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- [00:00]
A
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Hi, I am chief technology reporter Garrett Sloan, coming to you with an emergency episode of Marketers Brief podcast just in time for Advertising Week New York. Today's guest is Meta CMO Alex Schultz, who is fresh off writing his latest book, Click Here. The Art and Science of Digital Marketing and Advertising. If there is anyone who knows this industry, it is Alex, who has spent close to two decades at Meta, most recently a cmo. Alex's book is a blueprint for digital marketing from paid search to social to AI. And today we talk about his favorite moments from the industry. We talk about digital ad fraud, affiliate marketing, SEO, the rise of TikTok and where it's all headed. Hey Alex, good to see you.
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C
Yeah, good to be here.
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B
So I would want to jump in right away because I have gotten to start reading your book. Most of it, I, I have to admit I didn't get through every page meticulously, but I think I got a good view of how you structure the book and what you're trying to accomplish with it. But let's start there. What was your impetus for even writing this book?
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C
Oh, I mean there's a couple of things. You know, number one, I think there's a gap in the market and you know, the, the publisher, Hachette, David Shelley really agreed. Like there's no comprehensive guide to digital marketing on just like how do all the channels work and so on, similar to what Ogilvy and advertising did in the 80s and, and 90s and is still very relevant today. But for the channels that have come up since. So I think that that's number one and then sort of number two, I feel like there's just a lot of negativity in general about advertising. Like just in the world at large, there's always like always been sort of negativity on marketing and advertising and then digital in particular. And I think it's a really valuable thing. I think marketing and advertising help connect people to the things they love, the services they want. I think that helps businesses grow. I think that helps people get jobs. I think that helps pay taxes, grow the economy. I think taxes pay for all the services that we Love and like to use like roads and stuff like that. So I think like, there's a lot of value to marketing. Growing businesses, growing the economy, providing jobs and all the good things that come with it. And, you know, I wanted a positive book out there that said that as well about digital advertising. And I'm pretty happy to have done it. So those are the two. Those are the two reasons.
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B
Yeah. And there are some, some anecdotes obviously in the book, but it's not a tell all about the advertising industry though as much as everyone would love to read one of those from any insider might sell more books. This is more of a guide of certain anecdotes where they apply to what's happening today in marketing. And we can get into some of those anecdotes too. You had mentioned the Uber one. That was an interesting case. Uber was questioning the what its marketing strategy was accomplishing in digital. Turned off certain channels and claimed it saved tons of money. Can you explain that one?
- [03:45]
C
Yeah, for sure. I mean, actually, for what it's worth, something very similar happened to my team at a similar time, a bit ahead of them. So we saved money. I think there was an advertising network, perfectly legitimate advertising network, who were being used by Uber, who Uber ended up actually suing, where the advertising network was finding some of its sub affiliates were showing ads where they shouldn't be shown. And that was how Uber stumbled across it. Like it was during time of a lot of controversy. Uber ads kept showing up on Breitbart, as it happens. And Uber was trying to find out why, because they didn't want to wade into the middle of controversy. They turned off a bunch of stuff. They banned Breitbart, but they still kept showing up. And they found that there were a bunch of sub advertisers for an ad network that were showing ads in places where they shouldn't be shown. Then they tried turning off all advertising and they found that the conversions didn't drop, even though they were spending tens, even hundreds of millions of dollars. So whether it was deliberate fraud or whether it was accidental sort of scattering cookies over the Internet and claiming results that you didn't drive, there was a situation where Uber was buying a ton of ads and it wasn't producing a bunch of results. And by just turning off and seeing what happened to growth, they were able to realize they were wasting money. They thought that it went as far as being fraud. And so they actually pursued a litigation strategy. They won some points, they lost others.
- [05:07]
B
Yeah. And I reading it in the book, it Reminded me like, oh yeah, that did happen. And I still see maybe posts on Reddit or marketers talk about these kind of cases. And I don't know if there's maybe a misconception or maybe I'm misremembering or what the effect is that I'm trying to remember is at some point they there's a claim that Uber turned off meta or Facebook ads and did really great otherwise Facebook gets lumped into that story sometimes. Or am I misremembering?
- [05:38]
C
Well, I don't think so, but like, it's totally possible. I actually think it's really important when you do Facebook ads or Instagram ads that you test them with lift studies. Like it's totally possible for it to be not fraudulent at all, but for you to do things wrong. For example, if you can show ads to people who are going to buy your service anyway. An example would be if you buy the keyword Uber on Google, guess what? You're probably going to get people who already knew Uber or if you're retargeting people on Uber on Facebook or Instagram, but they're people who are active on the app, you're not going to get new conversions. And so it's actually like really important. You do the basics well to be able to understand and measure what is your uplift and then execute on things like untargeting to make sure you don't waste your ads. So we strongly advise people like Uber who are a great partner to buy ads with lift studies, to actually see the incremental results and optimize for incrementality. We think that's the right thing to do.
