Meta is ramping up innovation across all of its segments in its "year of efficiency." Nicola Mendelsohn, Meta Head of Global Business Group, sits down with Yahoo Finance at the 2023 Cannes Lions Festival to discuss the outlook for AI, digital advertising on Reels, and what the platform is prioritizing in 2023 and ahead of the 2024 election.
Video Transcript
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BRAD SMITH: Yahoo Finance's here at Cannes Lions festival of creativity 2023. Brian Sozzi, Brad Smith, and Nicole Mendelsohn, who is the head of the global business group at Meta Platforms. Thank you so much for taking the time.
NICOLA MENDELSOHN: Oh, Thank you for having me. I'm delighted to be here.
BRAD SMITH: It's been an amazing time here at Cannes, just getting the ear a lot of the execs that are in your position right now and then also hearing what they have to say about the environment, not just here at Cannes but when they go back to their desks, when they go back to those video conferences and how they put a lot of things into action. What are you hearing from some of those execs here?
NICOLA MENDELSOHN: Well, I'm hearing that the execs are here because they want to learn and they want to understand what are the new things that are going to be either launching this week or they can expect to be seeing over the next six, 12 months coming up. And there's a lot that's happening at Meta and they're leaning in very heavily. Why are they doing that? They're doing that because they really want to understand what are the things that can drive their growth. And they're saying that actually Meta is a fantastic place for that.
If I think about one of our fastest growing products that would be Reels. And we did a whole slew of announcements this week about how we've increased the number of different advertising properties that we're actually putting onto Reels. So A, we're expanding Reels out to more territories around the world, to more verticals, which is exciting. We're also allowing now the ability to be able to actually drive to install apps through Reels as well. Which is a really important thing if you're an app advertising. You want to get discovered, well, we're a fantastic place to be able to do that. So that's one of the things that's exciting. And it's particularly exciting because we've announced recently that there are now more than 2 billion shares every single day of Reels.
BRAD SMITH: That's amazing to hear because social media is essentially right now the new mall. It's where people find inspiration though on top of that and now there's the shopability element to it as well. But how would an investor of Meta Platforms see that trickle through to the bottom line, even a new announcement, a new layering on of the user experience like that?
NICOLA MENDELSOHN: So what we would expect to see, and we're certainly seeing that at the moment, is they'll see the strongest return on advertising when they come to Meta. That's not what I'm telling you, that's what they're telling me all this week. A good example of that is actually how we're using AI. And we couldn't have a conversation, could the three of us, if we didn't mention AI especially this week. I think it's become the kind of the Cannes AI conference in many ways.
But we actually launched a whole suite of products last August. We call it Meta advantage. It's all powered by AI, and it really helps advertisers reduce the number of manual steps when they're creating a campaign. It optimizes on the reach and the way in which you can find new consumers for you, and then ultimately how we measure as well. And we're seeing extraordinary return on advertising upwards of 32% ROAs which is extraordinary, and a 17% decline on average on the CPAs as well. So when you combine Reels with the advantage product suite, that's when you get the really strong performance and the growth advertisers are looking for.
BRIAN SOZZI: A lot of folks we have talked to here have used this one word in particular in terms of ad demand this year. It's choppy. Do you see a chopping? When do you see that situation loosening up a little bit?
NICOLA MENDELSOHN: That's actually not what we're seeing very much when we're talking to the advertisers here and the agencies here. Yes, it has been a challenging period, especially over the last 12 months when we've navigated really choppy waters. And some of that uncertainty is still there. But what they're telling me is actually that they're finding now that they're baking in the uncertainty into their models, which is actually allowing them the freedom to be able to think about what they want to do and where they want to place their bets. I'm actually also seeing that the advertisers are becoming much more agile. And so they're doubling down on either the countries or the verticals or the products where they're performing and they're actually moving budgets around and that's certainly been a theme that I'm seeing here this week.
BRIAN SOZZI: What's next for WhatsApp? I'm seeing a lot more on WhatsApp. It appears to be getting a more prominent placement, whether it's an earnings call or some of the dinner meetings I've went to recently as well, but what is next for that platform and how important is that platform in the Meta hierarchy at this moment.
