# Meta's CMO on AI Ads and Rising Meta Ad Costs

Channel: Ben Heath
Video: https://www.youtube.com/watch?v=wwdvrZBjock
Duration: 18 min
Language: English
Words: 4124
Transcript page: https://viewrankai.com/tools/youtube-transcript/wwdvrZBjock

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[0:00] I've been given an opportunity that most marketers would bite your hand off for, a chance to interview Meta's CMO, Alex Schultz. I'm going to be asking him about AI, the current state of Meta advertising, and [music] what's coming around the corner. But first, I've got a flight to catch.

[0:20] It's not often you get to speak to someone who is undeniably one of the top marketers in the world currently. You're CMO of Meta, it's one of the biggest marketing jobs there is. This video is sponsored by HubSpot. More about them later. So, your primary responsibility as CMO is, I'm assuming, more users across the

[0:39] Meta apps. Not just the apps, also the glasses, also the reality labs headsets. Okay. And also within the apps, different features of the apps. But they are fundamentally use our products more. Actually, reduce it right down. Okay. Does that extend to acquiring more advertisers as well? 100%. Actually, advertiser growth and pages growth is the one thing I have done for my entire job. I was hired to do pages and advertiser growth in 2007,

[1:02] and I still do. Wow. I heard you say before that you had a cadence where you focused on like Instagram one year, then Facebook, then WhatsApp. Is that still like the primary focus? Yeah, it really depends where the business is. So, this year, I am actually primarily focused on AI, and it sounds like so cliché, but like, look, we got these huge AI investments, we need to make them real. So, the biggest thing I'm focused on now is Meta business agents, the sort of AI customer service sales, uh rep thing we've built, um and growing that. That's my number

[1:27] one focus right now. I want to ask about that in a second. Before I do that, on the acquiring more advertisers, cuz that's primarily, you know, people who follow me are advertisers. Are you trying to convince Meta users that use the apps say for business purposes to advertise, or bring them in totally from outside, and make sure to like, what

[1:43] does that look like? So, there's this thing called the KX funnel. It's named after this guy, Konstin Jin, right? Who is no longer with the company. He was with the company like, it longer than me. Amazing guy, and we came up with it early on, and the the was first you need to get someone to use our products. Then they have to use our products organically to promote their business. Then they buy an ad. To this day, we leverage that funnel. Yeah. Like you're never a successful advertiser if you haven't used our products first. So, absolutely it's about converting existing users to use it as a business, and then

[2:10] businesses to buy ads. So, are you familiar with the Meta Megaphone Partner Program for creators specifically? I mean, some of it. Like we have a lot of creator programs and I get confused. So, it is possible I'll get confused about which specific program. I just wondered if there were any thoughts around like what you're going to do with creators in terms of maybe acquiring more advertisers or probably more specifically thinking about our audience, it's probably like reactivating old advertisers would be more of a an application. That's probably a selfish question to be

[2:38] honest. Well, no. For creators, actually my main focus isn't about leveraging creators as a way to get more advertisers. My focus is getting advertisers to switch their spend to creators because advertisers are getting better ROI. Google's seeing this, too, by the way. They're getting better ROI when they're doing authentic stuff with creators and then boosting them as ads. Yeah. So, because we're seeing those good results, my job is to get businesses to use the Instagram Meta

[3:02] Marketplace to match with advertisers. Like that's my key. Okay, on that topic then, I've been saying to people a lot, work with creators. I'm seeing consistently across businesses I look at, often their best performing ad in ad account will be a creator ad. Be 100% 100%. So, what do you think businesses who haven't yet taken that step should be looking out for in terms of the creators they should

[3:19] work with? Yeah, I mean, I think the thing that we found is that it's most people end up focusing on reach. Yeah. And saying, can I go to the biggest creator? Yeah. And what we've found is actually it's about authenticity and match of content to who you want to target. Because as an advertiser, you're

[3:34] paying to boost the creator. Yeah. So, like if you've got a really good authentic connection and you can let the creator be authentic with their audience for the ad, and then you can buy the sponsored ad, you'll be successful. If you're just going for a big creator, but you're then like really trying to manipulate what they're saying to fit with you because it's not actually that good a match. Like that's going to go far, far worse. I would say focus on authentic match that you can boost with ads as a business, not focus on reach

[4:01] first. I imagine that Meta is very much walking the walk on this. Like you guys are working with creators to acquire more users and things like that, right? We have a thousand creators we're working with. Wow. Like so so like the glasses like we are really creator first. But also Instagram growth. Like when you grow Instagram,

