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Behind the Numbers: an EMARKETER Podcast
Is Meta’s AI spend a problem? Is 2026 Social Media’s “Big Tobacco” moment? And More —The 3 Big Questions for Meta | Behind the Numbers
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A
Ever seen an ad that just fits perfectly that Seed tag Their neuro contextual technology combines AI and neuroscience principles to place brands exactly where they belong. It's privacy first advertising that taps into users interests, emotions and intentions, making every interaction feel natural and relevant. Seed tag where context becomes intelligence. Hey gang. It's Monday, February 9th. Minimax and listeners, welcome to behind the Numbers Knee marketer video podcast made possible by seed tag. I'm Marcus. Joining me for today we have two of our social media experts, senior analysts living in New York. It's Minda Smiley.
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B
Hey Marcus, how are you?
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A
Hello there. Very good, very good. Thank you for joining. We're also joined by principal analyst living in Philadelphia, Max Willings.
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C
Yo. Hello.
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A
Today's fact. Who invented the drive thru? Great question. Red's Giant Hamburg, not hamburger. It's a diner, so that makes sense I guess. Along Route 66 in Springfield, Missouri. Opened in 1947, it was widely credited with being America's first drive thru restaurant. Who knows though, it could have been someone else, just didn't write it down. The first drive thru restaurant with a two way speaker was created the year after 1948 by Harry and Esther Snyder at their first In N Out Burger in Baldwin Park, California. The world's largest restaurant chain, McDonald's opened its first drive thru in Sierra Vista, Arizona in 1975. According to popular accounts, a nearby location was experiencing declining sales because soldiers are at a local army base were required to follow military regulations AR671 which classified fatigues as dirty work clothing and inappropriate for appearing in civilian spaces. As a result, soldiers wearing their uniforms off base were required to remain in their vehicles, creating the need for a drive thru option. So they used to go off base but they weren't allowed to get out of their cars. And so McDonald said we'll throw a drive through in there for you.
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B
Wow, this all just got me thinking. I can't even remember the last time I've been to a drive thru. I mean living in New York, I just, I mean I don't drive so I don't go to drive thrus. I don't know. Yeah, it's crazy.
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A
It's a lot of people. According to the National Restaurant Association, 75% of all restaurant traffic is now takeout orders. That's not all drive thru, but even drive thru numbers that I saw were somewhere between the kind of 50, 60%.
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C
I'm still struggling with the idea of there being a drive through without a two way speaker.
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B
Yes, like you just drive to the.
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C
Front and they're like you get filet of fish. But I don't want that pay or.
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A
That'S what I heard. Get out of here.
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C
People behind you are honking. Stop being I just, you know, we'll have to go back in time and figure that out. I find it so unsatisfying when we don't know how. Who actually invented something anyway?
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A
Today's real topic, the big three questions surrounding Meta. All right, we set the table. First, full year 2025, Meta grew revenue 22%, same as last year, approaching $200 billion. In 2025, Q4 revenue was better than 2024, up 24%. So they're the numbers. But in this episode, it's one of our top three things that a company this is Meta for this one. We've done Netflix already, Google, Amazon, others to come is thinking about at the moment what are some of the top things on their mind. And so we're going to come up with a consensus list. I'll throw something into the ring. To start, I have Is AI spending really that big of a problem? So here's my take. It sounds like a lot because it is a lot and it's growing quickly, but I think that's why people maybe have. I don't want to say it's blown out of proportion, but Meta's capex spending on AI expected to be between 150, 100, 115 to $135 billion this year. It's nearly double what they spent on capex last year and about four to five times as much as they spent in 2023. So it's a lot of money is getting bigger very quickly. But Meta is an ad company and advertising is doing really, really well. Meta made over 60, 60 billion dollars in net income in 2025. They would have made more, but they had a non cash income tax charge related to, as they said, the one big beautiful bill act. And so that probably would have been closer to $80 billion. And we have Meta on pace Max and Minda to overtake Google just to become the number one seller of digital advertising in America by the end of next year. So I think they're doing okay money wise. What do you think of this idea that they're spending too much on AI?
