Today in Digital Marketing - Everybody Hates AI

Starting point is 00:00:00 It is Thursday, April 25th. Today, revenues up, but stock price down. What caused the crash of Meta's stock? Just two letters. Also, you're not imagining it. Your Google clicks are costing more. And young TikTok creators say, please, for the love of God,

Starting point is 00:00:20 don't make us use Instagram. I'm Todd Maffin. That's ahead today in digital marketing. Do you have business insurance? If not, how would you pay to recover from a cyber attack, fire damage, theft, or a lawsuit? No business or profession is risk-free. Without insurance, your assets are at risk from major financial losses, data breaches, and natural disasters. Get customized coverage today starting at $19 per month at zensurance.com. Be protected. Be Zen.

Starting point is 00:00:52 Last night, Meta released its Q1 results. Let's start with the ad business. Meta said that Q1 impressions were up about 20% year over year. Ad prices did increase, but only by about 6%. Meta's overall revenues were way up, 27% higher than Q1 of last year. The actual number is $35.6 billion if you care about the raw data. That beat what investors were expecting by about a third of a billion dollars. Meta said it expects even better numbers for Q2, but the numbers it teased were below what investors had hoped. But even with that fairly good news, Meta's stock took a big dip in after-hours trading. It seems most of it because investors were concerned that CEO Mark Zuckerberg has once again gotten enamored of a technology and is throwing the weight of the company's focus behind it. A few years ago, that tech was the so-called

Starting point is 00:01:45 metaverse. Hal Zuckerberg renamed the entire company after it. Now, of course, the shiny new thing is AI, and meta is falling in line to jam the tech in as many nooks and crannies as possible. Consumer reaction has been lukewarm, to be generous, and investor reaction, even worse. Meta's stock fell 15% before the market opened this morning. At our deadline, the stock had not recovered from those losses. So what about AI specifically spooked investors? For one thing, Meta admitted it's expecting to spend $5 billion more than what it first estimated, almost all of that going to AI investments. On an earnings call, Zuckerberg tried to calm investors by pointing out that there are several ways AI could make money for the company, but that money isn't guaranteed. The business plans are still being

Starting point is 00:02:36 developed, and whatever revenue bump does come will likely come years from now. Quoting Business Insider, at GPT in late 2022, Meta suffered an embarrassing setback after releasing its own AI chatbot called BlenderBot. That bot proved to be obsessed with conspiracy theories, prompting users to call it incompetent. Investors may be wary of Zuckerberg's tendency to jump the gun on a technology he's excited about, unquote. We will have more detailed analysis on what all of this means for advertisers tomorrow when our meta ads correspondent, Andrew Foxwell, joins me. We also have some Q1 numbers from Google's ad business. Search ad spending in the US soared 17% year over year.

Starting point is 00:03:41 Now for the bad news. Click growth slowed to four percent compared to eight percent in Q4 of 2023, and the cost per clicks jumped by 13 percent year over year. Last year, a Google executive admitted in their antitrust trial that the company tweaks the ad auction to meet revenue targets. Quoting Search Engine Land, quote, the search engine frequently changes the auctions it uses, the search engine frequently changes the auctions it uses to sell search ads, increasing the cost of ads and reserve pricing by as much as 5% for the average advertiser. For some queries, the tech giant may have even raised prices by as

Starting point is 00:04:16 much as 10%. According to Google ad executive Jerry Dishler at the Federal Antitrust Trial, Google tends not to tell advertisers about pricing changes, he added, unquote. Retailers have seen CPCs rise by 40 to 50% over the last five years. The average advertiser saw a 20% increase from Q1 of last year to Q1 of this year. In particular, the usage of Performance Max campaigns are, no surprise, on the rise, but conversion rates for PMAX are about 5% lower than shopping campaigns. PMAX's cost per click, though, is about 2% better. During Q1 of this year, 89% of Google shopping advertisers were running PMAX campaigns. That's up from 82% last year.

