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Meta’s AI-driven advertising system splits marketers

Meta’s efforts to overhaul its advertising technology in response to Apple’s privacy changes are leading to bumper results for brands but also fears from marketers they are being forced to relinquish too much control to the social media platform.

The $440bn company has been pouring investment into applying machine learning and artificial intelligence to its advertising systems in recent months.

The aim is partly to overcome the restrictions introduced by Apple two years ago that force apps to get permission to track users and serve them personalised adverts. Meta said it lost around $10bn in revenue in the nine months after Apple rolled out its privacy changes in April 2021.

Meta has typically allowed advertisers to target users on the Facebook and Instagram apps based on behaviours 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 adverts according to the specific objectives of the marketer, such as whether a brand is seeking to sell products or win new customers.

The algorithms can run tests of potential ads and select what they think will be most effective, with the option to automatically alter text and images.

Meta said it had invested in dramatically expanding its computing power in order to train these more complex AI models on larger data sets. With less granular data available on the individual user, Meta instead is generating countless variations of adverts, assessing how well they resonate with audiences and then flooding the market with the variants that perform best.

Multiple advertisers and company insiders told the Financial Times the Advantage+ tool is significantly boosting the performance of advertising campaigns in ways that allow it to recover lost ground since Apple’s privacy changes.

Meta has spent more on revamping its AI advertising capabilities to battle the fallout from Apple’s changes than on chief executive Mark Zuckerberg’s lossmaking push to build a digital avatar-filled metaverse, according to one senior staffer.

“It’s been very lucrative for us, and we’ve been ramping up,” said Roberto Mendoza, associate director of global marketing agency iProspect. He added that for every $1 spent on a website advertising campaign through Advantage+, clients were generating $7 in returns — nearly as high as before Apple’s privacy changes.

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

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

Because it can no longer track Apple users beyond its own app without permission, Meta must lean more on so-called first-party data — such as whether users like or comment on a post, or tag or mention specific brands, according to several marketers. It is also wielding AI to develop new models to better estimate the performance of campaigns.

Over time, Meta hopes to use generative AI — a fast-emerging technology that can be used to produce novel content such as graphics — in its ads systems to allow it to rapidly tweak text and images in campaigns based on users’ responses to them at faster rates than ever, it said.

The advertising push comes as Zuckerberg declared a “year of efficiency” in response to investor concerns about revenue declines, leading to widespread job cuts and the elimination of underperforming business arms such as shopping features on Instagram.

After culling 11,000 workers in November, Meta is exploring further job reductions and removing layers of middle management, according to people familiar with the matter. Zuckerberg has claimed that Apple introduced its changes to deliberately damage the targeted ad-based business model of its Big Tech rivals.

David Herrmann, president of Herrmann Digital, a media buying agency, estimated that the revenue earned for each dollar spent on advertising by his clients was 20-30 per cent higher on Advantage+ than other campaigns on Meta not run through this tool. “Pretty much out of the gate, those campaigns started to outperform any business-as-usual campaigns,” he said.

By taking charge of 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 “further those predictions” around what works best, according to Simon Poulton, vice-president of digital intelligence at digital marketing agency Wpromote.

Cody Plofker, chief marketing officer at Jones Road Beauty, said Meta’s new tool allowed brands to spend less time trying to work out how to wield Meta’s systems to target specific users and instead “focus on creative strategy” with ads that attracted more widespread attention.

However, the system could promote content with high engagement, views, likes or comments that do not necessarily translate into sales. The UK games company that withdrew from Advantage+ said the platform had recommended an advert that attracted “inflammatory” and “hateful” comments from users.

“Looking at it from a numbers point of view only, that is great engagement but it does not help us sell the [product] or drive traffic,” the company said, adding that the tool lacked “human emotion and common sense”.

“The results are vastly better [but] you give over control,” a UK-based retailer said, adding the main change was it had lowered the cost for impressions, or how many people would view the ad. “You are effectively looking at a black box solution where there is an algorithm saying it can do better [marketing] work than you can.”


Business Asia
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