[4:17] what's the best thing about Instagram? Creators. Yeah. And your friends. And so like we're not promoting your friends to you, so we're promoting creators. And so yeah. I'll get back to my chat with Alex in a second, but first, one of the best ways to improve your Meta ad results is to model from ads that are already proven to work. To help you do exactly that, HubSpot and I have put together a free resource of tried and true templates I've seen work time and time again. Each one includes the hook, body copy, and CTA, so you can take the structure, make it your own, and start testing straight

[4:46] away. My favorite part is that these templates are organized by business type. E-commerce, local business, lead generation, and SaaS. So no matter what kind of business you're advertising, you can find templates that are relevant to you. There's a link in the description below to grab it for free, and thanks to HubSpot for sponsoring today's video. In your book, which is fantastic by the way,

[5:05] Thank you. you talk a lot about principles being timeless. One of the questions I had was what worked really well in say 1990 that still works well today? The best example, and it's too easy, is database marketing. I like to use Tesco's as the example with the club card. Yeah. When they got the database updated so that they could know a person and actually understand for that person like

[5:28] where do they live? Yeah. They were able to match when a store's usage dropped because a competitor opened in the area. Now you're like, well that's really obvious. Why is Tesco special on that? Tesco special on that because the way the club card worked was they mailed you the discounts. Other club cards you got the cash off at the till. But Tesco's fundamental innovation is they needed your address. So they made sure you had to give them an

[5:48] accurate up-to-date address. Yeah, okay. So, they were way, way, way more efficient when they had a competitor store come into the same region at deploying their coupons against the actual people who'd gone to the competitor rather than just spraying and praying. That kind of thing, like making sure you have the right data in your database to do the targeting was 1990s

[6:05] relevant, it's 2020s relevant. The inverse of that almost, what are things that people are saying, "This is new, the new shiny thing you should be doing." that actually is just a new iteration of something that already exists. What comes to mind? I mean, for me, a lot of the AI stuff is actually just an iteration. So, it sounds crazy, but like let's use the same example, like direct mail. Yeah, like if you're doing meta business agents, which I'm really excited about and I think are amazing, they're still not that new. Like it's the same thing as you go back to Glen Gary Glen Ross,

[6:34] where are the good leads? You can't close the leads you're given. You can't close You need a person whose phone number you have. Okay, it's not their personal home address or their email address, but it's the same thing. You need to have information about them so that you can actually say the right thing to them. You need to Okay, in this case, the first couple of turns are going to be done by an AI, not a sales rep, but a lot of the underlying like fundamentals

[6:57] are all the same as far as marketing. And at the very end, the channel in this case is an AI that never sleeps and can perfectly answer the questions to your clients. But all the stuff upstream is exactly the same. You mentioned around agents. I wanted to ask about that and specifically how you think that will affect advertising. Like what does an AI even look like in 5

[7:16] years, let's say? I mean, I think it's going to be a distribution. So, there are going to be ads that are just shown to agents. Clearly, there are going to be ads that are just shown to agents. Right now, if you ask Open Clora or whatever what it wants to host it, right? Where do you

[7:32] want to buy your hosting for yourself? It selects something based on what it's been trained on and it's got preferences that are totally associated with the researchers that have used it. Not not in a biased way, but like or associated with like what's going on right now. At some point it will go out and look at a database and say, "Okay, which one do I want?" And you'll probably be able to just like search to have sponsored listings as well as free listings in that database. And so So, there'll be a set of stuff like that. That's definitely going to happen. Agents are going to have ads against them. But the

[7:58] other thing is like when an agent goes out and buys me my toothpaste, right? I want it to buy my preference of toothpaste, which is Colgate. And so, I want Colgate. I want Colgate whitening. Whether that works or not, you can judge for yourself. But I want Colgate teeth whitening toothpaste. And I really like that toothpaste. I'd be really upset if it didn't do it. Why do I like Colgate? I don't know. I think it's a bunch of ads I've seen through my childhood and growing up and so on that have put me into Colgate. And so, the preferences of the person that the agent is representing will matter. And that

[8:30] comes down to brand preferences. And so, you will need to show ads to human beings to be able to get the brand preferences there. And so, there will be a mix. Like humans will need ads shown against them. Agents will need ads shown against them. But 10 years from now, there'll be a bunch of ads shown to

[8:42] agents for sure. And same question, but for like your beloved Oakleys for example. How do you think that's going to impact advertising? Looking at the same sort of time horizon. Well, I mean, the hope is that we build better and better glasses. We get those wonderful display glasses like our vision that we put out when we rebranded to Meta will come true, where people will be heads up. They'll be looking at the horizon. And maybe they'll get a little notification in the bottom of the screen, but they won't be distracted by their phone the whole time. And so, like what we'd hope would happen is that there is an overlay of

