Meta Platforms (NASDAQ: META) is focusing on artificial intelligence to enhance its advertising business, which generated approximately $166 billion in revenue over the last year. As of 2024, the company’s ad revenue growth rate increased to 22%, up from 16% in 2023, due to improved ad targeting for its 3.4 billion users.
By the end of 2026, Meta aims to fully automate ad creation and targeting through AI, allowing users to provide a product image and budget while AI handles the rest. This technology could significantly reduce the costs of creating ad campaigns, which currently range from $10,000 to $20,000 per month for medium-sized businesses, potentially drawing more advertisers to Meta’s platforms.
Meta’s ads achieve an average return on ad spending (ROAS) of six-to-one, outperforming Google’s four-to-one ROAS, and generate high average revenue per user (ARPU) of $223 for Instagram and $191 for Facebook in the U.S. This efficiency in ad campaigns is expected to strengthen Meta’s market position, boosting revenue, margins, and stock performance in the long term.
