Meta, formerly known as Facebook, has been making significant investments in artificial intelligence (AI) to drive growth in its core business of digital advertising. CEO Mark Zuckerberg and finance chief Susan Li recently highlighted the ways in which AI has contributed to the company’s success, emphasizing how it has improved recommendations, enhanced content discoverability, and made advertising more effective. This focus on AI has enabled Meta to outpace its competitors in the digital advertising market, with a revenue growth of 22% year-over-year to $39.07 billion in the second quarter, primarily driven by advertising on Facebook and Instagram.
One of the key developments in Meta’s advertising business has been the integration of AI into its ad tech stack. Following the introduction of an iOS privacy update by Apple in 2021, Meta revamped its ad tech stack using AI, resulting in a more engaging user interface and increased user engagement. This strategic move not only helped Meta navigate the challenges posed by the privacy update but also led to improved revenue and profits. Analysts have praised Meta’s AI-driven approach, with Mark Mahaney from Evercore ISI pointing out the tangible returns that the company has already seen in the past two years.
Meta’s success in leveraging AI is evident in its ability to drive user engagement and ad performance. By utilizing AI to enhance its advertising platform and recommendation system, Meta has created a more personalized and engaging experience for users, leading to higher levels of user engagement and ultimately translating into revenue gains. This approach has allowed Meta to consistently outperform its peers in terms of growth rates, indicating the effectiveness of its AI strategy in driving business outcomes.
While Meta has already reaped significant benefits from its investments in AI, the company is not slowing down its AI initiatives. Meta’s CFO Susan Li highlighted the company’s plans for significant CapEx growth in 2025 to support its AI research and product development efforts. This long-term approach to AI investment reflects Meta’s commitment to staying at the forefront of technological innovation and maintaining a competitive edge in the rapidly evolving digital landscape.
Meta’s strategic focus on AI has been a key driver of its growth and success in the digital advertising market. By harnessing the power of AI to improve its advertising platform, recommendation system, and overall user experience, Meta has been able to stay ahead of the competition and deliver strong financial results. As the company continues to invest in AI for the future, Meta is poised to maintain its leadership position in the digital advertising industry and drive sustainable growth in the years to come.