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Marcus Johnson (00:00):

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(00:26):

Hey, gang, it's Monday, November 17th. Minda, Emmy, and listeners, welcome to Behind the Numbers: an EMARKETER Video Podcast made possible by DG Media Network. I'm Marcus. Joining me for today's conversation, we have two New York based folks. We start with our senior analyst covering social, it's Minda Smiley.

Minda Smiley (00:43):

Hey, Marcus. Happy to be here.

Marcus Johnson (00:46):

Hello, there. Welcome to the show. And also we have with us analyst extraordinaire, Emmy Liederman.

Emmy Liederman (00:54):

Thank you for that introduction.

Marcus Johnson (00:56):

Pretty much.

Emmy Liederman (00:57):

Happy to be here.

Marcus Johnson (01:01):

Oh, not enough.

Emmy Liederman (01:03):

Oh, just right.

Marcus Johnson (01:04):

Thank you, Goldilocks. Anyway, today's fact. How many people have ever lived? Okay, this might not be interesting. I'm now noticing in real time.

Emmy Liederman (01:22):

That's just-

Marcus Johnson (01:23):

But we'll see.

Emmy Liederman (01:23):

How many people have ever lived. That's the question, period.

Marcus Johnson (01:27):

Yeah. We'll see how this goes. According to estimates from the Population Reference Bureau, 117 billion.

Minda Smiley (01:36):

Oh wow.

Marcus Johnson (01:36):

One-one-seven billion. This means that the current global population of 8 billion represents 7% of people. Sorry, 7% of the total number of people who have ever lived on Earth.

Minda Smiley (01:49):

Crazy.

Marcus Johnson (01:50):

It doesn't seem right. It's just busier now. That's basically what they're saying.

Minda Smiley (01:55):

Who's collecting this data?

Marcus Johnson (01:56):

Life used to be better.

Minda Smiley (01:57):

I mean, that just feels...

Marcus Johnson (01:58):

This is from the Population Reference Bureau. Do you question my sources, Minda? But these are definitely estimates. It's hard to track. They haven't been keeping censuses, [inaudible 00:02:10], I don't know, this whole time. But in the year... It's just more people now is the thing. In the year 1000, the entire world had roughly as many people as the United States has now. So imagine all the people in the US right now spread across the whole world. It sounds nice. It sounds more peaceful is what it sounds like. But you could also carry a sword everywhere back then, so maybe not.

Emmy Liederman (02:37):

Yeah, pros and cons.

Minda Smiley (02:38):

You can't do that now.

Marcus Johnson (02:39):

Yeah. Swings and roundabouts as the British would say. Anyway, there's a car crash. Today's real topic, the big three questions for Meta. Every quarter we look at how the big tech players are getting on, or at least we will be from now into the future, and we will be asking this question, what are the three biggest questions surrounding said company, in this case Meta right now. So we're going to discuss my ranked list, my top three, and then Minda and Emmy will tell us at the end what they might change, if anything.

(03:16):

So the first question, I think the biggest question for Meta right now I think is how will AI-generated social video affect social media? So an article by Geoff Brumfiel of NPR is titled Kiss reality goodbye: AI-generated social media has arrived. OpenAI, he notes just debuted Sora 2, a short form AI video generator with social media features. Users can scroll AI videos forever or use a small text-based prompt window in the app to make their own. Solomon Messing, an associate professor at NYU in the Center for Social Media and Politics says, "Just what effect of a social media world driven entirely by AI remains unclear." Minda, I'll start with you. What do we think, how will AI-generated social media affect social media?

Minda Smiley (04:11):

I personally think it's way over hyped right now. For a few reasons.

Marcus Johnson (04:16):

Okay, tell us why.

Minda Smiley (04:16):

I think one, I mean I do think a lot of these kinds of videos are going to have a shelf life. I think once some of the shininess wears off, there won't be as much of an appeal to just watch purely AI-generated video. And we're already seeing other social platforms like grapple with the issues with this. I mean, Pinterest has had to already introduce features to let users turn down the AI slop essentially. So I just don't think the demand is as big as some people seem to think.

