LLMs & CHATBOTS
Meta reports strong earnings with AI & advertising
Late yesterday afternoon, Meta reported strong financial results for the second quarter of 2025 that exceeded Wall Street expectations.
- Earnings release and presentation slides – Meta’s IR website.
- “Meta shares climb 10% on revenue beat, raised forecast” – CNBC
At the start of the call with Wall Street analysts, CEO Mark Zuckerberg outlined his company’s “five basic opportunities” that Meta is pursuing:
- “…improved advertising, more engaging experiences, business messaging, meta AI and AI devices.”
Specifically on advertising, Mr. Zuckerberg stated:
“…on advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system. This quarter, we expanded our new AI-powered recommendation model for ads to new surfaces, and improved its performance by using more signals and longer context. It’s driven roughly 5% more ad conversions on Instagram and 3% on Facebook.
We’re also seeing good progress with AI for ad creative, with a meaningful percent of our ad revenue now coming from campaigns using one of our generative AI features. This is going to be especially valuable for smaller advertisers with limited budgets, while agencies will continue the important work to help larger brands apply these tools strategically.”
On Meta’s automated AI-enabled Advantage+ ad system, Meta’s chief financial officer Susan Li reported:
“Within our Advantage+ Creative Suite, adoption of Gen AI and creative tools continues to broaden. Nearly 2 million advertisers are now using our video generation features, image animation and video expansion, and we’re seeing strong results with our text generation tools as we continue to add new features.
In q2 we started testing AI powered translations so that advertisers can automatically translate the caption of their ads to 10 different languages. While it’s early, we’ve seen promising performance lifts in our pre launch tests.
We’re also continuing to see strong adoption of image expansion among small and medium sized advertisers, which speaks to how these tools help businesses who have fewer resources to develop creative with larger advertisers. We expect agencies will continue to be valuable partners in helping apply these new tools to drive performance.”
During the Q&A with analysts, Mr. Zuckerberg shared that he thinks things could be very different in a few years due to AI:
“I think certainly some of the work that we’re seeing with teams internally being able to adapt Llama 4 to build autonomous AI agents that can help improve the Facebook algorithm to increase quality and engagement are a fairly profound thing, if you think about it. I mean… it’s happening in low volume right now.
So I’m not sure that that result by itself, was a major contributor to this quarter’s earnings or anything like that. But, I think the trajectory on this stuff is very optimistic, and I think it’s one of the interesting challenges in running a business like this now, is there’s just a very high chance it seems like the world is going to look pretty different in a few years from now.”
More: Earlier in the day, Meta’s Mark Zuckerberg had released “Personal Superintelligence” on Meta.com and teased the AGI or superintelligence future…
- “Over the last few months we have begun to see glimpses of our AI systems improving themselves. The improvement is slow for now, but undeniable. Developing superintelligence is now in sight…”
LLMs & CHATBOTS
Crawling fee = 1% of publisher revenues
More revenue details were revealed yesterday on the deal announced in May by The New York Times and Amazon for AI crawling privileges on the Gray Lady’s digital properties.
The Wall Street Journal reported:
“Amazon’s deal to license a broad range of New York Times NYT content comes with a meaty payday for the publisher: $20 million to $25 million a year, according to people familiar with the matter. (…) The annual payment amounts to nearly 1% of the Times’s total 2024 revenue. (…) Amazon can use the material to train AI models and feature summaries and short excerpts of Times content in its products and services, including Alexa.”
Read more from The Wall Street Journal. (July 30)
LLMs & CHATBOTS
Analysis: Crawling revenue potential
The combination of The New York Times’ scale and its real-time nature make the dataset relatively unique. It raises a few questions:
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How long is this deal? At this point, all we know is it’s “multi-year.”
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Is this an exclusive deal with Amazon by The New York Times? Or can the NYT do other LLM deals such as OpenAI (a lawsuit/negotiation is pending)? Amazon reportedly outbid OpenAI at the time of the announced NYT deal. Any settlement in the OpenAI/NYT lawsuit would likely end up with OpenAI paying an ongoing licensing fees for crawling privileges.
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Can Amazon-backed Anthropic crawl the NYT? Unknown, but doesn’t seem like it. Nevertheless, Amazon has AIs of its own to do the ingesting.
This is a premium deal with a premium, scaled publisher. The WSJ and News Corp have a similar $250 million deal for 5 years with OpenAI.
Could every publisher—including the long tail—expect 1% of revenues (perhaps close to double that once the OpenAI settlement takes place for the NYT.)? Unlikely.
But, if Cloudflare or other pay-per-crawl marketplace companies (like TollBit) can get their marketplaces off the ground on behalf of publishers, some pubs will decide to find out.
Unique, differentiated content will help – and that’s where direct deals would seem to be important for driving yield versus an open “real-time” auction. (AI-RTB or AITB, anyone?)
On the other hand, crawler revenue may not make sense at all for some publishers who risk losing their audience.
In ad tech, there could be a wave of new companies serving the sell-side around LLM crawling analytics that will emerge in addition to the sell-side ad tech firms that already exist.
Trouble is for sell-side ad tech companies – the sell-side doesn’t have a lot of money. So, perhaps they end up serving the buy-side, too? We’ll see.
Related: “A wish list with limits: What publishers want to see from Google’s AI licensing deals” (July 28) – Digiday
LLMs & CHATBOTS
Use cases for AI adoption
Yesterday, Morgan Stanley Research produced a study for its investment banking clients to discuss the AI opportunity across industry titled, “The AI Adopters Are Here: Ways to Play + Breaking Down AI Adoption Use Cases.”
