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Meta is entering the generative AI business. Will it make a difference?

By Bryan Karas, Chief executive officer

April 21, 2023 | 7 min read

The move probably won’t give the company a huge revenue boost, but it could help its efforts to build the metaverse, writes Playbook Manager CEO Bryan Karas.


Meta announced in early April that it plans to embrace generative AI for the creation of ad content. / Adobe Stock

Earlier this month, Meta became the latest big tech company to publicly announce plans to incorporate generative AI into its business model.

Meta has invested heavily in AI research and development for many years. If there was anything surprising about the company’s recent announcement – which was focused on the use of generative AI usage in ads – it was that Microsoft and Google had already beaten them to the punch (with the launches, respectively, of a GPT-4-powered Bing and an AI-powered chatbot called Bard).

Generative AI has real potential to upend the search industry as we know it – but it’s a different story for Meta. It’s unclear at this point that the adoption of this technology will represent a major breakthrough for the brand.

What will Meta’s generative AI services mean for brands?

There are a few major hurdles that brands typically face in their efforts to be successful advertisers on Facebook, Meta’s flagship social media platform. Two of them – the loss of data and conversion tracking from iOS14 and prohibitively expensive engagement costs – won’t be addressed by Meta’s decision to adopt generative AI for ad creative.

Generative AI-fueled creative should, however, knock down one hurdle for small and midsize businesses (SMBs) who struggle to find the resources to produce enough copy, imagery and video to test and scale ads on Facebook. Creative limitations will no longer be a reason for brands to stay out of the Facebook ad auctions, which is good news for those SMBs that are willing to pay high engagement costs.

What will the adoption of generative AI do for Meta?

More SMBs in the auction would, of course, be even better news for Meta; as competition increases, so will engagement costs and, therefore, Facebook’s ad revenue. But I don’t envision the adoption of generative AI leading to more than a 10% to 20% increase in that revenue. That would be a great earnings call headline for Meta’s investors to see after what has arguably been the roughest stretch of the company’s post-IPO era, but it won’t represent a transformative shift.

My prediction is that more brands will enter the auction, and other brands who are currently advertising on Facebook will actively experiment with the generative AI functionality. But ultimately the inventory quantity is fixed and engagement costs can only rise so much without some brands being priced-out entirely.

Facebook’s fundamental advertising picture, in short, isn’t changing anytime soon. Generative AI won’t address Facebook’s flattened user numbers, particularly in wealthy countries. And it won’t lure younger users away from TikTok.

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Generative AI – which could revolutionize software engineering and coding – could, on the other hand, significantly enhance Meta’s efforts to develop the metaverse. Expedited and less expensive engineering, combined with Meta’s vision and creative talent, might give users (and advertisers a better reason to engage with the metaverse. And given that Meta founder and CEO Mark Zuckerberg has proclaimed 2023 the company’s year of efficiency, reduced engineering costs would be a huge company win.

Ultimately, I believe that Meta’s adoption of generative AI will help to boost its efficiency, rather than its growth. The company may get more revenue from its users, and background metaverse development can continue in the background at a breakneck pace without absorbing a huge quantity of resources. But if you’re looking for seismic shifts in the marketing landscape that are occurring as a result of the rise of generative AI, my advice is to look not toward Meta, but toward Google, Microsoft and the rest of the search industry. This is where the real, impactful change is happening.

Bryan Karas is chief exec of Playbook Media and a former client solutions manager and client partner at Facebook, which changed its name to Meta in 2021. For more on the latest happening in AI, web3 and other cutting-edge technologies, sign up for The Emerging Tech Briefing newsletter here.

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