(04:45):

And I also think when you look at the actual numbers, I'm going to pull one up. As of mid-October, Meta AI had about 2.7 million daily active users, and that was after Vibes was introduced to Meta. That's still a draw. I mean, that is significant growth when you think about the fact that it is a newer app and that Vibes clearly added a surge of downloads to Meta AI, but that's still not that many people when you compare to Instagram and Facebook. And I'm aware that it's not a fair comparison. Instagram and Facebook have been around for much longer. But again, when you think about just the whole landscape and how much attention Sora and Vibes has gotten, I don't think that many actual people are interested in these types of videos and want these types of videos. I'm very curious what you both think, but that's my take.

Marcus Johnson (05:30):

Okay. Vibes just for context, Meta's own AI video app, which just launched. Emmy, what do you think?

Emmy Liederman (05:39):

Yeah, I think when we started seeing very obviously AI generated content on Instagram and a lot of it was croissants turning into golden retrievers and just ridiculous things like that. I think there was a novelty to it and people were intrigued by it. But I kind of think that novelty is going to wear off because I think there is going to be this appetite for content that is clearly not AI generated and kind of this fatigue around it.

(06:11):

I saw an interesting stat from the company Billion Dollar Boy that said in November 2023, "60% of consumers preferred Gen AI creator content, which dropped to 26% in July." So I think that there was this initial interest and the hype is really wearing off and people just prefer content that has that human touch because they're getting a little bit scared of this AI slop in the fact that we're losing that connection that makes creator marketing valuable.

Marcus Johnson (06:44):

Yeah.

Minda Smiley (06:45):

There's also, we're kind of seeing this divergence where there's all this interest in these AI videos, but then when you look at the other side, look what the other trends show. People are really interested in premium episodic series like content on social media. People want to see stuff that does feel like there was some thought put into it, that someone made this, that someone had some sort of roadmap. So I think that's really telling too, and that's something I feel like we're not really seeing people talk about is people are craving a more premium experience when they're watching stuff on social. And I think a lot of these AI videos are the complete opposite of that.

Marcus Johnson (07:20):

Yeah.

Emmy Liederman (07:21):

Yeah. And I think people are craving more premium and episodic experiences, but I also think they're craving imperfect content. I was talking to a creator recently who went to this Adobe conference where they were talking a lot about their AI features and they have one feature where it pretty much allows you to edit your content. So if you completely misspoke or mispronounce something, it would edit it as if that didn't happen. And he was talking about how back in the day before AI really took off, people were very focused on getting every single detail perfect and re-shooting things, re-recording things when they misspoke. And now it's almost less important because there is this need to kind of virtue signal and show people I have this imperfect content and I'm not completely leaning into AI.

Marcus Johnson (08:15):

Yeah, I've always thought that when you go on stage and you have to give a speech or something and a presentation, making a mistake just humanizes you. I'm always excited for the first time I make mistakes. I'm like, okay, I got out the way. And anytime I see someone do it on stage, I always think, okay, they're human and I can just relate to them so much more. I think it does make your content even better when people can see that it's not perfect because nothing is.

(08:42):

My take here. I don't think it's going to go away as fast as you guys. I don't think it's something that people are going to move past as quickly, maybe eventually, but I don't think as quickly. And one of the reasons is because I thought deep fakes were a bad thing, but maybe there's been a kind of redefinition of them. The definition I looked up is deep fakes, they're an image or a recording that has been convincingly altered and manipulated to misrepresent someone as doing or saying something that was not actually done. So that's from the dictionary. Merriam-Webster, in case you're wondering which one.

(09:18):

But that before Sora 2 and Vibes came out, deep fakes used to be a bad word. Bobby Allyn of NPR noting, "OpenAI has essentially rebranded deep fakes as lighthearted play things." And then Daisy Soderberg-Rivkin, a former trust and safety manager at TikTok says, "It's as if deep fakes got a publicist and a distribution deal. It's an amplification of something that has been scary for a while, but now has a whole new platform." So I wonder if we've reframed deep fakes and they are going to be more socially acceptable and for that reason people might start using them or continue to use them for longer.

