Everybody Hates AI

[00:00:00] It is Thursday, April 25th. Today, revenues up but stock price down. What caused the crash

[00:00:08] of Meta's stock? Just two letters. Also, you're not imagining it. Your Google clicks

[00:00:14] are costing more. And young TikTok creators say please, for the love of God, don't make

[00:00:21] us use Instagram. I'm Tod Maffin. That's ahead, today in Digital Marketing.

[00:00:28] Last night, Meta released its Q1 results. Let's start with the ad business. Meta said that

[00:00:33] Q1 impressions were up about 20% year over year. Ad prices did increase but only by about

[00:00:41] 6%. Meta's overall revenues were way up, 27% higher than Q1 of last year. The actual

[00:00:47] number is 35.6 billion if you care about the raw data. That beat what investors were

[00:00:52] expecting by about a third of a billion dollars. Meta said it expects even better numbers

[00:00:58] for Q2 but the numbers it teased were below what investors had hoped. But even with that

[00:01:03] fairly good news, Meta's stock took a big dip in after hours trading. It seems most

[00:01:07] of it because investors were concerned that CEO Mark Zuckerberg has once again gotten

[00:01:13] enamored of a technology and is throwing the weight of the company's focus behind

[00:01:17] it. A few years ago, that tech was the so-called metaverse. Hell, Zuckerberg

[00:01:23] renamed the entire company after it. Now of course, the shiny new thing is AI and Meta

[00:01:28] is falling in line to jam the tech in as many nooks and crannies as possible. Consumer

[00:01:33] reaction has been lukewarm to be generous and investor reaction even worse. Meta's

[00:01:40] stock fell 15% before the market opened this morning. At our deadline, the stock had

[00:01:46] not recovered from those losses. So what about AI specifically spooked investors? For

[00:01:51] one thing, Meta admitted it expecting to spend $5 billion more than what it first

[00:01:57] estimated. Almost all of that going to AI investments. On an earnings call, Zuckerberg

[00:02:03] tried to calm investors by pointing out that there are several ways AI could make

[00:02:06] money for the company. But that money isn't guaranteed. The business plans

[00:02:11] are still being developed and whatever revenue bump does come will likely come

[00:02:15] years from now. Quoting business insider quote. Meta also has an image problem

[00:02:21] despite years of investment in AI. The Facebook owner was not seen as an AI

[00:02:25] leader in the same way as Google nor has it been able to control the post GPT

[00:02:30] narrative as successfully as Microsoft just months before open AI first

[00:02:35] launched chat GPT in late 2022. Meta suffered an embarrassing setback after

[00:02:40] releasing its own AI chat bot called Blender Bot. That bot proved to be

[00:02:45] obsessed with conspiracy theories, prompting users to call it incompetent.

[00:02:51] Investors may be wary of Zuckerberg's tendency to jump the gun on a

[00:02:55] technology he's excited about unquote. We will have more detailed analysis on

[00:03:00] what all of this means for advertisers tomorrow when our meta ads

[00:03:04] correspondent Andrew Foxwell joins me.

[00:03:10] We also have some Q1 numbers from Google's ad business search ad

[00:03:13] spending in the US soared 17% year over year. Now for the bad news,

[00:03:18] click growth slowed to 4% compared to 8% in Q4 of 2023 and the cost per

[00:03:25] clicks jumped by 13% year over year. Last year, a Google executive admitted

