Meta's AI Abundance(stratechery.com)
stratechery.com
Meta's AI Abundance
https://stratechery.com/2024/metas-ai-abundance/
27 comments
It's in there but buried, I think it's really hard to overstate that Gen AI is Meta (and Amazon's and Apple's) opportunity to wrest search away from Google.
It's the ads, less so the AI. Meta makes an absolute killing with ads by dominating much of the internet now, usurping the throne from google. Instagram + Facebook +WhatsApp is probably easily going to be worth $2+ trillion even if the Metaverse does not work. AI is the icing on the cake or long shot that can catpult Meta to even more riches.
> Meta makes an absolute killing with ads by dominating much of the internet now, usurping the throne from google.
That (the usurping the throne from Google part) seems wrong to me. Not sure if this has changed in recent years, but Google and Facebook/Meta ads always seemed very different to me. I.e. Google had such specific search intent so it was possible to target items at near the point of purchase so effectively. Facebook/Insta ads were more about introducing people to new products by knowing so much demographic info about people.
In my experience, the ROI on Facebook ads in specific verticals was absolutely horrible. For example, banks and fintechs are willing to pay a ton for customer acquisition because these services are so sticky - get a new banking customer, and often you'll have them for life (changing banks can be a major PITA). But for all the people mindlessly scrolling through Facebook and Instagram, very few of them are wanting to go check out a new bank account opportunity while they're looking at funny cat videos.
Again, not sure if this has changed recently, but search ads and social media ads always just seemed to have very different purposes to me.
That (the usurping the throne from Google part) seems wrong to me. Not sure if this has changed in recent years, but Google and Facebook/Meta ads always seemed very different to me. I.e. Google had such specific search intent so it was possible to target items at near the point of purchase so effectively. Facebook/Insta ads were more about introducing people to new products by knowing so much demographic info about people.
In my experience, the ROI on Facebook ads in specific verticals was absolutely horrible. For example, banks and fintechs are willing to pay a ton for customer acquisition because these services are so sticky - get a new banking customer, and often you'll have them for life (changing banks can be a major PITA). But for all the people mindlessly scrolling through Facebook and Instagram, very few of them are wanting to go check out a new bank account opportunity while they're looking at funny cat videos.
Again, not sure if this has changed recently, but search ads and social media ads always just seemed to have very different purposes to me.
This is a well thought out bull case for AI paying off at Meta. I just wonder what the upper limit is on ad spend in this economy from that long tail of advertisers, especially to Meta users which seem to be mostly focused on consumer goods. Surely Meta is already tapping into an enormous portion of that limit.
If AI can help an advertiser get the outcome they want in 1000 ad impressions instead of 5000 ad impressions (with more precise targeting or more appealing creative), Meta can 5x the price of those 1000 ad impressions, keep the advertiser happy with the same ROI they had before, and sell 4000 additional impressions to someone else as incremental profit.
Or they could 4.9x the price to show the current advertiser a better ROI and encourage higher spend from them, while still having the 4000 extra impressions to sell.
Or they could 4.9x the price to show the current advertiser a better ROI and encourage higher spend from them, while still having the 4000 extra impressions to sell.
This is precisely why I’m skeptical. It assumes that that first advertiser can sell more of the same products just with better copy or more targeted placement and that more advertisers can backfill the previously used inventory that the first advertiser no longer needs and enjoy better sales too.
But doesn’t that then mean that many more product sales are taking place as opposed to the same number of sales spread across more impressions? I don’t see how many more sales can take place without users spending more money or the number of users going up and my original point was that meta is surely tapping into that addressable market as it is. There are only so many consumer dollars to go around.
But doesn’t that then mean that many more product sales are taking place as opposed to the same number of sales spread across more impressions? I don’t see how many more sales can take place without users spending more money or the number of users going up and my original point was that meta is surely tapping into that addressable market as it is. There are only so many consumer dollars to go around.
It's way higher. I experimented with targeted search ads to try and sell some copies of Conveyor (a developer tool for desktop app devs, see bio). It was a waste of time. Google took a pile of cash and delivered zero conversions. It turns out that the conventional wisdom is now that search ads are too expensive for small companies. It's also extremely complicated. Even with a lot of work on targeting, the traffic you get is junk and it's hard to track conversions. I suspect most devs just block ads and never saw the ads at all, even if I was charged for them.
If Meta can use AI to make niche B2B advertising work better then there's still a lot of room for growth. Like, if there was a way to get AI to advertise my product to people asking frustrated questions about how to deploy their desktop apps, I'd be very interested in an offer like that.
If Meta can use AI to make niche B2B advertising work better then there's still a lot of room for growth. Like, if there was a way to get AI to advertise my product to people asking frustrated questions about how to deploy their desktop apps, I'd be very interested in an offer like that.
They're also thinking about tapping into small-scale "mom and pop" shops, with lots of "AI"-augmented services, like customer support, translation, seo, marketing copy and so on. If they find a good price-point for that, they could bring in a lot of revenue from that side as well. They control lots of entry points for a lot of users, between fb, insta, whatsapp and so on.