Emmy Liederman (10:00):

I think that's a really interesting framing of deep fakes getting this PR makeover. And this example is on a kind of different scale, but I kind of connect this to a bunch of new features across social platforms that we've seen in the past where they were really cool and interesting and innovative at first and then they kind of just lost their sparkle over the years.

(10:25):

I think a lot of Snapchat filters is a great example. I remember when Snapchat first started introducing filters and you could have that one where you open your mouth and a rainbow comes out of it. And I was in high school when that happened and everyone was losing their minds over this. And then quickly it just kind of got stale and people were less impressed by it.

(10:47):

So I think to some degree, I understand that AI is going to advance and be able to seem realer and maybe be more innovative than the video content we're seeing now. And I don't know the exact timeline of when people will get sick of it, but I do think that it's going to happen. And then there's also a lot of these environmental concerns and people are like, "Why are you turning your cat into a human being and wasting all this energy?" So I think there's a segment of the population that feels that way as well.

Marcus Johnson (11:20):

It might happen I think when there are some big kind of scandalous videos that go viral. There was one, I believe it was in Germany, a politician, where there was a fake video of her basically pulling out of the campaign. And so I think when these videos have significant ramifications, then people might start to say, "Okay, this is too much. I don't want to be a part of this."

(11:42):

I thought it was a really good line from Bryan Walsh of Vox. He was saying, "Really, it's almost unfair to hold a tech company to its mission statement, but OpenAI, the creator of Sora 2, you are pushing it with its latest product release, the AI generated video social network, Sora 2. OpenAI may have set an all time record for greatest distance between mission statement and actual work." So I'm a little bit surprised that they decided to release this product, but I think it's one of the biggest... Yeah, I think it's one of the biggest conversations surrounding OpenAI and Meta because they play in the social media space. So that's my number one.

(12:18):

My number two. Meta using AI chatbot conversations to target ads. So Ina Fried of Axios noting that, "Like OpenAI," as Minda just mentioned, "Meta has introduced its own AI video app called Vibes." A Reuters piece explains that Meta platform said, "It would begin using people's interactions with its Gen AI tools to personalize content and ads across its app starting from December 16th. Users can't opt out." According to TechCrunch, one example of this would be if you are talking about hiking on Facebook or Instagram and then Meta AI would later show you hiking groups, friends, trail updates or ads for boots, hiking boots, for example. Conversations involving religious or political views, sexual orientation, health and racial or ethnic origin won't be used to customize ads or content. The rollout doesn't include the EU, UK, South Korea because they have stricter privacy laws. Emmy, what's your biggest takeaway regarding Meta using AI chatbot conversations to target ads?

Emmy Liederman (13:17):

Well, I think the people that are already using these AI features are pretty leaned in and excited about AI as a concept. So I don't think that from a privacy standpoint, Meta using these AI chatbot conversations to inform the types of ads people are getting is going to change their attitude around it. If anything, I think they'll say I'm getting a better and more personalized experience around AI. And I think we've seen a lot of research, especially for younger generations, they don't love the way that AI has its hands in creative work, but they're way more interested in the role that AI plays in shopping recommendations, for example. So I think that they are bought into AI helping from a commerce standpoint and an advertising standpoint. So I only really see this as a positive advancement for Meta.

Marcus Johnson (14:16):

Right. Minda?

Minda Smiley (14:19):

I had a few takeaways. My first was, I thought it was really interesting when they said conversations involving religious, sexual orientation, racial, that whole thing. They're saying that's not going to be part of how they customize ads. And I was sort of like, I mean, what? Who's to say what constitutes religious conversation? I know they have all these tools and stuff, but that's something that certainly made me raise my eyebrows and think if that's something you are concerned about, if you don't want those more personal or sensitive topics... I think that's a huge gray area and I feel like how they're going to moderate that. There's sort of a lot of questions there. So that was my one takeaway.