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C
I tend to align with this, with your opinion on this, Marcus. I feel like, as you say, when you have that kind of operating profit coming in and when you are, you know, telling analysts and investors that you are projecting to have even more operating income in 2026 than you had in 2025, then it's kind of hard to argue with the results. The only thing that I would sort of throw out there in favor of the people who are skeptical of this is thinking a lot about, you know, the fact that not every bet that Meta has made historically has panned out. Right. So you think about Horizon World thing that precipitated them changing their name from Facebook to Meta is now kind of, you know, been consigned to something that Meta is trying to get right on mobile with in the form of Horizon Worlds. And so, you know, it's, you could argue that all this spending, you know, we're not certain that it's going to deliver the same ROI that it's, that it's been delivering. But I think that when you post profit numbers like the ones that Meta is posting, it's really hard to.
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A
Be.
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C
Too skeptical of how they've conducted themselves so far.
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A
Yeah, that's incredibly fair point. One of the other ones I had here. So one of the main things they're thinking about is this pivot away From VR to AR. Meta's Reality Labs unit posting an operating loss of $6 billion while generating less than 1 billion in Q4 full year they posted a loss of nearly 20 billion whilst only making just over 2. And now ever since late 2020, Reality Labs has lost nearly $88 billion total operating losses. They also recently laid off over a thousand folks who work for the VR related initiatives as they pivot more towards their Ray Ban Meta smart glasses. So yes, that I think is a really good point. Marissa Jones noting our Marissa Jones analyst noticing that the efforts do appear to be paying off as well in terms of the AI investments. Investors are scrutinizing Meta's private pricey AR costs, she writes, but marketers are seeing tangible upside in some automated, efficient and performance driven ad tools. And maybe investors are changing their opinion a bit here. Meta stock is up. If you go over the last 12 months, it's up less than 3%. However, Megan Borowski of Bobrovski of the Wall Street Journal pointing out that his shares rose around 8% post earnings, suggesting that investors appear to bless Meta's plan to vastly increase spending. A contrast from last year when shareholders responded warily and pushed for more detail on the company's costly plans. Independent mobile analyst Eric Seifert also agreeing, saying, I don't think investors care as much about Capex with Meta now, given the consistent traction with their AI optimization tools.
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B
Yeah, I mean, I think it's interesting because when we talk about AI and meta. It's like, yeah, clearly their AI investments on the advertising front are working both from a, you know, in terms of just targeting and whatnot, but also like engagement and keeping people around longer and fine tuning the algorithm and whatnot. But I think the bigger issue when people talk about this is that they're often referring to like the, you know, the what's next of it all. It's like, yes, things are going well now, the investments are working. But like, I think people start to get skeptical when, when they hear Zuckerberg throw around words like super intelligence. And then it kind of gets into the broader, the broader discussions around AI in terms of like, where is all of this going and what role does matter really play in all of this? Realistically, there's certainly a lot of skepticism around, you know, will, will, will matter really pull this off and become the, this massive AI player that it thinks it can become?
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A
Yeah.
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C
To me, one of the most pressing questions for them as you move forward, thinking a lot about what Mina just said is what's their vision for their agent? Right. So they, you know, have kind of gone back to the drawing board more than once when it comes to their approach to AI generally. They, you know, have they mentioned during their most recent earnings call that they've sort of like re architected their, their LLM and have are now pursuing sort of a different vision for how this will work on the consumer facing side. But there's this big question, right? Like, is this an agent that's designed to, you know, help you solve answer questions? Is it about helping you make friends? Is it about helping you shop? Is it about, you know, finding information about what's going on in the world? And you know, I would imagine that they would say it'll help you with all those things, but the sort of core use case that is going to help drive their business is probably one that they're hoping will kind of stick around one thing, right? And my suspicion is that it's going to be oriented around shopping. And that's largely because of how effective they have been for years now at sort of, you know, driving and facilitating E commerce. There are now, you know, tons and tons of advertisers that are, you know, using their automated systems to drive shopping transactions offline. And that to me feels like a kind of natural step forward.