[9:12] the world where you are interacting via these display glasses. And there will be appropriate places in that when you're choosing for example to look at Reels cuz you're bored at the bus stop where you'll see an ad interspersed. But you won't be looking down at your phone when it happens this time. But most of the time, you are just getting useful notifications and you're not distracted from your day-to-day life. And it actually helps you to be more present with the world. So, it's it's probably

[9:32] that balance. One of the things that my audience has noticed which naturally going to happen over time, is CPMs. Cost per thousand impression when you're advertising on matters increased. It's effectively a demand supply function, right? More demand from advertisers increases the cost. They never noticed those many years when it went down. Okay, yeah.

[9:50] You are right. Yes. I've got the charts, you see. I I see each year's CPMs and I see when they went down and when they went up. Anyway. But there can't be that much more supply to be had, or can there? As in, the supply by the way being available ad inventory. So, here's the thing that blows my mind.

[10:05] I would have I would have said that. Yes. But then TikTok happened. Okay? I mean, look at how much time people are spending on TikTok. There's many more time on TikTok than our services in some countries. And all of that came from somewhere. I think came from TV mostly. Yeah. But there has been a huge growth in supply actually. I think what's really interesting for you, given your focus on the world, is Google and Meta, and I think now TikTok, Amazon, and others bringing in what's happened with digital advertising is we have actually seen advertising go from 1% of the global economy to now maybe 1.3, 1.4% of the global economy. And it

[10:38] was stuck on 1% for a very, very long time. Okay. And so, what's actually happened is the pie appears to have been grown. And it's been grown by there being more places where you can show ads and more inventory where you can show ads. But it's also been grown by making those places more efficient. And so, what I think, like, yeah, you'll see competition between the social media apps to get those eyeballs and get that time. TikTok has shown that we can grow the pie and eyeballs, though. So, I still believe there's space for growth there. But the biggest thing is going to be a focus on how do we show the right

[11:05] ad to the right person at the right time. And AI will let there be more personalized creative. AI will let there be better matching. And we should be in a place where we're actually able to get higher CPMs because we're driving more ROAS. Cuz that's the only reason our CPMs go up. And it doesn't matter.

[11:18] So, that doesn't matter. The narrative being even if supply was capped and there was more advertiser demand and your CPMs did go up, if the platform is smarter and they're better able to I think the narrative was we're going to get loads more impressions and the CPMs are going to go up, but then stuff show a executive answer. But But I do I do think that it doesn't matter is actually important because the ranking is the key thing. Right ad, right person, right time. Infinite AI creative, directed by human beings who are the creative directors, combined with perfect ranking in a thought experiment world means huge

[11:49] value from existing inventory. Going back to creative slightly, when you talked about that being something that you're really pushing, we could see that matter as advice to advertisers. My assumption would be that as you see more and more AI generated stuff, personal brands, effectively another term for for creators in many places, are going to be the the signal that cuts through the noise. So, you're anticipating that being more of the narrative going forward, like it's already absolutely what you should be doing, and in 2 years' time even more and more

[12:15] important. That's the trend we're seeing. Yeah. Can trends reverse? Yeah, trends trends can reverse. There's nowhere on Earth where we're seeing that trend reverse right now, and usually what we see, if you're talking 2 3 years out, is you usually see the signs of that a couple of years ahead of time. we'll go. Somewhere on Earth something's looking

[12:29] different. Interesting. I think there are creators using AI, and so you'll see augmented creators. I think you'll see some AI only create content, but fundamentally I think like no, the creator stuff is a real trend, and if anything I think it will deepen with things like conversational commerce, with things like um shopatainment, stuff you're seeing in

[12:46] Asia right now. I wanted to ask about AI generated ad creative, and particularly those businesses that are really going to struggle with that. I'm thinking like compliance-heavy industries, cuz I'm hearing that as a thing that's coming up all the time where people are saying, "I can't use methods such and such image generation, or allow it to change text and things like that, cuz we might get in trouble with legal." What are your thoughts on that, and sort of solutions

[13:07] coming down the line? I would argue there are two different kinds of kinds of industries on this. One is the one you're describing. Yeah. The way that we and other tech companies are handling this is AI judges. Yeah. And so, we are literally building AI lawyers that are making better decisions than the average lawyer okay to be able to review creative. I actually think it's going to be really important for these companies to be able to scale their legal department to have guided by their lawyers. I mean, this is my big thing. You know, Geoffrey Hinton said we'd lose all radiologists by now. We

