate signal loss they'll face as Google continues deprecating third-party cookies and the ad industry shifts from interest-based to probabilistic targeting by improving campaign insights.

"Gen AI provides an opportunity for us to continuously iterate with the insights," Nebol-Perlman said. "The more you're able to create variations of everything and the faster the testing, the more the insights. That's where we're very much leading: using gen AI as an opportunity to provide more insights to businesses for them to continuously test and learn, and by doing that, they're going to run better campaigns that find better results."

Between ongoing signal loss and strong overall interest in AI, advertisers are taking action and leveraging the capabilities that Meta has been investing in for years. Users of these capabilities have seen how additive they can be to the advertising workflow, Bowles said.

"The more people that are using it, the more they're finding success," the executive said. "They're finding time being put back into their coffers to focus on the things that are really germane to these creative briefs."