Over the years, advertising has transformed into a pitch for brands to battle it out. In today’s world, with a layer of artificial intelligence (AI) and generative AI (GenAI), the game has many new twists and turns in its plot. From creating a volume of campaigns to targeting precisely, and lastly driving the performance of each campaign, technology has changed the way of advertising on digital platforms. The total advertising market is valued at Rs 1,13,500 crore, with digital advertising accounting for 51% at Rs 57,885 crore, as per the FICCI-EY report 2024. Of this, Google and Meta account for 70% of the digital ad spends, amounting to Rs 40,519.5 crore. It is a no-brainer that technology giants such as Meta have rolled out a slew of tools allowing advertisers to create more effective and impactful campaigns. This, perhaps, is also a way of taking the fight against other leading tech companies. For first quarter 2024, Meta declared its financial results, which showed that total revenue and revenue on a constant currency basis were $36.46 billion and $36.35 billion, respectively, both of which increased by 27% year-over-year (YoY). Furthermore, the company anticipates second quarter 2024 total revenue to be in the range of $36.5-39 billion. In a conversation with BrandWagon Online, Arun Srinivas, director and head – ads business (India), Meta, talks about their AI products, the influence of their walled garden, and the exceeding point for automation. (Edited Excerpts)
As Meta launches products in the GenAI space, is it because of the buzz on AI or is it a serious business call on your part?
I think our business has always been about AI, right from 2006, when we launched the News Feed feature. Meta has always been supportive of the AI factor, which has helped the company to customise feed and customise recommendations. This step has helped us build Instagram and Facebook, in terms of being discovery platforms, as I believe nine out of 10 things, today, get discovered using AI tools by taking into account customer preferences. Moreover, this is the first time we’re giving power to the advertisers to start dabbling with using AI, specifically on the creative side of it, as they have started to understand how that technology can be used for helping any user base, potentially, for locating targets.
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Your competitor, Google, has an AI-based product called Performance Max, which helps disseminate advertising content faster and also, improves performance marketing. How does this particular product, besides allowing one to create different renditions of creatives, help in terms of generating value for business or return on investment (RoI)?
I’ll give you three examples. See today, if you look at the creative process, it’s reasonably outdated and laborious, for different use cases. For example, if I talk about one of our clients, an online gaming company trying to create ‘mega’ ideas before every Indian Premier League (IPL) season, in terms of creating their campaigns and generating interest using cricketers, among others. In terms of making creatives, we tried it with a client when we were, literally, able to generate 12 of them in less than 10 minutes, which we were able to show them without giving a final ad copy. In terms of image generation, we intend to cut down the process from weeks to days.
Similarly, if you look at the text generation feature, we have already seen clients trying this. While we’re yet to look at the results, I believe we’ll be able to share them with you subsequently. At this point, I would say there’s a need to churn out creatives much faster, because of factors such as burnout, among others. Creatives are considered much faster, in comparison to audio, because we’re all swamped with content. So, in that sense, whether it’s text generation, image generation or image enhancement, these tools are going live. Furthermore, each of them will have a role to play in bringing more energy to the creative process, and equally freeing up time, which can allow one to spend more time on the strategic stuff.
What are your expectations in terms of new businesses, which started within the Instagram family, to start using creatives to drive revenue? As Meta is known for promoting small and medium-sized enterprises (SMEs), how do you think it’s going to work
I reckon this will be a better move for them. What this move can do is give users a plethora of background options, in terms of ideas, one can literally, use to have multiple renditions for weeks. So, I’m pretty sure that users will be even more nimble-footed, in terms of how they adapt to this and use it to generate, for example, the best captions that they can use using these tools, or even the text overlay feature along with images, among others. I would expect small businesses to adapt to each of these steps. See, in our ecosystem, today, all our advertisers, be it small or big, use what we call the ads manager, which is our platform. Using it, they can set their campaign objectives and upload their visuals or videos, among others, along with settings which will allow users to track performance. All these are going live on the same platform, you know, so I sense that the options will be pretty rapid and instant.
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What is the one drawback this product may have?
One of our endeavours will be that after rolling this product, we listen to feedback from all our advertisers, which will be key for improving the product. As a technological company, we recognise that, which’s why we’ll keep on optimising our product. Let’s take the example of Reels, which has evolved from where it was and where it’s now, as a product. Our aim is to keep on optimising based on that feedback.
In terms of walled gardens, where you have your universe for advertisers to come, and with third-party cookies being deprecated by Google, how much of an advantage do you have in terms of moving advertisers’ money with these kinds of Meta-based products?
I’m not sure that’s the only way to look at the business line. The reality is that while cookies are there, and with us moving towards a cookie-less future, the focus should be on regulations, in terms of consumer sentiment on privacy, among others, which are held even more paramount. I think we’ve developed processes, with AI playing a big role in that regard. While cookies are one way to look at the industry, I’m saying the other way to look at it is locating where the consumer is spending time and increasing their engagement. Using AI algorithms, brands can choose to target their required set of customers.
In terms of privacy, do you think there is a chance of AI crossing the line with privacy, or overcrossing?
I think, here, the odds are that one is getting ad suggestions for the categories that the person likes or resonates with. This is the reason why people are able to discover content including ads on our platforms, which leads to conversions. It’s a virtuous cycle in which advertisers invest more money and can get conversions. We also look at trade-offs. For example, let’s say you are seeing ads on which you don’t spend enough time and you keep going away, then that signal also gets captured. Based on that history, the AI algorithm starts negating that as input and stops sending you suggestions for those kinds of products. I think it works in one’s favour as well. It’s not that the total number of ads will go up if one reduces time. By the way, recording the amount of time spent on our platforms gives another signal to the AI algorithms for understanding the ads which are putting-off a user . Therefore, AI reduces the amount of hours one gets, among others, and vice-versa. So, I think these individual signals remain private between the user and the platform, without anybody else being given access to the targeting.
