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The Digiday Podcast
Meta courts agencies with expanded ad tools while AI reshapes the industry
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- [00:00]
A
Foreign. This episode is brought to you by Blockboard. Running high quality ad campaigns used to mean big teams, big budgets and a lot of complexity. BlockVantage changes that. AI does the heavy lifting so you can launch campaigns in minutes across screens, including tv, with no media buying expertise required and every impression is verified before you pay. No black boxes. Best results that you Can Trust. Visit myblockboard.com. Hello. Hello and welcome to another episode of the Digiday Podcast. I'm your co host, Kameka McCoy, senior marketing reporter here at Digiday, coming to you live from this year's Kitchen Cannes Lion International Festival of Creativity in the south of France. We're coming to the end of this year's festival and if you've made it this far, congratulations. A lot of this year's conversation has been big beachside announcements and claims about AI, as always. But one thing that's becoming pretty clear is that AI is everywhere, especially in how ads are built, how they're bought, how they're measured, and the growing question around where that leaves the agency role. If you want a full rundown of everything that's been coming out of Cannes, Digiday's obviously got you covered. We've got a newsletter coming out every day. If you haven't checked it out, please sure to do so in this episode. I'm talking to Nicola Mendelsohn from Meta. She's head of Global Business Group, and we talked about how Meta is leaning further into automation and AI with its ad business, but they're trying to do so in a way that doesn't necessarily cut out the ad agency or the whole CO row. So without further ado,
- [01:53]
B
Welcome to the show. Oh, thank you so much. I'm absolutely delighted to be here with you.
- [01:57]
A
What can is this for you?
- [01:58]
B
This is can 23, I think 23 years of coming year 13 with Meta. And before that I was 20 years plus in advertising.
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A
Oh my goodness. So you've seen a lot change. But I would also imagine that you've seen a lot change within Meta's own ad business, which is what we're here to talk to you about today. A couple years ago I was reporting that Apple had privacy changes and there was the rise of TikTok and there was all this tumultuation happening and the question was, what is Meta going to do now that this space is starting to get crowded? Today, Meta has really solidified itself as an ad business and is even her e marketer on track to surpass Google's ad business? Talk to me a little Bit about what's changed.
- [02:41]
B
Wow. There's a lot of questions in there. But I think the main thing has changed is the fact that we've been working with AI for the business side well over a decade. We use the models to service the right content to people that are using our platform. So the fact that more than three and a half billion people are utilizing our platforms every single month, every single day, actually is an extraordinary thing because we're giving them the information that they want to see, the content that they love. So that part of the business is very strong where the people actually are. And then we're also using it to ensure that we're serving the right ads to the right people at the right time. And we built a whole new system actually called the Advantage plus system. And in that it helps to do better targeting, better personalization, better creative, better shopping, if that's the thing that you're looking to do. And that's at the heart of it. And we just announced today the new research from the University of Berkeley is showing that for every dollar the that is invested in the US by an advertiser, they're seeing on average a $4.13 back in return on ad spend. So this is a huge number. And that's because we're also investing heavily in the generative AI tools we're seeing. More than 8 million advertisers are now embracing those tools. We had a whole load of new announcements around that area as well that were enabling people to kind of build on the success that we're already doing. So every bit of the business that we have, we have AI that touches it in some way. And more and more what we're focusing on is how we can make it easier for our advertisers to be able to run campaigns at scale, find people they didn't know that they could with new and exciting creative work as well.
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A
Absolutely. Now, given that you manage the relationship with marketers and advertisers, how does that then show up in the conversations that you're having with them? You know, what's the pitch look like, that type of deal?
- [04:32]
B
Yeah. So look, this has been been probably my busiest can ever the most meetings that I ever had. And actually the meetings are incredibly positive because many of the people I'm sitting with are saying to me that we're the number one place for growth. They can actually see the incremental side that we are delivering for their business that matters. So actually they're saying, what's new? What are we not doing? Well, how can we think about it? We've got our own dashboards and scorecards that we have with all our advertisers. And so it's really about talking what's next and what's new. And one of the big things that we've been talking about, and it's really based on what they've been saying to us, is how do you give us more insights from the campaigns that we're running? Right. And so we've actually announced today that we have created a whole new workspace in Ads Manager, which has like a brand memory, so you can put in all your past campaigns, et cetera, and then when the campaigns are running, it actually can show us what's working well, what's not. So you can double down in the moment on what's working well, but then you have the insights to go, well, why did that one work better? What can I do when I'm thinking about a new campaign that we can do? And so what they're also telling us now is that, and we're feeling this, that we're not just launching lots of new products. And by the way, this can, we've launched 15 new products, which is our biggest can ever, the most we've ever done. These things are all compounding together, almost like a flywheel. So if an advertiser is giving us that product catalog, which they are doing for a lot of the ads that we have, dynamic ads, et cetera, then that's one set of signals. But then when they're working with creators, that's another. When they're doing partnerships, ads as well, each one of these parts of the flow is compounding together. That gives a signal so that then when we have the creative workspace, that's all working together, and that's the power of what AI is now able to do and the power of the meta platforms.
