At Meta they’re fastening seat belts as founder and CEO Mark Zuckerberg attaches a rocket to investment in AI (artificial intelligence).
The social media giant, which has the world's second largest share of digital ad revenue after Google, plans to allocate up to $US40 billion this year on capital expenditure.
That’s about the same as its advertising revenue in the September quarter, $39.9 billion,
And there’s more ahead with “significant” acceleration in infrastructure expense growth planned for next year.
Zuckerberg is pleased with progress, saying the company is going faster than he thought in building the infrastructure for AI.
“I just think that the opportunities here are really big,” he told analysts in a briefing.
“We’re going to continue investing significantly in this and I’m proud of the teams that are doing great work to stand up a large amount of capacity so that we can deliver world-class models and world-class products.”
AI was having a positive impact on nearly all aspects of Meta’s work, from core business engagement and monetisation to long-term roadmaps for new services and computing platforms.
“And this partially comes from having a vision and roadmap that is aligned with the direction that technology is heading, but more importantly from our teams doing some really excellent work on execution on so many fronts,” he said.
Improvements to AI-driven feed and video recommendations have led to an 8% increase in time spent on Facebook and a 6% increase on Instagram this year.
More than a million advertisers used GenAI tools to create more than 15 million ads in the last month.
Businesses using Image Generation are seeing a 7% increase in conversions, Meta estimates.
Zuckerberg said Llama, a generative AI model that's open-source, is seeing great momentum.
“Llama token usage has grown exponentially this year, and the more widely that Llama gets adopted and becomes the industry standard, the more that the improvements to its quality and efficiency will flow back to all of our products.
“This quarter, we released Llama 3.2, including the leading small models that run on-device and open source multi-modal models. We're working with enterprises to make it easier to use, and now we're also working with the public sector to adopt Llama across the US government.
“Now it's the time of the year at Meta when we plan our budget for the next year. That's still in progress, but I wanted to share a few things that have stood out to me as we've gone through this process so far.
“First, it's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years, so I think we should invest more there.
“Second, our AI investments continue to require serious infrastructure, and I expect us to continue investing significantly here. We haven't decided on a final budget yet, but these are some of the directional trends I'm seeing.”
CFO Susan Li told the analysts Facebook is also getting strong results from the global rollout of a unified video player in June, backed by experience and prediction systems that power it.
Facebook has seen a 10% increase in time spent within the video player.
And Meta is making progress with other longer-term engagement priorities, including generative AI and Threads.
Meta AI is seeing increases in usage, including Australia and New Zealand, with more enhancements including voice.
In the US, people can now also upload photos to Meta AI to learn more about them, write captions for posts, and add, remove, or change things about their images with a simple text prompt.
“We’re seeing strong retention with advertisers using our generative AI-powered image expansion, background generation and text generation tools, and they’re already driving improved performance for advertisers even at this early stage,” said Susan Li.
“Earlier this month we began testing our first 6 video generation features - video expansion and image animation. We expect to make them more broadly available by early next year.”
And across both Facebook and Instagram, Meta is continuing our broader work to optimise when and where to show ads within a person’s session.
“This is enabling us to drive revenue and conversion growth without increasing the number of ads,” she said.
“The second part of improving monetisation efficiency is enhancing marketing performance. Similar to organic content ranking, we are finding opportunities to achieve meaningful ads performance gains by adopting new approaches to modelling.
“We recently deployed new learning and modelling techniques that enable our ads systems to consider the sequence of actions a person takes before and after seeing an ad.
“Previously, our ads systems could only aggregate those actions together, without mapping the sequence. This new approach allows our systems to better anticipate how audiences will respond to specific ads.
“Since we adopted the new models in the first half of this year we’ve already seen a 2% to 4% increase in conversions based on testing within selected segments.
“We are also evolving our ads platform to ensure that the results we drive are customised to each business’ objectives and the way they measure value.”
“We’re also testing new features and settings for advertisers that will allow them to optimise their campaigns for what they value most, such as driving incremental conversions rather than absolute conversions.”
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