The Key to LLM Monetization Is Ad Targeting

Google and Meta are boosting digital ad revenue by attaching generative AI to ad creation, targeting, bidding, and performance measurement.

• DribbleUp ran ads using only Facebook's AI tools, after which revenue outpaced marketing spend, and its Facebook spending also increased.
• AI-related ad revenue jumped from $1 billion in 2022 to $35 billion last year, and $56 billion is expected this year.
• Google's quarterly ad revenue reached $77 billion (+16%), while Meta's reached $56.3 billion (+33%).
• The two companies plan to invest over $175 billion and over $115 billion, respectively, in data centers and AI infrastructure.

Targeting methods have also changed. In the past, advertisers directly specified age and region, but now platforms use AI to recommend candidate customers. L'Oréal applied Google's tools across 800 campaigns, 30 brands, and 23 countries, and said it contributed to improved sales for NYX Professional Makeup.

Gemini better interprets search queries and ad creative to serve more relevant ads, reducing inappropriate ads by 40%. Meta has increased Facebook time spent by double digits and used automatic dubbing to expand Instagram videos into other languages.

responsive search tests and selects ad copy in real time, and Loop has expanded into international markets through AI translation and overseas keyword execution. Monks reported that clients cut campaign costs by 30% and content costs by up to 65%. In exchange, ads have become more personalized and more opaque, while advertisers' control has been diminishing.