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B
I do write about like I spoke to Bose recently about their SEO strategy and turning on and off, say search ads for half their audience and seeing what that does. And so brands are still experimenting with this, but the experiments have been going on for decades. But they must evolve with the times. What do you see out there, like right now? What is the trend in why are brands still have to experiment with search? Why don't we know for sure what the strategy is and what works?
- [07:04]
C
Well, because things shift. So an example here, right? So I buy the keyword Facebook ads, which really goes against my personal beliefs. I don't like to buy branded keywords, but I buy the keyword Facebook ads. And the reason I buy the keyword Facebook ads is because Pinterest, LinkedIn, Snapchat, TikTok all show up as paid listings. Before you get to the SEO term for Facebook ads, when you go to Google. And so it's very clear actually when we do the testing that if we don't buy that ad, we get less people sign up to buy Facebook ads. And so I think like, what happens is things evolve. Like 10 years ago that group of people weren't buying ads. They weren't buying those positions. And so 10 years ago, I don't think it made sense to buy Facebook ads. Today we've got four competitors appearing before our organic listing. And so today it does make sense to buy the keyword Facebook ads. And so I think the point is that things evolve and things change. And if you go, okay, I've solved search marketing, I've done all of the analysis I need to do, I'm going to set that in stone. And in 2020, by the time you hit 2025, I think you will be wrong by that stage. You have to be continually testing and continually making sure that your understanding is staying correct and current.
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B
Maybe on the consumer side, we could talk about how do you use Meta's own tools to improve the advertising for your own products and how does that shape the way you understand advertising?
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C
Yeah, so we use them across the board. Right. So are hundreds of millions of people who use Instagram who don't use Facebook. There are hundreds of millions of people who use Facebook who don't use Instagram. In the US There are tens of millions of people who use Facebook and Instagram but don't use WhatsApp. So we buy app install ads as you would expect from us. Right. Because we're an app company. I do a lot now on e commerce marketing for the glasses. So that's been a new area that's opened up for us in about the last sort of two, three years there. What's been tremendously successful and a shock for me, but it is what's happening in the industry is partner ads. So we're doing ads where influencers are uploading videos of them using the glasses and then we boost them as ads using the partnership ads product. It works really well. It's a fifth of my spend now on direct response marketing for the glasses and we're going to do more of it next year. We weren't selecting the influencers based on their likelihood to sell glasses. We thought it was about awareness driving, which turned into a brilliant direct response tactic too. So that's a big evolving new thing that we're doing that's working really well. And then the details matter. We have capi. So we do actually push across conversions. We put value into the Conversions, API. So we actually know what the value was of the sale that we drove. We do all of that. And I know it's basic, standard stuff, but we do that stuff because it's what drives up the performance of your campaigns. So it does actually influence. We're active users of our own products. We do an awful lot with our own product. And that informs what, what I do when I'm selling. And interestingly, because I'm head of analytics too, it informs the questions I ask and the things I advise our ads team to do from a, from a data perspective based on what's working for us in terms of the product and.
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B
Hearing you describe it. I mean, you must be the best advertiser on Meta if you were to weigh performance or have you seen better advertisers? Do you. Are you able to borrow from any that you think are doing it better?
- [10:24]
C
Oh, I certainly am not the best advertiser. Don't be rude to my team. But I would actually say that generally I doubt that Facebook's the best on Facebook or Google's the best on Google or TikTok's the best on TikTok. You know, back in the day, I always said to people, hire someone from Zynga, you know, back in 2012, because the Zynga people understand our system better than we do. You know, the Amazon team's brilliant at using us. You see, Disney's amazing stuff they're doing to promote Disney is brilliant. Coke does brand stuff incredibly well on us. That's so impressive. And they've won a bunch of awards, but it's really working for them. And then the fast fashion companies, Temu Shein, those companies are. They're killers right now. Those. I'm always just sitting there looking and observing what they're doing and saying, wow, I need to learn from them. So I'm proud of my team. I think we've got a great team. I suspect that we are not the best team in the industry. At Facebook and Instagram ads, I suspect it's people who don't work at the company who are best better at getting the most out of the system. Even though I'm very, very proud of my team now, I'd. I'd hold us up against anyone on buying Google Ads, but I think on Facebook and Instagram ads, I bet you some of our clients beat us.
- [11:32]
B
And yeah, on that note, the other platforms, you do talk about all the channels and we can get into what channels are relevant. We got paid search, organic search, social, paid social, all the retail Media, you've listed them out. That's why the book is good. It goes through all the different iterations of digital marketing. So you, you lay out the channels and now you're talking about the different channels. Google, TikTok do you. And TikTok is fairly new. How do these channels differ from each other? And since TikTok is new, have they brought something different to the game than Meta was already doing, or what's evolving in social media as a channel?
