Marcus Johnson (00:04):

Hey gang, it's Monday, May 11th. Max Emmy and listeners. Welcome to Behind the Numbers E-Marketer podcast. I'm Marcus. Join me for today's conversation. We have Philly-based principal social media analyst, Max Willins.

Max Willens (00:16):

Yep.

Marcus Johnson (00:17):

Hello there. We're also joined by New York Living Analyst Emuliedma.

Max Willens (00:24):

Hey.

Marcus Johnson (00:24):

Hello. Hey, a brief greetings. Today's fact. When you thoroughly shuffle a deck of cards, 52 cards, the exact order of cards you're holding has almost certainly never existed before in the history of the universe and will likely never exist again. Because after shuffling a deck of cards, there are more possible orders the cards could be in than there are atoms in the universe. The number is eight followed by 67 zeros, which we have a name for that. That's amazing. That might be the most interesting part of this. Someone bothered to name eight followed by 67 zeros.

Max Willens (01:14):

What's the name?

Marcus Johnson (01:16):

80 unvegintillion. Unvegantillian. Possible permutations. Permutations. It's

Max Willens (01:26):

A lot. I'm going to file

Emmy Liederman (01:27):

That away.

Marcus Johnson (01:28):

That is a lot. That's what 52 cards. They'll never be in the same order.

Max Willens (01:32):

I'm sorry for my silence. I'm just taking a second to digest.

Marcus Johnson (01:36):

Because it's that good or you couldn't care less?

Max Willens (01:39):

No, honestly, it is pretty crazy. But I feel like this is a fun fact, first day of probability college class.

Marcus Johnson (01:49):

100%. Probability college class?

Max Willens (01:53):

Taking a intro to probability, like a math. Oh, that is. Did you ever have to take probability?

Marcus Johnson (02:00):

I think it was part of ... It wasn't its own separate class. Should I be a teacher? Is that what we're saying

Max Willens (02:05):

Here? Yeah. No, that's exactly what I'm saying. I should be a teacher. Let end this podcast now. All

Marcus Johnson (02:10):

Right. Steady on. Five today. Let me think about my new switch to academia. Anyway, today's real topic before I get let go. The big three questions surrounding Meta. All right, let's set the table first. In Q1, 2026, Meta made $55 billion in total revenue. That's a lot of money. Okay. For context, we say numbers a lot of the time. What does that mean? It's a lot. It's an astonishing 33% more year over year. Double the growth, 33% is double. Last Q1's a growth somehow. And it's the fastest growth in the last 18 quarters. So they're making more and more money and somehow they're growing it faster, at least the last quarter. North America, it's about just under half 44% of the total part that grew 30% in Q1. Year over year, it's close to double last year as well. So purpose of this episode and the series we have around the big tech players to Netflix, Amazon, Google, Meta, et cetera, is to think about the big three questions for the company at the moment.

(03:19):

And so I want to throw one into the ring first gang because mine kind of relates to the performance numbers that I just talked about. And so I think one of the questions is that I had, I think others had as well, is are we happy with Meta's performance or not? Because there seems to be some cognitive dissonance, understandably, once you dig into it, but it's interesting because by that measure you'd think, wow, the street was really ... No, they weren't that happy with them. Megan Babroski of the Wall Street Journal was explaining that the market's negative reaction to Meta's Q1 results was in large part due to its upwards revision in its expected capital expenditures. Basically, they're spending more money on AI this year than they were planning to going from 125 billion to 135 billion. And also they said that Q2 will probably be a bit slower than expected.

(04:06):

Any thoughts here on this weird world where Meta can make $55 billion in a quarter and grow 33% and still is frowned upon by the street?

Emmy Liederman (04:16):

I personally find it very telling that the street has wrapped Meta's knuckles after delivering that crazy performance. I think anytime you announce you're going to be spending $135 billion, even if it's over the course of the year and even though to hear Metatalit, the money is going to go and the compute's going to potentially go toward fueling products that are already working, I think it bespeaks a broader unease with where this Gen AI craze is going. I mean, to what you were saying, if you just kind of took the names out of it and said, "We made $55 billion in a single quarter, and even though we expect next month is going to be kind of slower, it's still probably going to be very healthy double digit growth on $55 billion and they have half the world's population using at least one of their products on a daily basis.

(05:22):

That feels like a really positive story and positive company to hitch one's wagons to. But I think people are starting to get a little bit nervous wondering where all of this spending is leading from a monetization standpoint. And so even with Meta, a company that has basically been printing money for the last 10 years with its ad products, the fact that even Meta is being looked at nervously is a sign of a broader story that's much bigger than this one company. That's sort of my read on it personally.

