AI technology can help Meta Platforms (NASDAQ:META) significantly boost its advertising revenue, Mizuho analysts said in a Wednesday note.
The introduction of Meta’s Advantage+ for Creative, which leverages generative AI (Gen-AI), offers the potential to unlock substantial advertising spending by optimizing ad creation processes, analysts noted.
The feature can optimize images and animations for audience segmentation, significantly reducing the time and costs associated with manual creative work.
Based on three case studies, Advantage+ not only accelerates the time to market but also improves campaign efficiency. In specific case studies involving beauty, retail, and furniture brands, the use of Advantage+ resulted in substantial time savings and cost reductions.
For instance, automating image generation for audience segmentation saved about 10 to 12 hours, lowering total campaign costs by 5%. More complex ad designs, such as carousels, saved up to 30 hours and reduced costs by 15%.
As the GenAI technology advances, video generation features will represent a “holy grail” opportunity for META, Mizuho highlighted.
With video production typically accounting for over 30% of ad campaign costs, the automation of this process through Gen-AI could lead to considerable financial benefits for advertisers, analysts explained.
“As a result, we believe that Meta can potentially unlock incremental ad spending onto the platform at about 30% of upside in rev/user beyond FY23,” they wrote, reiterating an Outperform rating on the stock and the price target of $575.
