Meta’s Earnings Call Hints At the Future of CTV Advertising
In Meta’s Q2 earnings call, Mark Zuckerberg reframed his comment from May that in the future, Meta’s AI is going to handle creative from end to end.
On July 30th, Zuckerberg noted, “We're also seeing good progress with AI for ad creative -- with a meaningful percent of our ad revenue now coming from campaigns using one of our Generative AI features. This is going to be especially valuable for smaller advertisers with limited budgets, while agencies will continue the important work to help larger brands apply these tools strategically.”
Originally taken as a shot across the bow by creative agencies, brands, and tech companies, Zuckerberg makes it clear that he’s mostly talking about employing end-to-end AI for longtail advertisers without professional creative capabilities or big budgets.
Interestingly, his points could be applied almost word for word to the transformation happening in CTV. AI could make CTV a lot more like Facebook, with self-service options for small advertisers and high-end AI-enabled products for bigger brands and their agencies. With that in mind, it’s worth understanding what makes Facebook work, and how their best practices can inform our next steps on CTV.
Local vs. Longtail and the Coming CTV Deluge
Traditional linear TV has its own kind of “long tail” in local. Local advertising makes up about $21B in the US including linear and CTV, which is a little less than a quarter of the entire TV and CTV ad market in the US at about $90b in 2024. Local advertisers though, aren’t necessarily advertisers with small budgets. They include networks of auto dealers, national retail chains and political advertisers, which all retain national advertising agencies and are sophisticated at measurement and targeting. Of course there are the local businesses who try their hand at TV commercials, but that makes up only a small portion of the $172b local advertising market that social media and search dominate.
Local advertisers are obviously excited for the additional targeting and measurement that CTV brings them and are a big part of the CTV advertising revolution, but AI and creative tech will mostly provide new levels of efficiency for them.
The real long tail that AI and creative tech brings to CTV are small businesses, which Facebook has been successfully attracting for many years. Small businesses have small budgets, lack creative agencies, and don’t have sophisticated measurement capabilities - but their overall spend ads up. AI and creative tech literally mean that billions of dollars of longtail advertising can suddenly access TV ad inventory affordably.
If CTV attracts these advertisers, it is less likely to look like traditional TV with the bifurcation of “national” and “local” and more likely to look like Facebook, which has “self-service” and “agency-supported.”
Lessons from Facebook
With the right approach to self-service, long tail advertisers will start to flood CTV. As companies like Roku, Universal Ads, and LG announce self-service AI creative capabilities, what they’re really doing is opening CTV for smaller advertisers. These advertisers are often well acquainted with digital advertising on Facebook (and Google), where self-service options are intuitive, effective and granular.
Consider these features that Facebook’s self-service advertising has perfected:
- Personalization and Targeting - Facebook has an incredible amount of audience data, and they let advertisers use that data within their walled garden to target very specific audiences with tools like Custom Audiences, Lookalike Audiences and Detailed Targeting. Small business owners have a ton of levers to use like retargeting people who have spent a certain amount of time on their website. Different audience targets can be tested and compared, or combined to create a bigger audience - all with easy-to use tools.
- Creative design and optimization - Facebook’s Creative Hub now offers AI features that allow advertisers to generate creative basically from scratch, but it also works well to help advertisers build on existing assets and test different iterations. Retailers can employ DCO to share product-specific creative with key audiences and optimize creative in real time.
- Measurement - Any business owner or small marketer can understand the reporting in Facebook Ads Manager. They are able to use the Facebook Pixel to track activity to specific creatives and target audiences, and attribute them to sales.
CTV giants will need to replicate as much as they can from this winning formula to pull longtail advertising dollars away from Facebook and other social sites. Some of that will be easier and some will be harder.
On the easier side, CTV provides incredible creative opportunities - having a chance to run a full TV commercial affordably is a dream come true for many small businesses. Using AI tools, businesses can pull assets from social, their site, or elsewhere and have a professional commercial without a major expense or time commitment. This is a major barrier from traditional TV advertising that’s now eliminated.
On the harder side, CTV is by nature less interactive and less measurable than social media. Targeting is also a bit harder, at least today. Here is where CTV giants have the most work to do - providing small advertisers with the granularity they need to feel comfortable that they are targeting the right audience and offering measurement options that give them confidence in their investment. Integrating measurement and data partners is just the first step. These tools were originally developed for data analysts - not small business owners. The next step is to make these tools approachable and affordable. At the same time, CTV companies need to find more ways of gathering data and encouraging interactivity with viewers.
All of us working to make CTV great for small businesses should keep these opportunities and hurdles in mind as we build out solutions. Understanding the needs of longtail advertisers to drive innovation and change is key to realizing the full potential of CTV.
[Editor's note: This is a contributed article from Spaceback. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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