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A
Really quickly. Just on this, I think it's a great point because a lot of the conversation has been around how fast is your AI? And it's a question of is meta behind in the AI race? Is Google out in front. And then it's OpenAI, et cetera. And it's focusing on this idea that the fact that they've yet to release a successor to Llama 4 that was released last spring, the release fell a bit flat. A new model expected in the first half of the year. But the real question, Max, to what you're saying is what's it going to do for people? How's it going to help? And I think that's a really important one. Sorry, Max, you were saying?
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C
Well, no, I was just going to sort of pivot toward another big question that I feel like I had for them, which is basically oriented around ad load and ad performance. Right. So one of the sort of defining balancing acts that Meta has had to perform for the last little while has been sort of balancing between engagement and monetization around reels, right? So they, they famously launched reels as this ripoff of, you know, the video experience that you get on TikTok. And they took their, as they often do, took their time introducing monetization. And similarly, as they rolled out Advantage plus, which is their sort of automated shopping suite, one of the sort of introductory facets of that was their kind of reliance on what I would call low hanging fruit. So people that have been proven to be really heavy shoppers on Instagram and Facebook, people that have maybe already bought products from a company being targeted again, but it seems from looking at comments made by Susan Lee and Mark Zuckerberg and just their general performance, in light of some changes that they've made to the way their ad product works, it does seem like they've managed to sort of move past low hanging fruit. And to me, that's a really, really interesting thing to monitor closely. Right. Like, so if, if what that Meta says is true about their ability to do sequencing at a higher level has panned out, then that's, I think, a really profound thing. And I guess, you know, has Meta really cracked the code on, you know, driving incremental conversions with their, with their ads versus just relying on, you know, low hanging fruit? That's kind of a mouthful. But do we like that as a, as a potential, you know, entry in this, in this episode?
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A
What do you think, Minda?
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B
I think so, yeah. I think it's definitely a fair point. Yeah. I think Meta clearly is incredibly sophisticated compared to even a lot of its peers in this space, but I still think it's a question worth posing.
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C
Yeah. Yeah. I mean, so I guess the best way to think about this, right, is that once upon A time, the way that these systems might have worked if you are, you know, looking around on Instagram and you buy a ski jacket, right. The thing that you might see the next time you open up Instagram is more ads for more ski jackets. And you would go like, okay, yes, congratulations, you have noticed this is an area of interest, but I already have a ski jacket. But the way that they have kind of re architected their systems to sort of understand kind of consumer journey and context, what they're, what they've been saying now for a while is that what you are likely to have happen if you have bought that ski jacket is the next ad you see is going to be for ski gloves or for ski poles or for, you know, a discount on hotel rooms to a ski chalet in Colorado. And that kind of greater window of context and understanding potentially has a huge implication for the efficiency of the ads that they serve you and the amount of conversion that they can drive. And, you know, again, based on the comments that their CFO Susan Lee has made and some other stuff, it does seem like that started to work. And if that turns out to be true, then that potentially has huge implications for their ad business. Right. Because instead of having to kind of drive at these very ambitious revenue growth targets they have laid out by, you know, cramming more ad inventory into our, our user experiences, that potentially opens them up to some risk of people going, every time I open up Instagram, all I see is ads and them getting annoyed and engaging with the platform less. But if they're able to kind of drive this growth while keeping ad load pretty close to what it is, that's a huge, huge advantage for them, both in terms of their own growth prospects and just their ability to sort of stay ahead of their competitors as we move forward.