Starting point is 00:05:07 The data comes from Tenuity's Q1 2024 Digital Ads Benchmark Report. We have a link to it in today's email newsletter, which is free, and you can sign up to by tapping the link at the top of the show notes or going to todayindigital.com slash newsletter. Nearly half of consumers make daily, weekly or monthly purchases because of influencers, according to new research from Sprout Social. The study also found that 30 percent of consumers trust influencers even more than they did six months ago, and nearly half trust them as much today as they did in the past. But authenticity as a valued trait in influencers may be declining. Only 35% of Gen Z consumers said they cared most about authenticity. Instead, 47% said they now prioritize follower count.

Starting point is 00:06:04 Generative AI has begun to impact that influencer space with mixed consumer attitudes about AI-created influencers. 37% said they'd be more interested in brands using AI influencers. Another 37% said they'd be distrustful. The survey highlighted changes in consumer and brand relationships. 29% of consumers said they're more likely to share product feedback with influencers rather than brands. Consumers prioritize genuine and unbiased influencer reviews. And 55% say access to discount or promo codes makes them more likely to seek out influencer content. And that will bring us to the lightning round. Reddit is coming back online after a widespread outage today. Users were getting try again later messages. The outage

Starting point is 00:06:53 lasted for about an hour. ByteDance is exploring scenarios to sell TikTok without its algorithm, according to a report from the information. Many of those details remain uncertain. Threads has reached 150 million monthly active users. This week, the app started testing posts that auto-archive after a certain time period. And today, the company announced it would start testing hidden words, letting users block specific names, words, or phrases from appearing on their feed. This is something both Instagram and X have had for a while now. And digital video ad spending has surpassed linear TV ad spending for the first time with a 23% growth in 2023. Social video had around 20% year-over-year growth, its second year in a row at that level. Do you have business insurance?

Starting point is 00:07:46 If not, how would you pay to recover from a cyber attack, fire damage, theft, or a lawsuit? No business or profession is risk-free. Without insurance, your assets are at risk from major financial losses, data breaches, and natural disasters. Get customized coverage today starting at $19 per month at zensurance.com. Be protected. Be Zen. And finally, as the U.S. applies more pressure on TikTok, some of its most loyal users are wondering where they'd go if the company doesn't divest in the U.S. and ends up getting banned. You might think, well, Gen Z loves Instagram and Instagram has Reels, which is basically a TikTok clone. Surely they'll just migrate there.

Starting point is 00:08:29 But according to an interesting piece today in Business Insider, that might not be in the cards. Quoting the piece, quote, one Gen Z content creator said in a recent TikTok that she might be able to handle a ban on posting if Instagram wasn't such a humiliation ritual. The idea of posting her TikTok content to Instagram Reels in front of everyone she knew in high school wasn't appealing. I don't know if I have the gumption to really do that, she said. That's a big ask, unquote. So where would they go? The piece had many in the 12 to 27-year-old age group would much rather take their chances on very new apps like Clapper or switch over to YouTube Shorts.

Starting point is 00:09:10 Again, quoting Business Insider, quote, while they may have an account to document their social lives, like millennials have a Facebook page that's gathering dust, Zoomers have found Instagram pretty cringe for a while now. In 2022, Gen Z writer Habib Farah explained in a blog post why the app gave her generation the ick. Instagram is boring, exhausting, and generally not fun compared with TikTok, she said. The sentiment is growing. Multiple TikTokers have expressed finding Instagram embarrassing, unquote. Another creator, Tabitha May, was quoted in the piece saying,

Starting point is 00:09:47 quote, posting on Instagram feels icky. It honestly feels like every time I post, I'm just being judged by everyone I've ever met, unquote. Oh yeah, I feel that. I have an ask of you, and that is to share the news of the podcast. If you're getting value from it every day, please post something on social media with a link to todayindigital.com or just tell people to get it wherever they get their podcast. You know how this works.

Starting point is 00:10:15 Our newsletter is about to hit 5000 subscribers, and obviously we want to get the podcast, which is kind of the anchor product in this whole crazy mess, higher as well. So thank you in advance. Thank you so much for listening. I will see you tomorrow.

Today in Digital Marketing - Everybody Hates AI

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