(14:59):

My second kind of going into what Emmy was saying, people already assume all these social networks are tracking us all the time. People are convinced that our phones listen to us every day and hear all of our conversations. I mean, just last month I think Instagram's had to come out being like, "I promise we're not listening to you." No one believes them. It sounds so dystopian to say, but I think, people think that they're tracking so much of us all the time. So I don't think this really shocked many people to hear them come out and say this, frankly.

Marcus Johnson (15:34):

Yeah.

Emmy Liederman (15:35):

I don't think Meta necessarily or at all deserves a gold star for the ways in which they've protected people's privacy. They're kind of giving consumers no reason to believe that they will actually follow through with protecting privacy. And there's such a gray area as Minda was saying, how do you define or separate or weave out what is considered a conversation about your identity and what isn't? It just doesn't really feel like that's how human beings operate. So I think no one is believing those words.

Marcus Johnson (16:12):

Yeah. It's a lot of extra data. Meta AI now has 1 billion MAUs, monthly active users across the company's family of apps. So it's going to be a lot of extra information about folks that they can use in different ways for content, for ads. We'll see. That's my second question. Big question for Meta.

(16:29):

My third is, do Meta's new smart glasses really have a future? So back in September, Meta unveiled some new smart glasses, which have been a hit for the company writes Eli Tan of New York Times. He explains that there are three new types of glasses. The first one, Meta Ray-Ban display for 800 bucks. Tiny screen in its lens to show apps. You can share media to Instagram, play music through built-in speakers. The apps in the glasses will be controlled by a wristband. It also has voice-based AI assistant that can talk through the speakers and see through the camera. Second pair is an upgraded version of its existing Ray-Bans for 379 bucks and the third pair costs 500. And they're meant for sportswear. They're being made by Oakley. Minda, do Meta's new smart glasses really have a future?

Minda Smiley (17:15):

Yeah, it's a really interesting question. This is an area I've been paying more and more attention to. One thing I always say when I'm talking to people is... Kind of a litmus test I use in my own life is when people outside of our industry start talking about something is when I know, okay, this might be becoming a thing. And so one of my friends recently, she does not work in marketing, her company actually sent her a pair of the Meta Ray-Bans and she was saying how she was wearing them while she walked her dog and she liked them more than she thought she would. And I was like, okay, this is super interesting. And again, got me paying a little more close attention.

(17:49):

So I do think, to my point, I do think they have more momentum than they ever have, but I still think it's incredibly niche and I still think they have so many challenges along the way. I mean, even the stumbles that happened recently with Zuckerberg, kind of like demoing the new glasses on stage. I don't know how [inaudible 00:18:11] closely, some people have followed this, but it didn't go well-

Marcus Johnson (18:13):

[inaudible 00:18:15].

Minda Smiley (18:15):

And so that's a challenge. And then there are just some bigger challenges around if this is a product people actually really want. I mean even this sounds silly to even say, but I think there are some people out there that just don't want to wear glasses. I'm one of them. I actually have to wear glasses because I can't wear contacts. It's a whole boring story, but I hate having them on. I took them off for this podcast. I don't like having that feeling of something in my face. And I do think it's a growing and more interesting part of their business, but I think there's a long way to go.

Marcus Johnson (18:47):

Yeah. Emmy, I'm really struggling to figure out whether this is going to be a big deal or is absolutely nothing because [inaudible 00:18:54] of the Times writing, as I just quoted, he was saying, "Meta smart glasses have been a hit for the company." However, in another article written by himself and his colleague Brian X. Chen of the Times. "They know that as of February, Meta had sold about 2 million of its $300 Ray-Ban Meta camera glasses since their 2023 debut. And they hope to sell 10 million annually by the end of next year. That's a tiny amount for a company this size," that they note. So I can't figure out if this is significant or not, these investments that they're making in smart glasses.

