Meta's AI-driven ad system divides marketers

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Meta's efforts to overhaul its ad technology in response to Apple's privacy changes are producing great results for brands, but marketers are also concerned about being forced to cede too much control to the social media platform.

In recent months, the $440 billion company has invested heavily in applying machine learning and artificial intelligence to its advertising systems.

The goal is partly to overcome restrictions Apple introduced two years ago, which require apps to obtain permission to track users and serve them personalized ads. Meta said it lost about $10 billion in revenue in the thailand mobile database months after Apple implemented its privacy changes in April 2021.

Meta has generally allowed advertisers to target users on the Facebook and Instagram apps based on behaviors gleaned from users' online activities outside the platform, as well as characteristics such as age and gender.

Now, an offering launched in August, called Advantage+, uses artificial intelligence to automatically generate multiple ads based on a marketer's specific goals, such as whether a brand is looking to sell products or gain new customers.

Algorithms can test potential ads and select what they think will be most effective, with the ability to automatically modify text and images.

Meta said it has invested in dramatically expanding its computing power to train these more complex AI models on larger datasets. With less granular data available on individual users, Meta generates countless variations of ads, assesses their resonance with audiences, and then floods the market with the best-performing variants.

Multiple advertisers and company insiders told the Financial Times that the Advantage+ tool significantly improves ad campaign performance, helping Meta regain ground lost since Apple's privacy changes.

According to a senior executive, Meta has spent more money improving its AI advertising capabilities to cope with the fallout from Apple's changes than on Chief Executive Mark Zuckerberg's loss-making campaign to create a digital metaverse filled with avatars.

“It’s been very lucrative for us, and we’ve accelerated the pace,” said Roberto Mendoza, managing partner at international marketing agency iProspect. He added that for every dollar spent on a website ad campaign through Advantage+, clients generated a return of $7—nearly as much as before Apple’s privacy changes.

However, three companies have expressed concerns to the Financial Times about the extent to which they must now entrust the management of their campaigns to the social media company and its algorithms.

“We made the active decision not to use the Advantage+ feature because of the amount of control you have to give up as a marketer,” said a UK-based gaming company.

Since it can no longer track Apple users beyond its own app without permission, Meta must rely more on so-called first-party data—such as whether users like or comment on a post, or whether they tag or mention specific brands, according to several marketers. The company is also using AI to develop new models to better estimate campaign performance.

Over time, Meta hopes to use generative AI – a burgeoning technology that can be used to produce innovative content such as graphics – in its advertising systems to enable it to quickly adapt campaign text and images based on user feedback, at a faster pace than ever before.

The publicity push comes as Mr. Zuckerberg declared a "year of efficiency" in response to investor concerns about declining revenue, which has led to widespread job cuts and the elimination of underperforming business units, such as Instagram's shopping features.

After eliminating 11,000 workers in November, Meta is considering further job cuts and eliminating layers of middle management, according to people familiar with the matter. Mr. Zuckerberg has claimed that Apple introduced its changes to deliberately undermine the targeted advertising-based business model of its Big Tech rivals.

David Herrmann, president of Herrmann Digital, a media buying agency, estimated that his clients earned 20 to 30 percent more revenue per dollar spent on advertising on Advantage+ than on other Meta campaigns not running through the tool. “Right off the bat, these campaigns started outperforming typical campaigns,” he said.

By supporting Advantage+ campaigns and using AI to test “different permutations” of ads on different demographics, instead of relying on advertisers to decide their targets, Meta is able to “dive deeper into those predictions” around what works best, according to Simon Poulton, vice president of digital intelligence at digital marketing agency Wpromote.

Cody Plofker, director of marketing at Jones Road Beauty, said Meta's new tool allows brands to spend less time trying to figure out how to manipulate Meta's systems to target specific users and focus on creative strategy with ads that attract broader attention.

However, the system could promote content with high engagement, views, likes, or comments that doesn't necessarily translate into sales. The British gaming company that withdrew from Advantage+ said the platform recommended an ad that attracted "inflammatory" and "hateful" comments from users.

"From a purely numbers perspective, engagement is great, but it doesn't help us sell the [product] or drive traffic," the company said, adding that the tool lacked "human emotion and common sense."

“The results are significantly better [but] you give up control,” said one UK-based retailer, adding that the main change was the lower cost of impressions, meaning the number of people who view the ad. “You’re effectively looking at a black-box solution where there’s an algorithm that says it can do a better job [of marketing] than you.”