Scotiabank is out with a note today on Meta and it highlights a slate of problems in the company’s core business: Advertising.<\/p>\n
It paints a picture of Meta that should worry bulls more than the macro backdrop does.<\/p>\n
Scotia said that 25% of the expert’s advertising clients are either pulling back or walking away from META entirely because its tools are broken and the AI rollout hasn’t worked.<\/p>\n
The AI product is called Advantage+ and the complaints are specific and getting louder. The report said it keeps auto-enabling without warning or explanation, forcing advertisers into campaigns they didn’t choose. Worse is that AI-generated creative is producing embarrassing errors.<\/p>\n
An example they cite:<\/p>\n
“An AI created ad for a
\nrestaurant change advertising chicken pot pie and pot roast advertised marijuana.”<\/p>\n
AI image – not an acutal ad but what Scotia describes<\/p>\n
That’s bad but they also note the core targeting functions aren’t working. They say anti-discrimination rules materially reduce targeting effectiveness\u2014driving budget
\nreallocation away from META entirely for some advertisers.<\/p>\n
“This has been a problem for nearly
\na year but the problems got far worse in February and salespeople keep being laid off resulting in
\nno customer support,” the report says.<\/p>\n
Meta’s response? Continued sales team layoffs, leaving advertisers with nobody to call when things break, according to the report. That’s a dangerous combination \u2014 platform problems escalating while support capacity shrinks.<\/p>\n
Shares of Meta are down 13% this year though lately it has hinted at an upcoming model and that will be a closely watched. It’s the first one led by Alexandr Wang after Meta invested $14.3 billion for a 49% stake in Scale AI and made Wang its Chief AI Officer. That move has already been panned but could turn into a disaster if the upcoming model flops.<\/p>\n
Compare that to Google, where spend is growing around 5% with stable share and where the expert in the Scotia report specifically flagged superior sales and support as a competitive advantage. Search is also inherently more defensive in a macro slowdown because it captures intent \u2014 advertisers cut top-of-funnel social spend before they cut search.<\/p>\n
In terms of their AI product though, the results so far aren’t as promising as you’d hope.<\/p>\n
\u201cAI Max\u201d adoption is
\nbeing aggressively pushed by GOOG salespeople; tests surprisingly showed slightly higher
\nCPCs and slightly lower ROAS vs. legacy campaigns though the changes were minor – mostly
\nseen as a non-issue because it seems to be clearly designed to drive SMB spend, not agency
\nassisted large advertiser business<\/p>\n
Advertising should be a killer app for AI but so far these indications aren’t great.<\/p>\n
On the macro side, they note that travel is beginning to struggle and highlight that cruises are strong, while international air travel is weakening. <\/p>\n
“TSA problems plus energy costs and the
\nwar have forced our expert to halve his previous 6% growth prediction for the category this
\nyear to just 3% y\/y,” the report says.<\/p>\n","protected":false},"excerpt":{"rendered":"Scotiabank is out with a note today on Meta and it highlights a slate of problems in the…\n","protected":false},"author":2,"featured_media":518144,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,86,56,54,55],"class_list":["post-518143","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-technology","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/518143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=518143"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/518143\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/518144"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=518143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=518143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=518143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}