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A
I think I would be remiss not to address the black box issue of this, that marketers sometimes point to this idea of, like, how granular can I get in terms of, like, how this is working, how it's making its decisions. How far do you guys pull back the layer of that to reveal to marketers and advertisers about how this LLMs and things like this work.
- [06:41]
B
Yeah, so that's exactly what I'm saying. In terms of they're getting more insights now to. To be able to inform and to advise what they want to actually do and where they want. Where they choose that they want to place their dollars as well. Also, on the creative side, you Know they have the choice, what they want to run so they can see it beforehand or they can choose not to. That's the choice. So I think we're putting more and more choice in the hands of the advertisers that are with us, but at the same time minimizing more of what the manual work, you know, some of the things that are an advantage plus would have taken 150 different steps. Now they can do it at a click of a button and they're seeing the results. That's, you know, that's something that they care about. Yeah, the bottom line.
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A
Where do you see the handoff between automation? Right. And humans?
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B
Yeah. Look, we're here at the festival of Cannes celebrating creativity. There is nothing more important than the person that can come up with the big idea, the strategy, the storytelling. So it's incredibly important. AI is never going to be able to replace the taste, the, the judgment, the insights, the familiarity that. I don't know. I was talking to someone the other day. I have a grandson who's 14 months. If someone turns around to me and just goes 4:00am and you know how that feels, you know, half the world's parents and grandparents around the world nod together. It's that and that insight, what you can then do with it if you're, you know, selling nappies or powder, whatever it is that you're doing. So that's where you, I think you need both. And what the certainly the agencies have been saying to us is that what the AI is able to do, the automation is to take away just a lot of the granular work that they didn't love doing and allow them to spend more time coming up with big ideas or working with creators.
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A
Have they come with black box concerns? I know I'm hearing that on my end as a reporter, but is that something that they bring directly to you guys?
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B
No, absolutely not. It was something that people talked about earlier in the iteration of how we were building it out. And so we set it out and we explained it, but no, it isn't.
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A
Got it. Got it. Earlier this year, back in May, we had our Programmatic Marketing summit where we have this Chatham House rules town hall style conversation. And one of the talking points that came from programmatic marketers and agency executives was like, I go to bed with my Advantage plus campaign running. I wake up, the toggles are different. I don't know what's going on anymore, what happened. So it goes back to this black box idea and kind of like really intense campaign management. What's kind of your response to that, Is that something that you guys have been thinking about addressing?
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B
Look, we, it's not something that's, that's filtering up to me so otherwise I would tell you all the things that we've done to address it. But we're taking marketers along the way with us, the people that have got their hands on the keyboard to make sure that we're addressing any campaigns, any issues that they have with their campaigns as they're iterating or anything new that we're doing. I mean a lot of this can, is about sharing all the new things that we're doing with, with our advertisers today.
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A
Absolutely. As you guys continue kind of hand in hand, how much input do marketers have in the relationship in to say of the direction of like how much automation happens here and how much is being handed to AI?
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B
Well, we have many different forums where we bring advertisers, buyers, all different levels within, within the industry together directly with our engineering teams. We run a global client council and client council we have measurement counts, performance ones where they come and we actually help us iterate on what the roadmap is, the things that they want to see and then we go and build together or you know, accordingly.
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A
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B
Well the big one, I think that's really step change is all things agentic.
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A
Yeah, of course.
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B
And messaging. So we're already, you know, a very important part of communication between an advertiser and an individual, whether it's on WhatsApp or Instagram direct or Messenger. But Actually, now seeing what we've been doing on Meta Business Agents is truly a game changer. So I think what it does is it gets back to that deeply personal way that business used to be done. And I'm talking about before the Internet. So, you know, the world of my grandparents. My grandparents used to work on the markets in the north of England.
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A
Yeah.
