Facebook targets AI to boost advertising in a post-iOS 14 world

On the earnings call, Meta leaders also detailed ads that send people who click on ads directly to a chat with the business doing the advertising. Zuckerberg said 40% of advertisers are using this click-to-messaging service.

“Click-to-Messaging ads is one of our fastest-growing ad formats,” said COO Sheryl Sandberg, a key architect of the company's advertising business who was on her final earnings call with the company before her announced departure on August 1. “It's already a multibillion-dollar business for us, growing at double digits.”

The ads benefit from creating an interaction between the consumer and a business.

“They help us move people from discovery to a direct relationship with a business,” Sandberg said. “In a world where we're trying to do more with less data, they give businesses and consumers a direct connection, so it's much easier to measure ROI. And so we're investing heavily.”

The company is also moving a focus on short-form video, including Reels. Executives were asked about how more ads would migrate to that product. Sandberg said creating new ad formats and measurements tools will be necessary, but there is also another layer required in helping small businesses to adopt video where they haven't in the past.

"Small businesses are better at static photos than they are at video. So this is a new format that we have to help them use. I think we have a number of tools that are working. We have a number of tools in development," Sandberg said. "But the idea is to help businesses really easily create those Reels ads, really easily test them so they can iterate and keep improving as we do this."

The solutions that help advertisers in the post-iOS 14 world may not only come from within Meta. Shopify, which saw direct-to-consumer brands flock to Facebook and Instagram advertising as an engine of growth in the last decade, rolled out its own tool called Audiences that helps brands create high purchase intent audiences, and export them to social networks for use as lookalike audiences. Platforms like Triple Whale and Northbeam are also stepping in to help solve attribution and measurement challenges presented by the iOS 14 changes, creating what Modern Retail called a "new battleground" in the ecommerce software world. And increasingly, brands are turning to a variety of other platforms like Amazon, Walmart, Google, TikTok and a growing number of retail media networks to find customers. Bringing things full circle, Apple itself is said to be building out advertising capabilities, including a demand side platform, as well.

It remains a phase of learning, as brands seek to figure out what works. But Meta’s latest release offers a sign that Facebook will continue to be a place to find new tools. Where the platform was once the first choice of many brands given its audience and data capabilities, they are now weighing a growing multitude of options.

At the same time, Meta isn't growing users at the same breakneck pace it once was. Facebook reported its first-ever decline in active users in the fourth quarter of 2021. Among teens, Facebook use plummeted from 72% in 2015 to 31% in 2022, Pew Research data found. That makes Meta's task all the more weighty.

Asked about how the company gained a sustainable competitive advantage, Zuckerberg said that building great infrastructure and emphasizing a culture that learns faster than others to stay ahead of competition is key.

“I'm confident that if we invest in building the new infrastructure that we need, then we're going to come out of this downturn with even more superior ad products and a meaningful technology advantage over other industry players,” Zuckerberg said.