Artificial intelligence (AI) is the focal point in the year ahead for Facebook’s parent company Meta Platforms.
“In terms of investment priorities,” CEO Mark Zuckerberg said on Meta Platform’s third quarter earnings call with analysts on Wednesday (Oct. 25), “AI will be our biggest investment areas in 2024 — in engineering and computing resources.”
The company’s earnings materials and Zuckerberg’s commentary noted that there’s been a boost to the core advertising business and the family of apps even as the company seeks to find ways to weave AI more prominently into Ads Manager, and to enable commerce more seamlessly for its advertisers, optimizing images and text.
And against that backdrop, the companysi going to be de-prioritizing at least some non-AI projects in favor of those focused on the emerging and advanced technology — and will be hiring for AI roles next year.
During the question-and-answer session with analysts, CFO Susan Li said in response to inquiries about AI’s continued use in advertising and in new use cases, “You’ll see that we have been increasingly testing these in our AI sandbox. As they become more mature, we’ll incorporate them into our ads manager directly.
“We’ve incorporated them into some of our Advantage+ solutions. A few that I would highlight that we’re rolling out this quarter are text variations — generating multiple versions of ad text based on an advertiser’s original copy that helps highlight the selling points of their products and services.”
AI-driven feed recommendations continue to grow their impact on incremental engagement, said Zuckerberg, who added that there has been a 7% increase in time spent on Facebook and 6% on Instagram.
“AI tools for advertisers are also driving results with Advantage+ shopping campaigns, reaching a $10 billion run rate,” he said. AI, he said, is bringing the cost of commerce and messaging down and will be another line of focus next year.
Elsewhere, Reels has driven a 40% increase in time spent on Instagram since the launch — and the offering is “net neutral,” as Zuckerberg said, to overall company ad revenue.
“Reels has graduated from being an early initiative,” Zuckerberg said, “to being a core part of our apps.”
Of course it is the bread-and-butter business — the apps themselves — that are the springboard for the more ambitious, long term plans for AI and other relatively newer efforts. Zuckerberg and CFO Li said that Facebook daily active users were 2.1 billion, up 5%, or 101 million, compared to last year. Monthly Active Users grew by 91 million, or 3% compared to last year. The company’s total family of apps revenue came to $33.9 billion, up 24% year over year.
Ad revenue was $33.6 billion, up 21% on a constant currency basis.
“Within ad revenue,” Li said, “the online commerce vertical was the largest contributor to year-over-year growth, followed by CPG [consumer packaged goods] and gaming. Online commerce and gaming benefited from strong spend among advertisers in China, reaching customers in other markets.”
“Other revenue” within the apps pantheon stood at $293 million, up 53%, driven by what Li said was “strong business messaging revenue growth from our WhatsApp business platform.”
A bit more than three months after launch, Zuckerberg said of Threads that there are “just under 100 million monthly actives at this point.”
And with a nod to the metaverse, Zuckerberg noted that the company has been testing Horizon for phones, tablets, and PCs — “an important part o how we build out metaverse across devices.” The company’s earnings materials illuminated that the Reality Labs segment, housing the metaverse efforts, logged a $3.7 billion operating loss, while revenues slipped to $210 million, down 26% from last year.
Investors bid the shares down about 3% after hours, as Li noted that there is still “volatility” in the “macro landscape” and that revenue trends may be uncertain.
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