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C
Yeah, I mean, the first thing I'd say is, what I try to do in the book is try and pull out more timeless principles that will work. You know, whether Facebook or Instagram or Snapchat or TikTok or LinkedIn or YouTube is the social media company you're looking at, and whether it's Google or Bing or Yandex or Baidu or, by the way, it's chatgpt or Anthropic that you're looking at in terms of your search engine. So I try and make it principles that will work across everything, and I hope that that works. I've backtested it and tested it on new channels. What TikTok's brought to the party, people don't realize how disrupted Meta has been. Search hasn't changed that much in the last 20 years. Social media has changed 20 times in the last 20 years. Well, to be fair, four. And most recently, TikTok coming along. Five years ago, Facebook and Instagram, you only saw content from people you followed, friended, liked, groups you joined, etc. Etc. It was connected. You had connected. Today, the majority of time spent on both Instagram and Facebook is looking at unconnected content, content that is shown to you based on a semantic understanding of the content and a semantic understanding of you. That was pioneered by TikTok. They brought it from Dao Yin in China and they brought it to the west, and they really broke the mold with that one and they changed the whole of social media. When, and I testified to this in court, actually, when we realized at the end of the pandemic that people who had adopted TikTok were using our services a quarter less than people who had not adopted TikTok, we realized how existential it was and how much of a change in social media it was. So I think what TikTok brought to the party, and I'm so proud we responded. We responded before YouTube, we responded before Snapchat. We had the first competitor out there to TikTok. But what I'm really proud of is we responded and now it's actually a huge benefit to us and we have all of this unconnected content, we have all of this public content, we have all of this engagement and we're able to now obviously serve ads against it as well as engage users and have them be really social with their friends sending it to each other. That's what TikTok did and it's a fiercely competitive environment and we responded and now it's nip and tuck.
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Well, let's take a moment here for a message from our sponsor.
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B
Now the book of course, you start with a good talk on affiliate and SEO, where you got your roots, which has to take me to aeo, the new term of art for AI Search Engine optimization. What's going on in that space? The book talks about AI and about yeah, we're just in the obviously just starting and where that's going to affect marketing. But what is your is AO a real thing and should advertisers be starting to practice it?
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C
It's a real thing. You need to think about your business model and you need to look for where the future exists. So old quote, I think it's Robert Heinlein. The future's here. It's just not evenly distributed yet. So if you're a content publisher, you should look very closely at what's happened to Stack Overflow because engineers were the first to adopt these models and they were the first to use them. And Stack Overflow's business has changed dramatically. If you're selling something, you need to look at what's the cutting edge of what the agentic AI agents are doing on buying right now and what buying guides are doing. There are so many interesting examples I could use. I just came back from a major sort of small SEO conference with really, really top people and I could go on forever about it. But the fundamental thing is they still need to find your content, they still need to rank your content. What are they going to use to rank your content? Well, they'll use what's on your site, they'll use how easy your site is to load, and they'll use what other people say about your site, whether it's links or just People saying things about your brand to decide what to show. I think there are two very interesting questions. So in many ways I think it's going to have a lot of similarities to SEO. I think there are two very interesting questions that need to be asked. Question number one is who wins? Like Google's doing amazingly, like, we pivoted really well. TikTok exists as well as us. They have a huge amount of engagement as well as us. YouTube Shorts exists as well as us, but it isn't like we lost and we disappeared. No, we, we did something really good with Instagram reels and Facebook reels and so on. Google is doing the same right now with Gemini. Inserting it in the one box and also with its own app and location using the Google One subscription and all those things. Is Google going to do really well in this world or is Google not going to do really well in this world? I think that's question number one. Question number two is, okay, if you go and use Gemini or you go and use ChatGPT, or you go and use Anthropic or Meta AI, you don't get any ads next to it right now. And there's this default towards it being a paid experience where people actually pay for ChatGPT and they pay for Gemini via Google One and they don't expect to see ads next to that paid experience. Is the paid experience going to dominate or you go to Google? Right now there's Gemini inclusions at the top of search. You go to Bing, you go to other search engines, they're trying to find ways to include AI in the search results. Is it just something like Google Maps that gets inserted in the one box at the top of search? And does it become a freemium existence like you're seeing today with Gemini plus Google search? Depending on the answer of those two questions. If Google wins and it's freemium, the world continues much as it is today. You still have search ads next to listings. If Google loses and it becomes most people go to ChatGPT and there are no ads next to it because they're paying massively disrupts the online marketing industry. And so it's actually really on the edge now as to who wins. Two years ago I think Google was a bit flat footed. Now they're killing it. And so it's a really interesting battle to watch.