The diagram below shows that advertising is just one element among many that will be transformed by AI.
The “Magnificent 7” and Shopify are among the “AI Adopters In Action” companies who made the list.
Fast casual chain Chipotle and its AI strategy in marketing also made the report as Morgan Stanley researchers explained:
Customer Engagement: Chipotle has been using AI since 2024 to categorize customers by attendance frequency and direct marketing resources to boost engagement on a customized basis. AI assistants also detect changes in consumer behavior to anticipate engagement needs. In 1Q25, the company tested additional time-of-day and content optimization capabilities through its app that led to three purchases within a customers’ first 90 days of making an account.
BRANDS
Marketing leader emphatic on AI opportunity
In a LinkedIn post, State Farm’s Head of Marketing Alyson Griffin linked to an article on Meta’s vision for advertising and made a resounding case in support of the automated AI future.
On Monday, Ms. Griffin began:
“AI is taking the wheel in advertising. Where are you sitting in the car?
Meta just announced a future where every part of advertising – targeting, creative, optimization – is fully AI-driven. And they’re not alone.
From search to shopping to social, we’re seeing a massive shift toward automation-first marketing. For us in the industry, this isn’t just about using new tools. It’s about shifting how we THINK.
We’re looking at a future where AI will:
– Build campaigns
– Generate copy and creative
– Determine where our dollars go
– Test, learn, and optimize at speed
So where does that leave us? Still in the car, obviously, but we better know how to navigate. More than ever before, it’s our job as marketers to focus on the strategy behind the message, the values supporting our brands, and the stories that foster true connection…”
Read more from Ms. Griffin on LinkedIn. (July 29)
TECH
Microsoft Q4 earnings ignite with Cloud, AI
- Microsoft Cloud and AI Strength Fuels Fourth Quarter Results (July 30) – Microsoft
- Microsoft stock pops 8% on earnings beat as Azure annual revenue tops $75 billion – CNBC
- “Cloud and AI is the driving force of business transformation across every industry and sector…” – Satya Nadella, CEO, Microsoft in a press release
TECH
Marketing automation startup Conversion gets funds
“As AI interest has soared, so has the company’s prospects. Conversion is nearing $10 million ARR over the past two years, [CEO Neil Tewari] said, and about 90% of its customers are midsize businesses that have yanked out a legacy app.
Of course, Conversion is also in a crowded field. Besides the legacy marketing automation tools like HubSpot, Adobe Marketo, or Salesforce Pardot, there are other AI native startups like Jasper, Writer AI, Iterable, Copy[dot]ai, and many others.”
Read: “Conversion founders raised $28M for their AI marketing automation startup” (July 30) – TechCrunch
TECH
What it takes to differentiate
Kara Puccinelli, chief customer officer at Nexxen, joined an episode of the AdExchanger Talks podcast titled, “Making Sense of DSP-SSP Convergence.”
Brief history: Nexxen is formerly known as Tremor International and includes Amobee, Tremor Video, and Unruly.
Ms. Puccinelli chimed in on what’s going to matter in ad tech when everyone has access to the same—or similar—AIs or LLMs:
“I think that a lot of it’s going to come down to ‘What is that AI built on?’ And I think that’s what we have to go back to: AI is only going to be as good as the data that feeds it or the solution that feeds it.
And the companies that have access to data assets that are very interesting—that they’ve continued to invest and build on—are going to have a differentiated edge.
I also think the companies that are marrying a strong service and human element with it [is important]… Just because AI advances doesn’t mean that you don’t have to have a strong team driving the overall strategy and strong relationship with the customer.
So… the data that’s going to feed it and also making sure that you’re differentiating with the human side of what you’re doing.”
Hear more on the Apple Podcasts app. (July 30)
TECH
Dueling AIs: Amazon’s exit from Google Shopping
“In the last week, an apparent withdrawal from Google Shopping ads by Amazon has revealed opportunities for rival advertisers while prompting speculation from Linkedin Kremlinologists.”
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Amazon has abruptly cut its Google Shopping ad spending – cue the speculation (July 30) – Digiday (subscription)
TECH
Commerce media and AI momentum
Commerce media and omnichannel ad platform Skai published a digital marketing trends report for Q2 2025 yesterday.
Skai promised “forward-looking insights for Q4 preparation and 2026 budget planning based on AI acceleration and commerce media maturation.”
Central to the report is a look at Google’s AI-enabled Performance Max platform which showed 60% of Skai search clients moving from “pilot” to “adoption”:
Furthermore, the company’s report observed about its clients: “Performance Max’s 60% adoption and Amazon DSP’s growth to 20%+ share show marketers are comfortable trusting AI with significant budget allocation during critical periods.”
Read the blog post and the press release. (July 30)
And, download the report. (PDF)
PROMPT
If I’m a long-tail, niche publisher, what should I do about LLM crawlers?
Response from xAI’s Grok:
“…By strategically optimizing for LLM crawlers while safeguarding your content, you can leverage AI to amplify your niche presence without losing control over your intellectual property. For more details on SEO strategies, check resources like this for AI-driven insights or this for traditional SEO guidance.”
MORE
- Criteo Nets $60 Million on Its Retail Media Business in Q2, Readies Agentic AI Tools (July 30) – Adweek
- Luxury Presence launches AI marketing team for real estate agents (July 28) – Housingwire
- Kroger unifies retail media, consumer insights and loyalty marketing services (July 30) – Marketing Dive
- Podcast: Stephen Upstone, CEO and founder of LoopMe discussed the company’s beginnings and its use of AI in advertising – Marketecture
- TikTok to Roll Out New Tool for Advertisers to Follow People Beyond the App (July 30) – Adweek