Marcus Johnson (05:59):

It's $600 million a day January through March is $55 billion. So it's a lot, but maybe it's quite a valid question. And digging into what Max is talking about for a second, Emmy, in terms of the nervousness surrounding Meta's AI investment, another question I had was where should Meta be focusing its AI efforts? And there was an MPR piece by John Rowich who was citing are now Dia Ratner, a research VP at Tech Consulting IDC saying, I don't think Meta is going to be able to build a best in class generalist model because from a resource standpoint, both with respect to GPUs and human talent is just not going to be easy to do. He points to the incomprincible sums of money that companies like OpenAI, Anthropic, Google, Nvidia are plowing into their own initiatives to hoover up GPUs that are crucial for AI data centers and to recruit top engineers.

(06:55):

Mr. Dyer Ratner thinks that they are too far behind and thinks they might have better luck picking a niche, like an AI video or an image generation tool rather than trying to compete with an all- purpose model like ChatGPT. Do we think that maybe that should be or could be the way that this goes, that they get a bit more specific and don't try to compete with these other guys for a generalist model?

Max Willens (07:23):

Well, I think we brought up this point with the whole big tobacco moment conversation with Meta where it's like if they're already facing all this scrutiny just because of the endless scroll and the impact of those features on mental health, if you layer on an AI tool that only could potentially make things exponentially worse. So it just feels like a risk from that standpoint to invest heavily in AI. But I think when you think about it from an advertiser's perspective, using Advantage+ in all of those AI tools, and also Meta just announced that they were laying off 10% of their workforce, which is insane. I think people are going to feel very fatigued by that ad load and also if they can easily tell that those ads are AI generated. I just wonder as its ad business is growing at this rate and they're relying so much on AI, what is the cost when it comes to user sentiment?

Emmy Liederman (08:33):

Yeah. Well, it couldn't be much lower. I was doing some research for a separate thing and found that this is one of the many things that YouGov tracks separate. They have this sort of giant list of public companies and figures who they keep running tabs on the sentiments around them. I think it's something like 32% of their panel of people have a favorable opinion of Meta. But as far as the NPR question and whether they should have a generalist model, it seems clear that they seem to understand this and are kind of pursuing several specialist agents already. So they have the business agents and they have kind of a general purpose one that might help people do things like shop or get better at individual tasks or pursuing individual goals that they have rather than an all- purpose general knowledge bot, which is actually a good segue into one of the questions that I had if I can throw it on the table, which is, will their business agents stick in the way that Workplace didn't?

(09:47):

Anybody that's followed Meta for a long time knows that they made an attempt, I guess about 10 years ago to turn themselves into an enterprise AI or excuse me, an enterprise business tool by launching something called Facebook Workplace, which was essentially meant to sort of be like a competitor to Slack, which I'm sure that they were hoping would turn into the tip of a spear that they could use to sort of borrow inside large enterprise business organizations. And that didn't really go anywhere. I think they did get themselves into a couple of large organizations but meta formally sunset it after a couple of years. But with their business agents, which they are taking every conceivable opportunity to talk up in public, they're going kind of in the opposite direction where Workplace was really definitely designed for larger organizations, the business agents I think are very much aimed at SMBs and sort of small businesses, mostly not in the US it seems.

(10:53):

It seems like that's their attempt is to build out and become the kind of business infrastructure for digital native businesses around the world. And I would say that Meta as an ad business is about as sticky as you could possibly imagine, but if they can kind of get their clause dug even deeper into all these small businesses that use them to attract customers and monetize them, I think that's just going to sort of lock in another, let's call it half decade at least of very, very healthy growth because the sort of early case uses for this are not just helping brands acquire new customers, which I'm sure is going to involve a lot of suggesting that they spend money on Meta's platforms, but also kind of agents that help these brands upsell and think about how to better monetize and engage their customers and users, which again, lends itself very nicely to Meta's platforms, but also sort of solves the top three kind of priorities of any small business owner.

(12:01):

And so if they're able to get this to work, I think we should basically get ourselves comfortable for many more successive quarters that look like this past one did, at least from a revenue standpoint, maybe not the CapEx one.

Marcus Johnson (12:16):

Yeah. I like this one. Emmy, what have you got? Any big questions come to mind for Meta?

