Forget generative AI, what would really spark Meta’s recovery is a Roku acquisition

From the devastating effects of iOS 14 on the company’s advertising business to waves of mass layoffs to flattening user numbers, Meta has endured enough challenges over the last couple of years to cast a pall on its long-term outlook.

Recent stock rally aside, the “year of efficiency” that Mark Zuckerberg promised isn’t what’s going to transform Meta’s prospects. Neither is the recent announcement that Meta will bring generative AI functionality to its ad creation capabilities by the end of 2023.

To radically change its outlook, Meta needs ad inventory. And to get it, Meta needs connected television (CTV).

More specifically, Meta needs Roku.

The root of Meta’s conundrum

Before I explain how I came to this conclusion, a little historical context may help.

Meta’s growth over time has historically been driven primarily by the steady increase in users joining its platforms. When that curve started to flatten, the company increased ad load, or the number of ads a platform can show to a user during a given session. Increasing ad load meant that Meta could increase inventory, ultimately leading to more revenue. But that strategy has limits.

Perhaps most importantly, at some point, users will become over-inundated with ads and, as a result, will stop using the product. And we’re seeing this play out in real time; even Facebook’s surprisingly positive Q4 earnings showed user growth continuing to slow, and even Instagram founder Kevin Systrom has said publicly that the platform has “lost its soul” to too many ads.

CTV investment as a fix

The solution to over-saturation is diversified inventory. And a company like Meta, for antitrust reasons, certainly can’t acquire properties like Snap or TikTok.

CTV, meanwhile, offers amazing creative options, great inventory and lots of room to improve personalization (anyone who has been served a completely misaligned Hulu ad knows what I mean). For these reasons and more, it’s growing faster than other advertising channels.

As if that weren’t enough, one of the biggest players in CTV very much looks like it could be in the market for a white knight.

Roku, which derives a ton of value from owning its own advertising platform, has nevertheless seen its stock drop from a high approaching $500 a share in 2021 to less than $70 today as its revenue growth has stalled.

There’s a solution here that works for both parties. Imagine Roku’s inventory integrated with Facebook’s data and backed by Meta’s deep pockets; the engagement opportunities for truly personalized CTV would be off the charts.

I’ve wondered for a while why Meta hasn’t already taken the plunge into CTV advertising, particularly since its Portal TV product has put it on CTV’s periphery. As a Facebook alum familiar with the company’s founding ethos, I think the reason might be a persistent belief that Meta is a social media company. In fact, its biggest competency, 11 years after it first went public, is highly targeted, high-performing ads that have proven effective from discovery to retention.

It’s time for Meta to own that identity and take a bold step to maximize its potential. For users, that could mean some highly engaging, super-relevant ads coming soon to a smart TV near you.

Bryan Karas is chief executive officer at Playbook Media.