Here’s How Meta Plans to Make Money from Gen AI

April 24, 2024—Meta's Q1 earnings report is the clearest sign yet that social media and AI are not only intersecting, but creating new revenue opportunities for the social platforms and new ad opportunities for marketers.

Here are my key takeaways from the call:

1️⃣ Meta believes generative AI will be a significant revenue driver

Mark Zuckerberg used the call to take an aggressive stance on the power and potential of Meta's generative AI features. Without naming names, he ratcheted up the competition with OpenAI, Anthropic and other firms that have had a bigger head start over the past year.

Of note, Zuckerberg said he’s both optimistic and ambitious about the potential for Meta AI and other types of generative AI offerings and that the latest Llama 3 models aren’t just good models but can be “leading models” for AI. He also said he thought the company was on a path toward “having Meta AI be the most used and best AI assistant in the world.”

“This is going to be quite an important set of products for us,” he said.

2️⃣ Two key revenue sources: AI agents and ads in AI experiences

Zuckerberg identified three areas where the company can derive revenue from its gen AI work:

✅ Business messaging/AI agents

✅ Enterprise sales

✅ Ads in AI experiences

Enterprise sales is an interesting area, but it's not a core strength for Meta. It's also coming from behind vs. Open AI and others. I'm not convinced this will be Meta's strength.

Of the other two, the closest near-term opportunity is AI agents. These agents would be smarter than today’s chatbots and capable of going out and conducting multiple tasks related to a business’s goals.

But the biggest opportunity in terms of total revenue impact will be ads in AI experiences.

Given Meta's strength in advertising, there is no doubt in my mind that the company is actively exploring how paid ads will fit into consumer interactions with Meta AI and other consumer-facing gen AI experiences.

In response to an analyst question about the integration of Google and Bing results into Meta AI on the call, Zuck was careful to point out that the company is “not working on search ads or anything like that,” but he added that “there will be an ability to have ads and paid content in Meta AI interactions over time.”

I don't expect ads to appear in AI experiences in 2024; Meta will spend the rest of this year evaluating which features users are gravitating toward and how to boost engagement.

3️⃣ Advantage+ is showing real traction

AI underpins some of the strongest-growing ad products at Meta, the Advantage+ suite of products. Advantage+ improves ad performance by using AI to automate aspects of the ad purchase process. Zuckerberg said revenue flowing through Advantage+ has doubled in the past year, a strong signal.

Given all that, I thought it would be illuminating to ask Meta AI how it thinks Meta will make money from AI. Here’s what it said.

Image: Author’s Meta AI chat