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A
Yeah, I mean, as we said, we expect them to overtake Google, so they're doing really well, but they're held to their own standard. You know, they're held to a completely different standard. And so I think, I think your point's well taken because even if they're doing really, really, really well compared to everybody else, that's not how the market's measuring them.
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B
Yeah, well, I can come in and totally change the subject, please.
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A
What do you have for us? Yeah, what else do you think is on their mind?
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B
I mean, my. I have a lot of questions. I think Meta and really a lot of the social networks are facing this year. I. One thing I'm super curious to get both your perspectives on is should Meta be putting this much stock into smart glasses. I mean, I certainly have my own opinions on this area that I've talked about on the POD before. But what do you guys think as we start the year? Is this finally the year where they really start to see real momentum?
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C
I love this question. Like you, I'm sort of dubious about the mainstream upside of these technologies. Although I will say what's interesting to me is this is no longer something that, you know, just a handful of companies are bullish on. I, when I, right before I left ces, I decided to take a stroll across the convention center floor just to sort of see what was on offer. And I was really struck by just how many brands, some of which were familiar to me, a lot of which were not, were, you know, showing off smart glasses of some form or fashion. And I think that I, you know, as I said before, I, I still kind of don't understand the, or see the value, the mainstream consumer value of having a computer that you wear on your face, but at least not in a consumer context. Right. Like, I, I've not to repeat myself too much, but I do think that it's possible that they, they turn into a kind of workplace technology that is, whose use is sort of enforced by, by management. But I, as far as like, you know, having something on your face that, you know, gives you, you know, yelp information or translates something in real time, like, to me, that's not worth several hundred extra dollars of spending and having to plug my glasses in when I go home every night, like, yeah, it just doesn't make a lot of sense.
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A
If you ask consumers, they'll probably say, no, I don't need them. But no one asked consumers whether they wanted a lot of technology. It was the tech companies that said, we're going to design this thing and we're going to tell you why you want it. And so I would argue from the consumer side, no, but I'd argue from a tech side, yes, because so many tech companies continue to remain so. I mean, Snap have been multiple pairs of spectacles. Amazon, Max to what you were just saying last year, released glasses for its drivers to help them with their jobs, their delivery drivers, so that they could track packages quicker and give them turn by turn navigation as they're going around dropping things off. So there's, there's a use case for them. Google apparently releasing their, another pair of glasses that they had some obviously way, way back when, 10, 20, how many years ago. And now reportedly, I'm going to be putting out their own, their own pair So I think if I had to buy another pair and they looked quite clunky. No, if you said that you could put smart, smart technology in my existing pair of glasses, maybe.
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B
I also think when we're talking about meta specifically, like, I think they have some, some branding issues going on and to what extent that actually matters for broader adoption. I don't know how much I can speak to that right now. But, like, I think because of everything with the Metaverse and how that just was such a swing and a miss, it's like, it's almost weird hearing Zuckerberg now, like, put so much stock into smart glasses, because I feel like it's like, well, you said a lot of this stuff about the Metaverse and we saw how that went. I was even kind of laughing, like, I. He said something on the most recent earnings call, like, it's hard to imagine a future without smart glasses or something. And I don't know, it just. This is maybe like a weird analogy, but it just reminded me of, like, when couples go on Instagram and talk about how happy everything is, then you, you're immediately like, oh, they're going to break up soon. Like, why are they trying to prove to us they're so happy? Like, it feels like this thing. It's like the more he talks about, like, yeah, this is inevitable. And it's like you're. The more you're sort of like, if you need to say it. Yeah, it makes me more skeptical. I don't know.
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A
But to your point about branding, I think that's a huge part of this, because when they pair, when they paired up with Ray Bans, that's when I started taking them seriously. And so I wonder how much of this will be meta eventually saying, we're just. It's going to be Ray Ban smart glasses powered by meta.