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B
Selling fabrics. And my grandfather would know the name of every one of his customers, whether they had a function or a wedding or whatever. He'd buy the fabric for them and he'd get it before they even knew they needed it. Yeah, yeah. And that's really hard to replicate. But actually now, in an agentic world, that becomes much easier where, you know, the agents have perfect memory. They know the brand, they know me as a customer. They can really start to serve to me the things that I want to know about and be so much more useful than we've ever been able to have before. And so just a couple of weeks ago, we had a big event called Conversations where we announced all the kind of changes that we were doing on the enterprise side. So we've been rolling out business agents for a while now. We've already seen that we have over a million businesses that are already employing agents on Meta Large on WhatsApp. But now we're seeing more and more of the larger advertising that's been a massive conversation this week at Cannes. Everybody wants to understand we which are the businesses that already done it? How do they do it? Which partners can, you know, should they be thinking about and how to think about what it can do for their business? So a good example of that is Movida. I don't know if you know them. They are a large Brazilian car rental company.
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A
Okay.
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B
Everybody in Latin America is doing business on WhatsApp. It's just almost like breathing now in terms of how commerce takes place.
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A
Yeah, yeah.
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B
But they said they wanted to take it to another level. They wanted to go agentix. So we work closely with them and you can literally go into Your. Into your WhatsApp. You can speak and ask a question going, I want to rent a car. These are my days. Boom. It shares everything straight away with you. And then it shows you, like, what kind of car do you want? How much do you want to spend? Shows you the carousel of all the different things. I'm not sure. Should I go? You have a little dialogue backwards and forwards. Boom. And it's booked.
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A
Absolutely, yeah.
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B
And then they can upsell you with, do you want the insurance? And then if it goes wrong, you know where it is. You're not having to find it in an email or an SMS or. Yeah, you've got it there in the thread. You just reactivate and go back in on the thread again.
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A
Well, that's actually a really good point that you bring up. I am curious because there are still, I would be remiss to not say hallucinations don't still happen within LLMs and AI chatbots and things like that. Who is responsible? Who is the onus on here for if it goes wrong? Is it meta, is it the agency, is it the marketer?
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B
Yeah. So look, we're seeing less and less of that. And when we're building our products, you know, we're building them very carefully from the day one in terms of making sure the privacy is right, making sure the safety is right and it's important. And that's just not something that we've seen in terms of what we, where the agents are because we're working within very tight templates with both the engineering side of the advertiser and also on our side as well. So yeah, that's, that's how we see it at the moment.
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A
Are these living templates that get updated as things occur pre thinking or how often is that addressed?
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B
So it depends on the individual business in terms of what they're doing. So it's pretty bespoke.
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A
Got it, got it. And then I want to zoom out again and go back to the idea of the relationship building part of this. Right. With more things being handed to automated tools, what does that then mean for your job and your team? How if automation is handling a lot, does that change like the sales reps and things like that that are talking to the marketers and advertisers?
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B
Well, I think it gives them superpowers, actually. I think there's nothing more important than relationships like you and I doing this now that can't be done by anybody else apart from you and I live in the moment. And I think that's the same true for what it is when we're working with our partners, when we're working with our agencies, when we're working with the businesses out there, it's the people that do the business, but the superpowers it gives you is to know so much more about the business, so much more about the tools that we can help to grow their business. That's the thing that matters is that
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A
more meetings, less hands on keyboards.
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B
I actually think it's more meetings. Yeah. I actually think it allows frees up the time to Spend more time on the strategy, the really big stuff that matters and can really disproportionately change the traction of a business.
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A
Absolutely. Now, some advertisers say again, going back to conversations that I've had with media buyers and things like that, one of the concerns is that as more platforms, not just Meta, but more platforms, start to automate the media, buying creativity, branding and all that process, I, as an agency, kind of get cut out of this process. What's Meta's response to that?
- [15:59]
B
Agencies are our critical partners here. You know, some of the. That tool that I was just talking about, the creative workspace, we've actually built the integrations for agency on day one.
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A
Okay.
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B
So it's not something we're doing after. It was something we work closely with. Agents on WPP spoke very publicly about it yesterday. How they see it as an acceleration of getting more insights for their creative will help them more, you know, with their advertisers. And I think one of the things that's really important here is we didn't just give them another tool that they have to work independently. It integrates directly into the work that they're doing, so it makes it easier for them. So, yeah, agencies matter. Really important.
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A
How do you keep that relationship balanced? Whether it be, you know, incentive to try new tools or more frequent conversations, how do you keep that relationship balanced?
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B
That at the heart of everything that we're doing? I mean, they're all on my global client council. We work. I mean, I see them all the time, like on a personal basis. And I'm an agency girl of old as well. So it's in my blood. Yes, it's in my blood. No, that's fair.
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A
Those gray days come harkening back.
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B
Indeed.
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A
Talk to me a little bit about what Meta is changing in terms of organizationally as things become more automated, like I said. What does that then mean for how you build out your team going forward to continue the relationship with advertisers and marketers?