NICOLA MENDELSOHN: Yeah, it's very important. And actually we think that from a marketing perspective, that messaging in general, not just WhatsApp but also messenger and Instagram direct, actually it's going to be a crucial way for advertisers to reach consumers in new and in exciting ways. So we already have a business which we call Click To, which is where you place an ad in feed and Facebook or Instagram and it directs you straight into the different messaging platform. That already has a run rate of $10 billion, but we're just kind of going with that one. And then there's also the utility side as well. Think of this as where you might pay for messages for different reasons.
A good example of that would be, well, we're in France, so let's talk about the airline Air France. They're actually using this exactly in this way, which is if you book a ticket with them, then they'll actually deliver you the boarding pass and keep you updated all in one WhatsApp thread as to where the flight is, is it taking off on time, et cetera, et cetera. These are just some like little examples. We're seeing in places in Latin America, in places in Asia, where there's a whole end-to-end commerce experience. Whether it's with supermarkets or whether it's with fashion retailers, where the people are coming in and having that whole experience and paying for the products right within the WhatsApp. So, yes. We are talking about it a lot because we think it's a really exciting opportunity.
BRAD SMITH: I'm doing some mental math here. We're about 17 months away from a US general election. And for Meta Platforms, the amount of advertisers that flow into all of the different subsidiaries that you do have, the pulse that we're seeing right now even among executives is that this is going to be a vitriolic type of election season next year. Has that showed up in where you're having conversations about how much they're booking, where they're going to be placing their advertisements, what they're going to be running up against in some of the user-generated content within Meta Platforms?
NICOLA MENDELSOHN: Actually it hasn't. But from a Meta perspective, it's not something we're waiting for the next US election. We actually have elections all over the world that are running almost every probably week or month, and so it's something that we prepare for in terms of making sure that we keep the-- preservations of elections is one of the most important things and so we put accordingly significant resources against this.
BRIAN SOZZI: Meta investors have heard a different tone from the top and CEO Mark Zuckerberg. This is the year of efficiency. We've heard this repeatedly. Has that message changed the culture of the company. Look, I think it is something that we're reflecting through as we go on, and he's been very public both externally and internally about this change and shift in mindset but what's at the heart of it is what Mark wants to get back to, is very much what made Facebook as it was and now Meta really in the heart and the DNA of the company, which is to empower people to move quick to innovate and to build.
And what we've seen through the changes that we've made, which let's be honest, have been some very difficult things to do internally, actually we're seeing a freeing up of the way in which people are thinking. And from my side, the product and the business teams have come together and we've never been closer than we are right now, and we're seeing that actually in the output from the product teams. I mean, I've talked to you about loads of new products already, right? And we're just getting going. So people can feel it. Yes, it's a change. Yes, it's a shift. But actually I think it goes back to what actually is kind of the secret sauce of what makes Meta great.
BRAD SMITH: When will we feel the Metaverse. When's that going to as you kind of look out and model into the future and get the pulse of the teams that are working on and building that out, when is that going to hit critical mass from your estimation?
NICOLA MENDELSOHN: Well, I think when mark talks about it, it's a 5 to 10 year play in terms of when we're going to see that real kind of scale, but there's no reason why the three of us now had to come all the way to Cannes to do this. We could have put on some Quest 3's and just got into the Metaverse.
BRIAN SOZZI: Well, I wanted to be here. I hear your point, but it's kind of nice being here. OK, I'm sorry. Go ahead.
NICOLA MENDELSOHN: Well, actually one of the places-- one of the office backdrops that I use in Horizon Worlds is actually a beach that kind of looks like this, which always makes the team laugh. So we're not anywhere near where we envisaged that it will be when Mark talks about that a billion people will be using some form of AR and VR in the future. But we're really pleased with the progress that we're making and as you know there's Quest 3 is coming out later this year that we're very excited about.
BRAD SMITH: Head of the global business group at Meta Platforms, Nicole Mendelsohn, thank you so much for taking the time here with us today.
NICOLA MENDELSOHN: Oh, thank you so much for having me.
BRAD SMITH: Absolutely.
- All right. Those are Brad Smith and Brian Sozzi bringing us the latest from Cannes.