[00:03:31] in their antitrust trial that the company tweaks the ad auction to

[00:03:35] meet revenue targets. Quoting search engine land quote. The search

[00:03:39] engine frequently changes the auctions it uses to sell search ads

[00:03:42] increasing the cost of ads and reserve pricing by as much as 5% for

[00:03:47] the average advertiser. For some queries, the tech giant may have

[00:03:51] even raised prices by as much as 10% according to Google ad executive

[00:03:56] Jerry Dishler at the federal antitrust trial. Google tends not to

[00:04:00] tell advertisers about pricing changes he added unquote. Retailers

[00:04:06] have seen CPCs rise by 40 to 50% over the last five years. The

[00:04:11] average advertiser saw a 20% increase from Q1 of last year

[00:04:17] to Q1 of this year. In particular, the usage of performance max

[00:04:21] campaigns are no surprise on their eyes. But conversion rates for

[00:04:25] Pmax are about 5% lower than shopping campaigns. Pmax's cost per

[00:04:30] click though is about 2% better during Q1 of this year 89% of Google

[00:04:36] shopping advertisers were running Pmax campaigns that's up from 82%

[00:04:41] last year. The data comes from tenuities Q1 2024 digital

[00:04:46] ads benchmark report. We have a link to it in today's email

[00:04:50] newsletter, which is free and you can sign up to by tapping the

[00:04:52] link at the top of the show notes. We're going to today in

[00:04:55] digital.com slash newsletter. Nearly half of consumers make

[00:05:03] daily weekly or monthly purchases because of influencers

[00:05:07] according to new research from Sprout Social. The study

[00:05:09] also found that 30% of consumers trust influencers even

[00:05:14] more than they did six months ago and nearly half trust them as

[00:05:17] much today as they did in the past. But authenticity as a value

[00:05:23] to trade in influencers may be declining. Only 35% of gens said

[00:05:29] consumers said they cared most about authenticity. Instead, 47%

[00:05:33] said they now prioritize follower count. Generative AI has

[00:05:38] begun to impact that influencer space with mixed consumer

[00:05:42] attitudes about AI created influencers. 37% said they'd be

[00:05:46] more interested in brands using AI influencers. Another 37% said

[00:05:51] they'd be distrustful. The survey highlighted changes in

[00:05:54] consumer and brand relationships. 29% of consumers said they're

[00:05:58] more likely to share product feedback with influencers rather

[00:06:02] than brands. Consumers prioritize genuine and unbiased

[00:06:07] influencer reviews and 55% say access to discount or promo codes

[00:06:13] makes them more likely to seek out influencer content. And that

[00:06:20] will bring us to the lightning round. Reddit is coming back

[00:06:23] online after a widespread outage today. Users were getting

[00:06:27] try again later messages. The outage lasted for about an hour.

[00:06:31] ByteDance is exploring scenarios to sell TikTok without its

[00:06:35] algorithm. According to a report from the information, many of

[00:06:39] those details remain uncertain. Threads has reached 150

[00:06:43] million monthly active users. This week, the app started

[00:06:46] testing posts that auto archive after a certain time period. And

[00:06:50] today, the company announced it would start testing hidden

[00:06:53] words, letting users block specific names, words or

[00:06:56] phrases from appearing on their feed. This is something both

[00:06:59] Instagram and X have had for a while now. And digital video

[00:07:03] ad spending has surpassed linear TV ad spending for the first

[00:07:08] time with a 23% growth in 2023. Social video had around 20%

[00:07:14] year over year growth. It's second year in a row at that

[00:07:18] level.

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[00:07:51] You have one unheard message.

[00:07:54] Hi, I was calling current the influence or marketing

[00:07:58] platform. But I think I just got redirected to a bunch of

[00:08:02] people listening to a podcast. Well, anyways, I was calling

[00:08:06] current because I was told they could help get my brand set up

[00:08:09] on TikTok shop and even build out an affiliate program of

[00:08:13] content creators promoting my brand and even have those

[00:08:16] content creators go on live streams and promote my product

[00:08:20] there. Wow, I could really use current. I also heard that

[00:08:26] the brands they work with are making millions in sales. I

[00:08:30] guess I'll just go to their website at current.tech.

[00:08:35] And finally, as the US applies more pressure on TikTok, some

[00:08:39] of its most loyal users are wondering where they'd go if the

[00:08:42] company doesn't divest in the US and ends up getting banned.

[00:08:46] You might think, well, Gen Z loves Instagram and

[00:08:50] Instagram has reels which is basically a TikTok clone.

[00:08:53] Surely they'll just migrate there. But according to an

[00:08:56] interesting piece today in Business Insider that might

[00:08:59] not be in the cards, quoting the piece quote one Gen Z

[00:09:02] content creator said in a recent TikTok that she might be able

[00:09:06] to handle a ban on posting if Instagram wasn't such a

[00:09:11] humiliation ritual. The idea of posting her TikTok content

[00:09:15] to Instagram reels in front of everyone she knew in high

[00:09:18] school wasn't appealing. I don't know if I have the

[00:09:22] gumption to really do that, she said, that's a big ask,

[00:09:26] unquote. So where would they go? The piece had many in the 12 to

[00:09:30] 27 year old age group would much rather take their chances on

[00:09:33] very new apps like Clapper or switch over to YouTube shorts.

[00:09:37] Again, quoting Business Insider quote, while they may have an

[00:09:40] account to document their social lives, like millennials have a

[00:09:43] Facebook page that's gathering dust, zoomers have found

[00:09:46] Instagram pretty cringe for a while now. In 2022, Gen Z

[00:09:51] writer Hibik Farah explained in a blog post why the app gave

[00:09:54] her generation the ick. Instagram is boring, exhausting, and

[00:10:00] generally not fun compared with TikTok, she said. The sentiment

[00:10:04] is growing. Multiple TikTokers have expressed finding

[00:10:07] Instagram embarrassing unquote. Another creator Tabitha May was

[00:10:12] quoted in the piece saying quote, posting on Instagram feels

[00:10:15] icky. It honestly feels like every time I post, I'm just

[00:10:19] being judged by everyone I've ever met unquote. Oh yeah, I feel

[00:10:25] that.

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[00:10:54] you tomorrow.