B2B is kind of weird in advertising - you are still just selling to a person. So even Facebook advertising is used in b2b because targeting by job title/interest area is strong there.
IMO there isn’t much of an upper limit, as long as roas is decent the limit exists elsewhere (manufacturing, people, etc) and any gains in those areas means more advertising spend is viable.
IMO there isn’t much of an upper limit, as long as roas is decent the limit exists elsewhere (manufacturing, people, etc) and any gains in those areas means more advertising spend is viable.
Hyper targeting can grow the advertising pie. Eventually meta can become basically "the ultimate salesman" hand delivering users to 3rd parties that completely fulfill a problem the user has. The amount they could charge to completely take care of all user acquisition(especially if theres an implied threat of "we'll take all your customers to your competitor if you fuck around") is astounding.
So many well thought out words and almost none about product, users or the people who actually provide the asset being monetised.
The products they make are sugar and if you wean yourself off you find they’re not actually important to you. There may be a strong hold, but switch focus and it’s easily broken.
There’s vulnerability there just waiting to be exploited.
The products they make are sugar and if you wean yourself off you find they’re not actually important to you. There may be a strong hold, but switch focus and it’s easily broken.
There’s vulnerability there just waiting to be exploited.
I don't know why you're being down-voted. The societal implications of Meta's products are profound and as yet poorly understood. I always encourage friends and family to remove social media apps from their phones. The thought of AR glasses controlled by Meta creeps me out.
Technically true but till date all the evidence about people weaning off it is against it. The social media addiction has become worse over the years and the companies serving this are valued at trillions. So what you say is technically true but it has a smaller chance of it happening than meta failing to monetize AI
>the more of a black box Meta’s advertising becomes the better the advertising results, even as Meta makes more margin
this one screams 'citation needed' and is not what I'm hearing from people in the field. Would anyone care to share their experience?
this one screams 'citation needed' and is not what I'm hearing from people in the field. Would anyone care to share their experience?
I think this might be a general reference to the ever declining efficacy of manual targeting after ATT/GDPR.
So even if automatic (black box) targeting merely maintains its effectiveness, it’s relatively better for advertisers to shift spend towards it at the margin.
So even if automatic (black box) targeting merely maintains its effectiveness, it’s relatively better for advertisers to shift spend towards it at the margin.
I sold in 2022 when they went full metaverse on us... one of my mistakes was believing Zuckerberg when he said he would bet the company on VR.
I think another mistake is people thinking metaverse = VR. Metaverse is a catch all term for the post-smartphone internet. Things like the RayBan glasses, Orion, that EMG wristband they showed at connect, etc. are all part of that.
I'd argue that there is 0 evidence so far that there will be a "post-smartphone internet", at least in the near/mid term.
Sure, those wearables may find niche use cases, but Zuckerberg definitely believed that the "Metaverse" (god I hate that term) would be the Next Big Computing Platform, as significant as the switch from desktops and laptops to smartphones. That has certainly not happened, and lots of people, myself included, still feel that all of these other devices are at best a "oh, that's cool" for a bit before ending up in a drawer somewhere, or at worst an undesired annoyance.
Sure, those wearables may find niche use cases, but Zuckerberg definitely believed that the "Metaverse" (god I hate that term) would be the Next Big Computing Platform, as significant as the switch from desktops and laptops to smartphones. That has certainly not happened, and lots of people, myself included, still feel that all of these other devices are at best a "oh, that's cool" for a bit before ending up in a drawer somewhere, or at worst an undesired annoyance.
Agreed, but unrelated to if Meta/Zuck are right or successful, thinking of the metaverse as just a VR play is wrong and also underestimates the scope of the project.
Anyone who sold their meta stock certainly regretting it. what a comeback.
Fun thought that same amount of buyers were buying from these people
The stock dropping below $90 coupled with all the blatantly untrue “no one uses meta anymore” posts on reddit seemed to be sheer stupidity tbh. They were reporting earnings and user growth at the time. It’s now >$570, a similar rise to Nvidia.
It should be a lesson in doing the opposite to /r/stocks sentiment. (They also had tons of posts on why shorting nvidia would be a great idea a year ago).
Basically do the opposite to the most uneducated group of investors you can find and you have a good chance at making money off their bad trades. Don’t try to inverse the large firms with huge amount of research. Just inverse reddit for easy money.
It should be a lesson in doing the opposite to /r/stocks sentiment. (They also had tons of posts on why shorting nvidia would be a great idea a year ago).
Basically do the opposite to the most uneducated group of investors you can find and you have a good chance at making money off their bad trades. Don’t try to inverse the large firms with huge amount of research. Just inverse reddit for easy money.
Is there an ETF for that?
They're spending more on VR in 2024 than 2023. As much as it's laughed at, I believe VR/AR will be a big platform, it's still growing healthily. And it's pretty awesome, go try the Quest 3. Most importantly for Meta, they completely own VR at this point. There's so much hardware and software that needs to be developed in order to compete that I doubt anyone can do it at this point. Apple tried, but besides the high price the software is just not mature enough, it takes many years to develop all the necessary parts.
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