[13:34] have more radiologists than ever. They're just using AI. So, I think you'll see the best lawyers will find a way to scale themselves using AI judges to ensure that adherence is happening to policy. And look, we are doing this for our compliance on content moderation. We are doing this for our compliance on privacy. And we are going to regulators and showing them statistics. I run data,

[13:54] right? Yeah. Showing them the statistics to show the performance is so high when you use AI that you'd be a fool not to. So, that's one category. And so, I think that category will be solved. It will take time, but I think that will be solved. The other category though is, let's say you're Persil and you need to show people that your beautiful top that you're wearing that I would somehow

[14:12] cover in chocolate or something. I've done quite well today, so you've extremely well. Oh, my god. Like, I'm on my second shirt. Your beautiful top is now whiter because of Persil. If they did an AI image, it just wouldn't be real. So, I think that category is going to be a different one. Persil, Dove, real beauty, there'll be a category of people who shouldn't use AI

[14:30] to do the creative. And that's right. But the compliance heavy industries, I believe you will find AI lawyers backed by real lawyers guiding them will actually scale the legal team in such a way that they can scale and that will happen. I guess there needs to be precedent set cuz what these companies would be worried about would be it coming back to them legal reasons, wouldn't it? So, once the precedent set is like, this is actually acceptable that we can use these systems and you won't get sued or you'll be defended against

[14:54] happen. a tech versus company that like we I believe we're setting that precedent in some of the stuff we're doing in content moderation where we are regulated. Yeah. But I also think you'll see the new banks getting out there and you will see startups getting out there that actually disrupt things and that will work. I wanted to ask about advertising everything you're advertising. You're

[15:11] putting ads everywhere. Yeah. What might surprise people that's worked well either selling something like the glasses or acquiring users that comes to mind? I mean, I think the thing Thing surprise people from me is like classic Hollywood celebrities in a Super Bowl ad. Okay. Right. So, I'm all the data, the targets, and the everything. And the single best thing I did was the Super Bowl 2025 with Chris Pratt, Chris Hemsworth, and bringing it home, and she

[15:38] nailed it, Kris Jenner. Hey Meta, call my lawyer. What we would have seen would be overpriced and it wouldn't land and but it worked really well. the stuff you wouldn't expect me to buy and I bought it and it worked. Okay. One last one. How long till everyone in the US is using WhatsApp? Oh, I don't know. We're at over a third of the US now, so things are going pretty well of the adult population who are allowed to use it and so on. So, we're going pretty well and it's gone up

[16:01] like really materially. I don't know. Everyone is an aggressive number, but I I do think it'll be the leading messaging app within the next 5 years or so, but like that's a that's a hope from me. It's not a guarantee, but we've really we're really doing good work here. Yeah, as a Brit who uses WhatsApp and interacts with a lot of like American clients, it'd be so much easier if they were all Absolutely. Well, iMessage is a worse

[16:22] messaging platform. Okay, so that was really cool. Speaking of Alex, I met him last year. Very interesting guy. Been at the company forever. Thinks about things very deeply. His book is fantastic. I'd recommend checking it out. It's not about Meta advertising cuz he's the CMO of Meta, right? He's acquiring customers from all these other channels. So, he's putting ads everywhere. So, yeah, really interesting. Something for me to wrap my head around that he like talked about so easily as someone who's in it was the

[16:48] ads to agents. What's interesting about that he talked about like a database type setup is that there wouldn't be a visual to it because no one's actually looking at it. It would just be to the agent. So, I totally get it in theory, but almost sort of actually understanding that coming through is is really interesting. Talking about creators and how that's working and how that's producing better results, how it's going to become more and more important is like a very consistent narrative that we've seen from Meta for a while, but just become way more popular. And even like the biggest example we have, have the surprise example of a Super Bowl ad

[17:19] with monster celebrities that worked really well. It's like, well, yeah. [laughter] The ultimate example of a massive creator campaign, right? Thousand creators on the Oakleys is mad. Really specific to advertisers, what would be interesting would be the narrative around not worrying about CPMs rising. Because it's a function of demand supply. More and more advertisers demand not that much more supply, although he thinks there is. I'm maybe a little bit more skeptical about that. But totally get it. There may well be some more supply. And that's going to lead to increased CPMs. Everyone's like, "Oh, if my CPMs go up, then I'm going to end up

[17:47] paying a lot more to acquire customers." If the platform gets that much smarter, then you can deliver increased CPMs and still see a better return on ad spend. And that's all that matters, really. It's your return on ad spend. It's your cost per conversion. A lot of the rest of it is noise. Better to have a higher CPM if your return on ad spend is also higher. And thank you very much for watching. If you want more content meta

[18:05] ad related, go ahead and subscribe.

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