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B
And OpenAI did hire a meta alum. So many demo and probably so many.
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C
Yeah, so many.
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B
She's not the only one. But that suggests an ad business. What do you hear out there? I mean These are your circles. New ad businesses popping up. It seems inevitable. Do you feel same open?
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C
For what it's worth, if you look at the book, Sam Altman's one of the guys who wrote a review for me. And given the fight between the two companies at the moment, I think that suggests we get on all right. So. So yeah, I know a little bit about those guys. Yeah, they're very open in public. They're hiring an ads person. They are 100% hiring an ads person. And so they are looking at freemium ad supported models. They'd be idiots not to. The question is, do they do it for their Sora 2 type AI feed of videos? Do they do it for their ChatGPT search type competitor? When does it show up? I think there are loads of questions around how it shows up, but they're not stupid. They want to make it possible to have a freemium model as well as a fully paid model. You need ads to make that possible. They've got brilliant people over there who I respect very deeply. Their CMO and their acting cmo. Kate and Gary are two really good friends. Gary I've worked with since ebay. And so, you know, there are incredible people over there and they're not idiots. So they will try and add business as well as a paid business. The question is which wins? How much weight goes to each one. The question is not whether both will exist.
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B
Is it also, I mean, I would think is just the ultimate ad targeting machine, ultimate desire reader of people's, you know, what they're doing or what they're searching. It seems like it would be next level ad opportunity. Is it shaping up to be that already or are there things with it that are not as clear cut as I'm seeing in terms of how effective it could be?
- [20:18]
C
No, you got it right. That's the trajectory. The question is how close do we get to this, you know, lauded, legendary audience of one, this idea that you will be able to actually show the right ad to the right person at the right time. The Internet as a whole and targeting on the Internet has got us closer again. This fits with the long term principle of marketing, which is exactly what I've said in the book. The principles are timeless. We've always wanted to show the right ad to the right person at the right time, but we didn't have the ability to target them back when it was billboards and newspapers very granularly and we didn't have the ability to show multiple different ads.
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B
Now, last question, as you talk about all the Targeting the potential, where it's all headed. I think the biggest quote of the year has to go to your CEO with Stratecheri talking about automating advertising. And that sort of freaked out my whole sector of the industry of be like, oh, see, they want to destroy the agencies and just it'll all be AI and that's the fear of the future. But your book does talk about automation and things that will be automated and won't be. So what are your, your thoughts on that?
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C
Yeah, I mean, my two things. One, my book has an entire chapter on how to select the right set of agencies and I expect for the rest of your career people will be selecting the right set of agencies. Like, as long as I have worked in this industry, people have said agencies are going to be eliminated and it's just not true. Big companies need agencies. Like if you're dealing with social media buying right? And you're buying on YouTube, you're buying on TikTok, you're buying on Facebook, you're buying Instagram, you're buying on Snapchat, you're not going to like have no body that looks across all of that different set of providers for you and helps you interpret the results across them. An agency is brilliant for that. That will continue to exist. In terms of leveraging the best creative, is every company going to build the best possible AI to be able to create their creative? Are they going to hand over creative production for TikTok entirely to TikTok? Facebook entirely to Facebook, Instagram entirely to Instagram? No, not for the big guys. So I think there's going to be a suite of agencies existing for the long term. Mark actually said that on our last earnings call, which I worked on it with him on making sure we put it very clearly. The other funny one, the second point is so many people overread all those remarks. And if you listen to him on his earnings call where he first said it, he said people will load their credit card up into the system and generate creative and won't use an agency. It's like I don't use a credit card to buy from publicists. I definitely use an insertion order. And so what's really going to be is small businesses are going to get more superpowers, just like the Internet gave them superpowers. And the sort of people who do stick a credit card into their system and can't afford an agency will get not as good as an agency using AI can deliver for you, but they can't afford an agency right now. So they'll get something second best, and that will give them way more superpowers than they had already, which is brilliant. And so our vision is small businesses are going to be given superpowers. The agency business will be transformed just like it has been every 10 years for the last hundred years. But the agency business will still exist. And big companies like mine will use chapters like I put in my book to determine the suite of agencies they need. And they will need a suite of agencies.
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B
Well, Alex, on that final hint of optimism and plug for your book, we can end the podcast. But I really appreciate you joining me today and being able to open up about just all this. So thank you so much.
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C
No, thank you very much. And hopefully it's useful. That's my goal. Foreign.
- [23:57]
B
You are listening to Meta CMO Alex Schultz and your host, Garrett Sloan, chief technology reporter at Ad Age. Thanks for joining us and see you next time on Marketer's Brief podcast.
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C
Marketers brief listeners get $40 off an.
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B
AdAge.com subscription, sharpen your marketing edge and visit AdAge.com brief for your discount.
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C
Sam.