Meta Focuses on AI for Advertising Growth

Meta's AI Offensive in the Advertising Market

Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, is increasingly focusing on Artificial Intelligence (AI) in its advertising business. This became clear during the conference call with investors, where Mark Zuckerberg, CEO of Meta, presented the company's future direction. In contrast to other large tech companies that use AI in many different areas, Meta is concentrating on one core area: targeted digital advertising.

Zuckerberg explained that AI should not just be a supplement, but the centerpiece of Meta's business model. He predicted that due to increased productivity thanks to AI, advertising will have a significantly larger share of global GDP in the coming years than it does today. Already, almost a third of advertisers on Meta platforms are using AI as a tool for content creation. A new, AI-powered recommendation system for advertisements has increased conversion rates on Reels, Instagram's short video format, by 5%.

Meta sees itself as being able to connect advertisers and potential customers more effectively through AI. AI is intended not only to deliver advertising content more precisely, but also to recommend marketing content for advertisers and optimize their campaigns. Zuckerberg emphasized that Meta's AI is already better at finding target audiences for products than many companies themselves, and this capability will continue to improve.

Meta plans to invest over 70 billion US dollars in AI capacities this year. The statements in the conference call served to show investors and shareholders how these investments could pay off in the long term. Compared to other large AI companies, which often invest large sums without presenting clear monetization strategies, Meta offers a concrete model of how AI can be used to generate revenue.

By using AI in the background to better match advertisers and buyers, and thus also the content of the advertising materials, Meta wants to make its platforms even more attractive for companies that want to maximize their marketing spend. End users should receive more relevant advertising messages in formats that they are more likely to engage with.

In addition, Meta plans to use AI in business messaging, AI-equipped devices such as the next generation of smart glasses, and to better personalize users' timelines. According to media reports, Meta wants to capture market share from competitors such as Google's advertising networks, OpenAI's ChatGPT, and Apple's emerging AI solution "Apple Intelligence".

After Zuckerberg's previous statements about the Metaverse, which caused skepticism among some investors, the return to the core business and the ambitious plans for the AI-supported development of one of the world's largest advertising networks seem to have dispelled those concerns. By justifying the AI investments with clear plans and targeting competitors in the digital marketing sector, Zuckerberg has calmed investors' fears while simultaneously issuing a challenge to the competition.