New Facebook and Instagram AI ad tools embrace video

The news: At Advertising Week New York, Meta introduced tools that capitalize on AI advancements to revolutionize advertising on its platforms.

• Meta is expanding its generative AI tools, introducing Video Expansion, which adjusts video aspect ratios by generating unseen pixels to create a more immersive experience on Instagram and Facebook, building on the success of the widely adopted Image Expansion tool that is popular with small businesses.
• Another new feature, Image Animation, allows advertisers to turn a single static image into video content for Instagram Reels. This tool extends the life of older creative assets and provides a cost-effective way to create engaging video ads without requiring preexisting video footage.
• Meta is also demonstrating its commitment to refining its product offerings based on advertiser feedback, particularly in allowing advertisers to incorporate brand voice and tone into their creative outputs.

The company is also simplifying video discovery with a full-screen video tab on Facebook, consolidating formats like Reels, long-form, and live content, making it easier for users to find videos and for advertisers to reach their target audiences.

Will it work? Meta would argue that the AI-driven features are already working.

• Nicola Mendelsohn, head of Meta’s Global Business Group, emphasized that the company is driving massive user engagement through AI recommendations.
• Mendelsohn also highlighted the payoff from AI-driven ad tools, noting that businesses using Advantage Shopping Campaigns have experienced an average 22% increase in ad performance. “AI really is at the heart of everything that we’re doing,” Mendelsohn said.
• These AI-driven tools are quickly gaining traction, with over 1 million advertisers using them in the past month to create 15 million ads.
• On average, ad campaigns using these genAI features have seen 11% higher clickthrough rates and a 7.6% higher conversion rate compared with those that don’t use the tools.

Our take: While Meta accounts for 7.5% of US adults' daily time spent with digital, it captures 21.3% of digital ad spending, indicating the high value advertisers place on its platforms. Meta’s AI-powered ad tools look to keep that momentum going.

• Meta’s ad revenues rose 23.8% year over year in Q2, outpacing competitors like Pinterest and Snap. This strongly suggests that the AI-driven tools are boosting ad performance and advertiser ROI.
• With US social media ad spending growing by 16.3% in 2024—better than any category other than CTV—Meta’s new video advertising tools come at a critical time when video content is becoming a core focus for advertisers.
• Video remains one of the most memorable ad formats, with 43% of US consumers recalling commerce video ads and 22% recalling social video ads. Meta’s investment in video ad tools should enhance the effectiveness and recall of its ad formats, ensuring advertisers benefit from higher engagement.