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B
Yes. Yeah, good point. Like, how much do they even want the meta name involved? How much do they even want him talking about this publicly? So it's a good question.
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C
Yeah, they absolutely were renting Ray Ban's kind of credibility or, you know, brand cachet by doing the partnership. But I think to your point too, about the, the kind of brand challenges minded, like, they absolutely have not solved for one of the things that, that nuked Google Glass 10 years ago too. Right. Like, there's already been a kind of steady flurry of stories about people, you know, using meta Ray Bans to, like, film women surreptitiously without their consent, about using them to sort of create kind of like clandestine, you know, pornography by Going into massage parlors and trying to coerce people into doing stuff that's illegal in spaces like that. And you know, Meta's spokespeople, whenever they're reached for comment for these stories, is always saying, you know, this is a, an abhorrent use of our technology. We don't condone this, but like it doesn't really matter that much. You know, kind of.
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A
On that note, in terms of the brand of Meta and social media at large, I want to take us to another point I had here, which is in 2026, will this be Meta's Big Tobacco moment? There are a few articles kind of referring, referencing to Big Tobacco as the moment when people kind of turn on tobacco companies. Stefan desaunier and Jonathan Vanion of CNBC noting that Meta's several high profile legal cases kicking off in 2026 centered around allegations the company and other tech giants but misled the public about the safety of their apps, despite knowing that certain design choices contributed to various harms on young users. There's an LA case that's about to kick off a separate trial in Santa Fe, New Mexico, another in Northern California, Northern District of California, another in New York City, et cetera, et cetera. And so how much do we think that this could be a big part of what is at top of Meta's mind in 2026 or right now?
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B
I should say we've definitely had a turning point. I would say we're in a moment where between the, there's all these trials that social media companies are facing around to what extent, you know, claims over that they've harmed young users, addicted harm users. We're seeing regulation at the state level and the federal level, classroom cell phone bans have really taken off very quickly. I mean, yeah, there's no doubting that we're in a moment that people are really wanting to hold these platforms accountable. To what extent that is working, I think is a different question.
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A
Yeah, yeah. Oh, sorry, I was going to say classroom cell phone bans also. Minda, we spoke about this. Max, I'm not sure if you were in the episode, but Meta also reckoning with increasing calls for social media bans for kids under 16, Australia being the first country to enact such a ban.
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C
Yeah, I think that it's going to be really, really interesting to see how all of this kind of trickles down to the. Or not trickles down, but sort of adds up in terms of the court of public opinion. But I think that it's definitely notable that in their sort of 2026 outlook. I feel like we've talked a lot about this conference call that Meta did already, but Susan Lee did point to the fact that they are facing a lot of litigation this year and it may materially affect their bottom line. And that's partly them just sort of doing what they have to do in a setting like that in terms of acknowledging that. But it's not nothing that she had to sort of make that disclosure in a, on that kind of quarterly call. Yeah, yeah, but I, and I, I personally think that this is going to be, it's going to be really interesting to see how this shakes out and, and whether also to this kind of change will wind up being permanent. Right. I mean, I1, I think about this all the time in the context of the, the NFL. Right. So you think back about 15 years when CTE first became a thing that the public became broadly aware of and it, you know, speaking purely from my own personal experience like that fundamentally changed the way that my, I like physically and emotionally processed watching football. Right? It went from being like, you know, watching a wide receiver run over the middle and get, you know, run over by a safety and what understanding what CTE was changed from being like, oh, that was awesome, to being like, oh my God, I hope he's okay. You know, and that was really. And it seemed for a while like that kind of experience was widespread enough that it was sort of, we were entering some kind of like moment of existential peril for the NFL. Fast forward 10 years. The NFL is probably more culturally essential than it's ever been in its history. And there seems like there's zero, you know, in its way to sort of keep that from remaining the case. Right. And so, yeah, I think that social media is quite different for lots of reasons. But it is also, I think, kind of useful to remember that even when something kind of comes up and enters the public consciousness that seems like a, again, like an existential threat to something like social media, it's entirely possible that 10 years from now people will go like, remember when people worried that short form video made children antisocial and unable to read and focus? Who cares? It's, it's really important to ask the question of like, what is, what happens when the entire, you know, as you pointed out in your preamble, literally the entire world is, is fixated on this. Right? It's not just a bunch of cranky, crunchy, like moms in California. It's Australia, it's France, it's Denmark, it's the United States. It's Canada, like India, Indonesia, Malaysia. Yeah, that's exactly right. And so it's. That is. That is a different kind of circumstance and scrutiny and it's. It's seems impossible that it's not going to change something, but. Yeah, exactly. We just don't know what that.
