Meta Platforms, Inc. (NASDAQ:META)
Meta Platforms, Inc. (NASDAQ:META) is one of the few firms I can think of that keeps finding ways to get itself out of sticky situations. One of the main reasons I am comfortable as a long-term-oriented shareholder who does not intend to sell META anytime soon is that Meta consistently finds ways to overcome legal challenges thrown at the firm by governments throughout the globe as well as competitive concerns. According to Meta, the company’s revenue will drop by at least $10 billion in 2022 due to Apple, Inc.’s (AAPL) release of the App Tracking Transparency feature as part of the iOS 14.5 update in April 2021. Since this was a severe problem for Meta’s advertising revenue in March 2022, I wrote an essay explaining why investors shouldn’t freak out. We now have evidence that Meta avoids harm by turning the tables on her attackers.
Meta Advantage+
For a while now, Meta has been dabbling with automated ad solutions. In March 2022, the business unveiled a new product suite called Meta Advantage, which combines all the automated ad tools it offers in a single, convenient package. In this area, you may find two distinct kinds of automated items.
- Meta-advantage refers to products that help advertisers improve their existing advertising campaigns in a targeted way.
- Solutions from Meta Advantage+ offer marketers to automate every aspect of their advertising campaigns, from choosing their target demographic to allocating their money.
With the capacity of AI technologies to employ real-time learnings to change the targeted audience and ad placements, Meta claimed fully automated campaigns experienced a 9% reduced cost per action compared to manual efforts. At the time, many investors and analysts should have paid more heed to the data presented by the firm since the success of these goods required to be studied for an extended length of time under diverse market situations to assess a measure of the value they contribute to an advertiser.
With an emphasis on increasing the automated ad setup experience, Meta announced additional automation solutions like Advantage+ Shopping Campaigns in August last year. In addition to LLaMA, a large language model, Meta is working on a plethora of additional AI tools and experiences, all intending to bring the benefits of AI to more of its social media platforms.
There is evidence from recent studies that suggest that Meta stock is making a solid comeback.
While Meta had forecast 22% growth in sales in 2020 and 37% growth in 2021, the firm saw its first year-over-year (YoY) revenue drop in 2019 at little over 1%. After predicting a $10 billion income loss due to Apple’s privacy features, Meta took steps to offset the damage. Still, they were eclipsed by the overall decline of the advertising business.
Meta recently released an update in which it discussed the development of the Advantage+ product suite and highlighted how a small firm called Doughp, which sells prints of cookie dough, utilized these artificial intelligence capabilities to improve the effectiveness of its advertising efforts. This business has benefited from completely automated marketing, as has many others. For every dollar invested in an Advantage+ campaign, iProspect associate director Roberto Mendoza told the Financial Times they received seven dollars back. This is almost the same ROI as before Apple’s privacy features were implemented. As president of Hermann Digital, David Hermann predicts a 20% increase in advertising returns since his company started working with Advantage+. Cost per impression (CPMs) and cost per click (CPCs) for businesses using Advantage+ Shopping Campaigns decreased by 20% and 15%, respectively, according to data from Tinuiti, demonstrating the increased efficiency and effectiveness of automated campaigns.
Yet, the Financial Times reports that not all advertisers are happy to cooperate with Advantage+ since they have to hand up greater data control to Meta. Investors should be wary of Meta because of its track record of not protecting customer information. Yet, the privacy worries about Advantage+ are the same as the privacy worries the corporation and its stockholders have dealt with over the previous several years.
Takeaway
Meta is updating its method of monitoring user behavior to emphasize responses to public posts; this information will be used to improve the company’s artificial intelligence (AI) models and machine learning (ML) algorithms, ultimately improving the effectiveness of advertising campaigns. Early performance data from Meta Advantage+ indicates that the company’s new approach is yielding the anticipated results, with automated advertisements enhancing the efficacy of marketing campaigns while reducing expenses. Although positive steps have been taken to offset Apple’s privacy upgrades, the advertising sector is extremely connected to macroeconomic situations. The firm will see sustained financial growth once the economy improves. I have a positive outlook on Meta because the company will be able to better monetize its user base in Asia and the Pacific in the future years thanks to the expansion of its advertising business. With any luck, WhatsApp can be monetized as well. Even if I discount the potential for future profits from the Metaverse, I still view Meta stock as enticing.
Featured Image: Unsplash @ Dima Solomin