Emmy Liederman (19:26):

So this is a hard question because I think that the product aligns with a lot of what consumers want right now because they want to be off their phones and kind of touching grass and connecting with the world and in a strange way, wearing smart glasses that I think allows them to do that more than not. If you're at a concert, you can pay attention to what's happening on stage without holding your phone in the air. I do think there's a lot of benefits for content creators, I would say more so. But I think that it has a serious branding issue because we know that Gen Z really shops based on their values and they're truly not a fan of Zuckerberg to any degree.

(20:12):

I don't know if you guys saw, this I think happened last week at the Music Innovator Awards. Billie Eilish was kind of going on about billionaires being unethical and said it in front of Mark Zuckerberg and was like, "You need to be giving some of your money away. What are you guys doing?" Kind of in a lighthearted way. But it went viral and I think that's really telling of how people feel about him and Meta as a business. I also don't think Oakley and Ray-Ban are particularly cool brands in this day and age. So I think that in order for this product to work, it needs a makeover in terms of who is behind it.

Marcus Johnson (20:56):

That syncs up with one of the questions I had, which was are low sales of these glasses for Meta a referendum on Meta or on smart glasses? Because that New York Times article was pointing out that, "If smart glasses do eventually become mainstream, the product might come from a brand that has a better reputation with consumers." Exactly, Emmy, to what you were saying.

Minda Smiley (21:16):

I also think they kind of have a distribution issue. Like I said, my friend who is using them, they were sent for free by her company. She didn't go out and buy them.

Marcus Johnson (21:27):

All right, so my top three big questions for Meta at the moment. How will AI-generated social video affect social media? The second one is about Meta using AI chatbot conversations to target ads. And the third is do Meta's new smart glasses really have a future? Minda, I'll start with you. What did I miss?

Minda Smiley (21:43):

What did you miss?

Marcus Johnson (21:47):

Or should these be rearranged?

Minda Smiley (21:49):

I would say maybe the one other thing I would've chatted about was more just broadening the AI bit for Meta in terms of, obviously we know that AI has really helped their business, it's helped their algorithm, so it's helped keep people on the app longer by servicing more relevant content, helped advertisers better target users. So we're seeing how AI is paying off now, but I think there are these kinds of longer term questions around what's going to be the thing that really gets the users excited about AI, not just the advertisers because yeah, that's a big existential question I think that they're facing right now.

Marcus Johnson (22:33):

Yeah, that's a good one. We didn't cover the earnings too much here, but Meta, which makes pretty much all of its money from advertising grew revenue 26% in Q3. That's its fastest quarterly growth in the last six quarters, so very impressive. And Q3 was their first $50 billion quarter, which was also a bit of a milestone. Emmy, how about for you?

Emmy Liederman (22:56):

I think that advertisers are happy with the results that they're getting from Meta, but at the same time, they don't like the lack of transparency, which has always been the case with paid social. But I think increasingly Meta is just promising results and not necessarily telling these advertisers how they're getting there. And I think that is a short-term solution, but when these advertisers are figuring out how they want to move their budgets, what their bigger broader marketing strategy is, they're going to face more issues if they're just chasing the cheaper results and the dollars in the short-term. So I wonder how that's going to play out.

Marcus Johnson (23:40):

Yeah, that's a good addition as well. That's all we've got time for for today's episode. Thank you so much to my guests for hanging out with me today to discuss the big three questions of the moment surrounding Meta. Thank you first to Minda.

Minda Smiley (23:54):

Yeah, thank you.

Marcus Johnson (23:54):

And of course to Emmy.

Emmy Liederman (23:56):

Thank you so much for having me.

Marcus Johnson (23:58):

Yes indeed. And thank you to the whole production crew and to everyone for listening to Behind the Numbers: an EMARKETER Video Podcast made possible by DG Media Network. Subscribe and follow to make sure you know when we have new episodes out. And leave a rating and review to help support the show if you can. Suzy will be here on Wednesday with another episode of Reimagining Retail.