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A
I love the analogy, Max, as well, because this did happen a long time ago. You know, this attention to concussion and then Super Bowl's never been more popular in terms of the numbers and how much people. People pay attention to it and to the NFL as well. If this is Meta's big tobacco moment, folks certainly still love to smoke social media, to put it for lack of a better phrase, because in 2025, they said that they added 230 million new people start. 230 million new people started using one of its family of apps, Facebook, Instagram, WhatsApp or Facebook Messenger. That's the size of Nigeria, which is the fifth biggest country in the world. And they just added that many people. So that may be. I mean, with smoking big, talking about big tobacco, there's still over a billion people who smoke today in the world. And so just because things may be calming down in one area of the planet, maybe they're not calming down so much in another. So I think it's a really good one. The only other one I had was Meta just getting the green light to go on a spending spree. So what do I mean by this? New York Times pointing out that Meta's AI spending spree continued last month when it bought Manus, an AI startup based in Singapore, for $2 billion. Right after a federal judge ruled in November that Meta did not violate U.S. antitrust law by buying WhatsApp and Instagram a decade ago in the U.S. the FTC is going to appeal the loss, but for now, it could be a green light for them to say we want. I mean, they already bought skale for about $14 billion last year to take Alexander Wang and place them as the chief chief of AI for Meta. So maybe they start. Maybe there's more deals to be done here because they won the case. But apart from that, I don't know if that makes the list, but the list we have is what's the vision for their agent? Is AI spending actually a problem? Has Meta really cracked the code on driving conversions with their ads? The pivot away from kind of VR towards AR, and there's. This is 2026, Meta's Big Tobacco moment. Minda, what do you think we should get rid of or keep what should be the Top three.
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B
I'm going to keep the big tobacco question in there for sure. I think that's. It's just an interesting discussion, I think, and I don't think it's going anywhere anytime soon, so that's the one I'll choose to keep.
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C
What you want to keep, Max, I like the question about what its vision for its. For its AI is. I. That's. You know, we can't have a podcast episode in 2026 without talking about AI, so, yeah, I choose that one.
- [28:14]
A
All right, nice. I'm going to hang on to. Is AI spending actually a problem? Just because their earnings just came out Q4 and it was a big topic there. So I really like your one about Meta cracking the code on driving conversions, but I think that could. That could spread out throughout the year. And then my pivot from VR to ar, they've been doing that for a while. We're just seeing maybe even more of a pivot. So top three we have for meta questions at the moment, in no particular order, is 2026 Meta's Big Tobacco moment? What's the vision for their agent? And is AI spending actually a problem? It's a great list to me. That's what we've got time for for today's episode. Thank you so much to my guests. Thank you to Minda.
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B
Yeah, thank you.
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A
And to Max.
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C
Always a pleasure. Marcus, thank you.
- [28:56]
A
Yes, indeed. Thanks to the whole production crew. Lance and maybe Danny working on this one. Who knows, Lazy. And everyone listening. Thank you so much. Listening to behind the Numbers new market video podcast made possible by Seed Tag, Susie will have the Reimagining retail show for you Wednesday, talking all about the social commerce trends you need to know in 2020.