How AI Has Boosted Meta’s Advertising Business

Around the world, advertising spend enabled by AI has reached about $370 billion. One reason: Big Tech companies have developed tools that use AI to do more targeted advertising. Examples range from Google (which offers a variety of AI-powered tools) to Amazon, whose advertising businesses has been strengthend by the adoption of AI and machine learning. At Meta, AI has played a role in helping the company re-tool its advertising business. Here’s how:

Meta Struggles

Meta’s adoption of AI tools has helped the company rebound from difficult times. In 2022, Meta suffered the largest single-day stock decline for any company because the demise of third-party cookies was hurting its ad business, which relied on third-party cookies to do effective targeting. This was a problem especially because Meta’s growth relies on its advertising business. But Meta licked its wounds and went to work figuring out how to develop better advertising offerings. AI played heavily into this reinvention.

AI Helps Meta Rebound

Two years later, Meta has wowed investors and impressed analysts by unveiling several AI-powered ad units that have bolstered its ad business. For example, Meta Advantage+ is a suite of advertising tools within Meta’s platforms (mainly Facebook and Instagram) that are designed to automate and simplify aspects of the advertising process using AI and machine learning. These include:

• Advantage+ Placements: automatically distributes your ads across relevant placements within Meta platforms for optimal results.
• Advantage+ Detailed Targeting: expands your audience targeting beyond manually selected parameters.
• Advantage+ Shopping Campaigns: promote your product catalog across Meta platforms, dynamically matching products to relevant users.
• Advantage+ App Campaigns: designed to drive app installs and in-app actions, these campaigns streamline the advertising process for apps.

These tools rely on machine learning and AI algorithms to achieve their automation goals. For example, Meta’s AI analyzes vast amounts of data from user behavior, ad performance, and campaign settings to optimize ad placements, targeting, and campaigns. AI helps Advantage+ identify the best-performing ad combinations (creative, targeting, etc.); predict which users are most likely to convert; and continuously adjust campaigns in real-time for improved results.

AI and machine learning do more than optimize Advantage+. Together they also provide some other useful capabilities such as:

• Creative generation and testing: some Advantage+ tools can generate variations of ad creatives or suggest copy based on what it knows about your audience and successful ads. It can then test different variations to find the best performers.
• Audience expansion: the algorithms can analyze your existing audience data and targeting, finding new potential customers who share similar traits and interests.
• Budget allocation: AI can distribute your budget across different ad sets or placements within a campaign for maximum efficiency.

These features have made it easier for advertisers to reach Meta’s vast audience across Facebook, Instagram, and WhatsApp.

Meta Achieves Results

The adoption of these tools is credited with helping Meta achieve a strong turnaround in its advertising business. As Marketing Dive reports, the uptake of AI in advertising reflects a broader adoption of AI across organic content, too:

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.

In addition, Meta is rolling out more features that apply generative AI, such text variation and image expansion. The company plans to broaden the availability of background image generation.

Tips for Using AI-Powered Ad Tools

At IDX, our paid media team has adopted Meta’s tools to help clients develop more efficient advertising campaigns. For instance, we’ve helped clients use AI to optimize images for different ad formats such as Stories. AI has made it possible for us to more easily resize and edit images, select tone-appropriate music, and develop ad copy. This has helped us improve clickthrough rates and decrease the number of times someone is exposed to the same ad. We’ve been pleased with the results. At the same time, we also believe that no AI-powered ad tool (from Meta or any company) is a set-it-and-forget-it solution. These tools require fine tuning and management. Our tips:

• Don’t hand over the keys to AI. Automatic ad optimization isn’t a silver bullet. Sometimes AI-powered tools recommend solutions that don’t work. For example, Advantage+ sometimes optimizes ads with music that is off brand for a client. We must monitor the music that Advantage+ recommends and sometimes fine-tune its recommendations with suggestions for more brand-appropriate music.
• Test the waters. Try different Advantage+ features to get used to how they work. As noted, you’ll need to refine the results. Don’t go all in; test and learn, one feature at a time.
• Mind privacy. We’re impressed with how Advantage+ can create lookalike audiences based on data you provide about your own desired audiences. But be very careful about the amount of data you share with Meta. Don’t include personally identifiable data.
• Keep humans in the loop. People need to provide oversight for AI far more than ever. Paid media experts need to monitor campaign performance to make sure metrics do not fluctuate drastically, for example. Paid media experts need to review leads generated by Advantage+ to ensure that they are qualified, and that automated content is on brand, for starters.

Embrace AI in advertising if you want to stay relevant. At IDX, we can help you do that. Learn about our paid media capabilities on our website.