Max Willens (12:23):

Yeah. So in our time spent with Social Networks report for 2026, we found that no platform can compete with TikTok in terms of user loyalty and engagement. So TikTok has the cohort of active users that doesn't compare to any of the other platforms. So going back to our conversation about how people actually feel about Meta and Facebook and Instagram as platforms, my question would be how are you protecting user sentiment and making sure that you're not just another app that people open and then quickly close because it's just sort of like a force of habit type of thing. I think people have a relationship with TikTok and see a lot of value in TikTok and Meta's apps are more of a habit to them. So I would just wonder how they're protecting that consumer relationship as they lean more heavily into AI fueled advertising.

Marcus Johnson (13:22):

It's interesting because it does seem as though TikTok has escaped some of the scrutiny that Meta's faced with the social media addiction trials. I know that they set it out of court for one of the cases and there are a lot of other cases to come, so we'll see if they're able to dodge the bullet, so to speak, in some of the other cases. But do we think that why do you think it's struggling so much to get rid of that association compared to someone like a TikTok? Because the social media addiction trials ... One of the questions I had was Meta lost a couple of quite prominent cases, but what happens next? Just to recap for folks who haven't been paying attention to this part of Meta, Maria Curie of Axios explained that Meta's recent court losses adding urgency to lawmakers pushed to pass legislation that could reshape how social media platforms are designed after plaintiffs in New Mexico and LA won their cases arguing that social media products were addictive by design.

(14:23):

There's thousands of other pending lawsuits which argue the same thing, meaning monetary penalties could add up quite quickly as well as structural changes. I mean, do you think TikTok would also be maybe dragged down by this, maybe talked about in the same context as Meta when it comes to the negative segments surrounding social media?

Max Willens (14:42):

I think TikTok definitely has its fair share of flack, but I think even the people that decide to take a break from TikTok eventually end up coming back because it does have this community element grassroots type vibe that feels so silly to say because it's this massive company, but I do think it has a certain positioning that Meta does not. I mean, I remember in 2020 when TikTok popped off, people were calling it the bright spot of the internet and we've clearly come a long way since then, but I still do think it has a sort of community type feel that welcomes discourse and peer-to-peer conversation in a way that Meta and I would say Instagram more specifically doesn't, which kind of also brings me to the question of how Meta is faring within LLMs because I know that Reddit and is very close a lot of the content on Reddit is surfacing on LLMs and it's something that is really beneficial for the platform is the fact that it's so based on that peer-to-peer engagement.

(15:49):

I just don't feel like Instagram specifically really has that type of dynamic. It feels like it's just kind of a content farm for influencers and a lot of people just use it passively.

Marcus Johnson (16:06):

Yeah. Max, what are your thoughts here?

Emmy Liederman (16:08):

Yeah, I mean, I think that there's a bunch to chew on here, but I think that the thing that's interesting about, it's clear, Meta and all the other large platforms are going to have to play these very interesting games of judo with one another over the next couple of years where they decide what kinds of data they're going to allow into their competitors LLMs and how they do that. Instagram I think probably did this for the sake of experimenting and to see what would happen when they announced shortly, I forget the exact timing, but it was basically like right when ChatGPT and Gemini were starting to begin competing in that first wave of user grabbing. And what Instagram or what Meta did is they made public Instagram posts crawlable by Google, which at the time struck me as quite surprising because on some level a lot of these platforms, what they typically like to do is kind of hoard all the data that they have and all the engagement and all the information that they have inside their platforms.

(17:23):

But my sense is that Meta probably did this just to sort of see whether Google or OpenAI would get really addicted to having insights from Instagram in its responses. And there are lots of tests that have been done by GEO startups that show that Instagram is a domain that's cited quite regularly. And a lot of that is down to the fact that it's indexed in Google now. And so I think that that's a really important piece to think about it. As far as TikTok and its kind of stickiness in people's lives, I was really struck by a piece of news that came out about two weeks ago where TikTok announced Campus Hubs, which to me smelled ... They basically framed it as this like, "Hey, this is a place where you can chat with all the kids that you go to college with and stay connected and figure out what's going on and make new friends." But to me, it really just smelled like their attempt at building the infrastructure for Facebook groups, which has really proven to be one of the most unbelievably sticky and kind of impossible social surfaces to extricate oneself from.

(18:37):

I am somebody who basically does not use Facebook anymore, but as a person who wants to sort of stay connected to his community and is also raising children, it is almost impossible for me to get out of Facebook groups. If I want to sort of connect with people in my community, short of like setting up a group chat on my phone with texts, it's really turned into this sort of defacto place where people congregate around hyper local things. And the Campus Hubs just feels like the earliest and easiest way for them to build a scaled base of people that they can lock in. And then as they grow up, that becomes an alumni group and maybe you break it down into smaller pieces, whether it's by major or business school or where people go or whatever it happens to be. And so even though I think Emmy's point about the kind of cultural position that TikTok enjoys is right, TikTok is also aware of the fact that that stuff doesn't last forever.