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B
You know, in many ways it looks pretty similar because what we've done is actually enable the team to have more AI tools to help them. And we're not done. I mean, this is an evolving thing that we're going to continue to create that, to continue to iterate on what we're doing. I mean, I've, you know, last year at Cannes, I didn't have a whole suite of my own personal agents that are doing so much more for me. I do now. They're amazing. I, you know, and the superpowers, it Gives me in terms of, you know, the leader of this part of the organization is really important because it helps me to help my team and it helps me to be able to help the advertisers as well. It helps me with the conversations with our engineers as well. So, yeah, yeah. I think the other area that is a little different is the investments we're making more on the enterprise side with our forward deploying engineers as well. That is a change that we've seen and that's in response to the feedback we've had from the market around, well, how do we get these agents? How do we deploy quicker, how do we move? And that is more of the weight on the engineering side. So that's the investment we have made.
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A
Talk to me more about that. Obviously, Meta made an investment in AI and automated tools. That's paid off, hence the ad revenue. But where do we go from here?
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B
Well, so many of the different areas that we're talking about, messaging with the business agents, were literally just only really launched in the last few months and really for the enterprise side, two, three weeks ago, so. So that's a really big area of focus for us. We'll continue to invest in all these tools. This is not one and done. We're continuing to invest to deliver stronger and stronger return on ad spend. One of the figures I'm most proud of when I shared that $4.13 is actually that it's up over 25% since 2022. So that shows you the continued investment that we're making is continuing to pay off for our advertisers, because that's the thing we care about more than anything is how we help those businesses to grow.
- [19:00]
A
Actually, that's a really good question that I want to tap into. How do you guys balance the relationship? Because you've got major hold codes like wpp, Omnicom and things like that, but also you've got like independents and smaller businesses. How do you manage that so that there's like a balanced approach between all of them at all of these different levels?
- [19:16]
B
Yeah, of course. So we want to. First of all, our tools are available to everyone. You know, the democratization that we have of our tools for the industry is something I'm incredibly proud of. And by the way, it's not just the whole coast or the indies, as you say, say, but for the smallest businesses, they have the same access to those tools. Now, of course, they're not going to use the enterprise tools and the things that, you know, that we're talking about there. But yeah, we have a very balanced approach in terms of how we think about it.
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A
That's on the ad tools side. And then same thing for your team. Does communication look any different? Team building, things like that?
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B
Yeah. So I look, I think, like in many different businesses, how you operate out in the market is different in terms of the relationships that you have, et cetera, and the differences sizes. But on the whole, it's pretty fixed in terms of where it is.
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A
Now I have to ask is, when I talk to media buyers, I have this conversation, one of their first questions was, whatever happened to the metaverse? That was something that was talked to about a lot and now we've pitted it to. To AI. What did the conversations look like when the metaverse was kind of, I'll call it back burnered.
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B
We still have the metaverse. It's still there. We are, you know, continuing to invest in Quest and the devices that we have, that whole world of virtual reality. But what we've seen along the way is the glasses.
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A
Yeah.
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B
So the meta AI glasses are really just something that is continuing to accelerate. We saw millions and millions of pairs of those. People love them, and they love them because it means that you can have meta AI literally with you wherever you're going. And it's been so useful this week. If you're in like a French restaurant and you don't understand French, the menu, it tells it you straight away in terms of what's going on. So we're continuing to innovate there. More styles, more frames, et cetera. So this is the really exciting part for us in terms of being able to deliver in a different way meta AI to people around the world. One of the things that really touched me, I was with last week at Vivitech, a partnership that we do with Be My Eyes. I don't know if you know this organization.
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A
Yes, I do.
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B
It's so moving. And the fact that they have a million people that are registered as blind or partially sick and now over 10 million volunteers. So when people put the glasses on and they're in a partially sight person or blind person puts the glasses on in a supermarket or in a railway station, they can call on, on the app, they can see what the person is seeing and they can direct them to the thing that they want. That is a superpower that those glasses have given to people. Yeah.
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A
I think one of the things that advertisers were so curious about is would there be an opportunity to advertise in the metaverse? Is that still on the table?
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B
So one of the things that we've always said is we always put our products out there for people to enjoy and to consume. And then at some point we may or may not think about monetization. And so we'll wait and see.
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A
Absolutely. Well, Nikolai, I know that you've got things to do and you've got to skedaddle, but thank you so much for spending some time with us here today.
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B
It's been fantastic to spend time with you in your air conditioned room. So thank you very much.
- [22:14]
A
Thank you. Foreign. Well, that brings us to the end of this episode of the Digiday Podcast. Thank you to everyone for listening. And please don't forget to share this episode with someone who you think would enjoy it. You can even rate us and leave us a comment on Apple Podcasts. We'll be back next week with another episode of the Digiday Podcast. Thank you so much for joining us.
- [22:41]
B
Sam.