DribbleUp, a sports equipment company, says it used to spend its own time and resources figuring out whom to target on Facebook. For the last two years, it has placed those ads “entirely through Facebook’s artificial intelligence tools,” according to The New York Times. Since then, the company says sales have outpaced marketing expenses. It has also started spending more on Facebook. Funny how that part works.
That is the deal Google and Meta are selling: systems that do not just help place media, but also create ad variations, choose audiences, bid for space, and measure results. The Times frames it as a shift that lets local businesses run campaigns with machinery once reserved for much larger advertisers.
The money is following the automation. A.I.-related sales climbed from $1 billion in 2022 to $35 billion last year, and are expected to rise another 60 percent to $56 billion this year, according to Madison and Wall, as cited by the Times. Google reported advertising revenue up 16 percent to $77 billion for the quarter. Meta reported revenue of $56.3 billion, up 33 percent from the previous quarter.
Both companies are funding the whole thing with data-center spending that reads like a defense budget. Google has committed to double capital expenditures to more than $175 billion this year, while Meta plans to spend more than $115 billion. The costs have also contributed to Meta’s plans to lay off 8,000 employees, as it uses A.I. to do work once handled by engineers. Google, the Times notes, has resisted similar cuts and says it is hiring in areas like A.I. and cloud computing.
On the product side, the pitch is that A.I. makes ads easier to run and harder to understand. Google says irrelevant ads have declined 40 percent as Gemini helps parse queries and evaluate advertisers’ materials, useful for a pay-per-click business. Its “responsive search” system creates and tests ad copy before serving the version it thinks best matches a person’s search.
Meta says A.I. has increased Facebook watch time by double digits and broadened the reach of Instagram videos by dubbing content into different languages, giving it more places to put ads. L’Oréal used Google’s tools across 800 campaigns for 30 brands in 23 countries, and credited the tools with helping increase revenue for NYX Professional Makeup. Loop, the concert earplug company, used Google’s A.I. tools to translate ad copy and place ads internationally, while noting that it still used “real photography and real people.” A small reassurance, but a reassurance.
The tradeoff is familiar: more ads, more personalization, less advertiser control, and a black box with better margins. As Madison and Wall’s Luke Stillman told the Times, “The process is more opaque, but more money is going into it because advertisers and users see benefits outweighing drawbacks.”
Full story at the New York Times.