(19:35):

And so it's going to be really interesting to see how all that stuff evolves.

Max Willens (19:39):

Yeah. I wrote a story last year about Meta implementing a similar feature with Instagram specifically where you can connect your profile to Unidays, which is a student verification platform and do the exact thing that now TikTok is now copying. So it's funny that Meta invented this sort of use social media to connect with your peers model and we're seeing them realize that there's this new generation of students that never even had a Facebook profile and are shifting that over. So it seems like the whole offer some sort of niche community led element is what these platforms are realizing will make their offering sticky.

Emmy Liederman (20:26):

Yeah, 100%. I wanted to come back to another thing which Mark has kind of threw on the table because it's very similar to one of the questions that I wrote down, or at least very much related to the question that Mark has put on the table. And my question is, what happens if New Mexico calls Meta's bluff? I'm sure you guys all saw this story a couple of weeks ago now where as mentioned, Meta lost phase one of its trial against that the state of New Mexico brought against it and they had to pay a big fine, well, big for non-Meta companies anyway and phase two of this trial is now underway. And one of the things that's going to happen in this phase is this judge in New Mexico is going to decide on what sorts of structural remedies Meta is going to have to undertake if it wants to not face even more penalties.

(21:16):

And at one point Meta issued a statement basically saying that the things that were on the table were unworkable and impractical and that if there was no sort of softening of the demands that Meta was just going to have to leave New Mexico. And to me, this is going to be a really fascinating thing to watch because Meta has pulled this card before in different markets. So like for example, in Canada, you still can't access news content on Facebook. In Australia, they tried something similar in some ways New Mexico is small potatoes, right? It's a state of I think two and a half million people, maybe not even that much. And so Meta is probably betting that they can put the screws to New Mexican legislators and attorney general more effectively than the two and a half million people that are no longer using Instagram anymore is going to affect their balance sheets.

(22:19):

I didn't have, you can't use Instagram and New Mexico on my bingo card, but that is now very much on the table, which I think is fascinating.

Marcus Johnson (22:29):

Yeah. It's hard to know what the right strategy should be here because yes, New Mexico, you could probably, but other states you can't necessarily do that with. So is this the right way to go about it or should they be getting ahead of this with saying, "Okay, look, here's our concessions. We'll change these things if you agree to not change these other things." It seems combative is the right move here. Emmy, do you have anything else? Any other big questions?

Max Willens (22:57):

So I also saw last week that Meta announced the launch of its ads AI connectors tool. So basically advertisers can bring in their third party AI tools and agencies and use those and apply them to their Meta ad strategy. So my question is what complications may arise from this? And considering that they laid off 10% of their workforce and are working with smaller people internally, this just seems like a major change that perhaps can't just be supported with AI alone. So I'm just kind of curious, how are you going to adapt to these changes in your advertising offerings with fewer people?

Marcus Johnson (23:48):

Yeah. Max, any others before we wrap?

Emmy Liederman (23:54):

The only one that I have is kind of on the bleeding edge speculative side, which is related to a scoop that Digiday got a couple weeks ago now about the possibility that Meta might get itself back into the TV business. They're apparently having exploratory conversations with SSPs about rebooting the Facebook audience network, but instead of it being for inventory spread across the web, it would be for inventory spread across CTV environments and

(24:32):

Programming. And this to me is just really fascinating because Meta, particularly Instagram has kind of made a big deal of the fact that they're kind of making a play for big screens and they want people to consume Instagram on their televisions. This to me is a sort of tacit admission that that is not going super great, or maybe if not that it's not going super great, that there's kind of an upper limit on it, but being able to monetize the intent data that their systems harvest is something that they're interested in exploring likely because Pinterest has sort of decided to make a go of this exact same thing with its acquisition of TV scientific. But I'm just really, really interested to see where that goes because it would represent a pretty significant break from the way that they have sought to sort of monetize in the past, but it is also potentially a chance for them to take a commanding position in a market that's right now filled with lots of little companies that are not as big or as strong as it is.

(25:38):

So I'm excited to see where that goes.

Marcus Johnson (25:42):

Very nice. I have a bunch that I'd left on the table or on the shelf, I should say. I didn't put them on the table. I'll rattle through them really quickly. I'll just give you kind of the headline, but one is this kind of came up recently, so that's why it's open mind for me. Cam Meta maintain its new lead over Google in digital advertising. Our forecasting team thinks that they're going to overtake them in net digital advertising this year. We covered it in an episode April 24th called Meta to dethrone Google as top ad business. Here's why. So check that one out if you want to listen to more of that one. So that was one of them. The other one is Meta quitting, maybe quietly quitting the Metaverse because it's laying off around 700 folks, many of them part of the Reality Labs division that runs Metaverse products.

(26:30):

The company said it was a right sizing investment in Reality Labs, but they'd still committed for the long haul, but I thought that was of note. Marissa had a piece. Marisa Jones, one of our newsletter analysts had a piece about Meta's ad disclosure update could trigger new regulatory pressure. So basically saying that the companies can be switching its ads, labels on Instagram and Facebook from sponsored, saying sponsored on a post to ad. And she was saying that that tag's going to be more difficult for the average user to note whilst they're scrolling and could help ads feel more like organic content, which could benefit advertisers, but it also could blow the lines between ads and posts in user's fees, which could get them in trouble with regulators. And then the last one I think is the most wild one of all, which is Claudia Efemini of The Guardian writing that Meta is creating an AI version of Mark Zuckerberg.

(27:18):

So staff can talk to the boss, the digital clone being is being trained on his thoughts, tone, and mannerisms to help workers feel connected.

Max Willens (27:27):

Wow.

Marcus Johnson (27:28):

Yep. Anyway, we'll pick a top three too.

Max Willens (27:32):

Do you think that's a requirement or it's an optional activity? To

Marcus Johnson (27:37):

Talk to him?

Max Willens (27:38):

Yeah.

Marcus Johnson (27:39):

Hopefully optional.

Max Willens (27:40):

Hopefully it's optional. Let's hope for those poor people.

Marcus Johnson (27:46):

All right, we are going to pick a top three. Emmy, you're a first to pick. We're going to pick three, our top three, one each, and that'll be our top three big questions for Meta right now. What are you keeping?

Max Willens (27:57):

The question I'm keeping is how is Meta investing in the user experience specifically competing against TikTok, which has much more engaged users.

Marcus Johnson (28:09):

Okay, very good. Max?

Emmy Liederman (28:10):

I'm going to be selfish and pick the question that I had about their business agents. It's something that Meta's super enthusiastic about. They announced recently that the AI was facilitating one million conversations a week between brands and their customers, and that's now up to 10 million a week. So I'm excited to see where that goes.

Marcus Johnson (28:35):

Very nice. I'm going to keep the where should Meta be focusing its AI efforts and can they right the ship in terms of getting Wall Street back on side because it seems like a lot of, well, Google especially obviously came up with their earnings and people were quite happy with how they were doing, even though these vast sums of money, people, it seems like investors seem much more comfortable with where these other companies are spending these AI dollars. Can Meta convince the street that it's spending its AI dollars well? There are top three, big questions for Meta. Lots to choose from, lots going on, but there are top three for you. Thank you so much to my guests for helping me put those together. Thank you first to Emmy.

Max Willens (29:14):

Thank you.

Marcus Johnson (29:15):

And Max.

Emmy Liederman (29:16):

Always a pleasure, Marcus. Thank you.

Marcus Johnson (29:17):

Yes, indeed. Thank you to the production crew who is Lance in this case. Thanks to everyone for listening in to Behind the Numbers EMARKETER podcast. And you can, of course, hang out with Susie, David Canyon, host of the Reimagining Retail Show this Wednesday.

Max Willens (29:29):

And then my last one would be how are you competing for user favorability and specifically against TikTok, which has a more engaged user base?

Marcus Johnson (29:38):

Wait, this is a second one?

Max Willens (29:42):

Third. Third.

Marcus Johnson (29:43):

A third one? No, you're going to pick one.

Max Willens (29:46):

Oh, wait.

Marcus Johnson (29:47):

You don't pick three. It's one each, which makes three.

Max Willens (29:50):

So why didn't you stop me after the New Mexico one?

Marcus Johnson (29:52):

Because I thought they was related. I was like, "Oh, there's more."

Max Willens (29:56):

Okay. I can choose that one. That's fine.

Marcus Johnson (29:58):

Sorry. Sorry. It's my fault. Okay. Yeah, you have to pick one. Max picks one, I pick one, that's the top three. Sorry, not three each. Sorry, so you go. You can start. I'm going to be self- Oh no, wait. Emmy, you need to pick one.

Max Willens (30:14):

Oh, okay. Wait. I know Max said he's going to be selfish. I'm going to choose mine then. Okay. Let's restart.

Marcus Johnson (30:22):

Okay.

Max Willens (30:23):

Okay.

Marcus Johnson (30:24):

Emmy, what are you keeping?