Meta Rules Everything Around Me

Everyone is aware that Facebook (or Meta or whatever) is an absolute juggernaut. But I’ve witnessed their dominance up close from both a consumer and advertiser perspective and their $1.3T market cap may not even do it justice.

Despite that, people love to doubt them. You might hear…

• Facebook is just for parents and grandparents now.

• Instagram has lost a step to TikTok.

• Their investment in the metaverse was a total shitshow.

And I’m here to tell you, absolutely none of that matters.

To anyone who’s ever been on a growth or marketing team, this thesis comes as no surprise. But most people have only ever engaged with Meta as a consumer, so let me break it all down for you…

Back in 2017 I joined Morning Brew as the 2nd employee and essentially ran product, engineering, and growth. One of my primary responsibilities was to grow the newsletter as quickly and efficiently as possible, optimizing for the highest quality readers.

Over time I began managing a sizable growth budget — roughly half a million dollars each month.

That budget was mostly split amongst the usual suspects: Facebook, Instagram, Google, YouTube, Display. The previous sentence is probably true for almost every company you’ve ever come across.

We also tried a bunch of experimental channels — basically just smaller test budgets to throw some shit at the wall and see if anything stuck. This ranged from Reddit, Pinterest, and podcasts to sponsoring tablets in NYC taxis, WiFi access in the NYC subway, and a bunch of other ridiculous things. None of them were a breakout success, but I think part of being good at growth is being open-minded and looking for alpha where other companies aren’t (also see above: 23 years old spending a lot of money).

Regardless, no matter what we tried, Facebook and Instagram routinely…

• Performed the best overall

• Had the best targeting

• Provided the best ad tools

• Yielded the most quality readers

I would wake up each morning and beg my boss, Austin, to let me spend more money on Facebook ads. I’d go as far to say that being able to effectively convince him to let me spend more money with them was one of the most important parts of my job.

Let that sink in for a moment.

Ultimately, Facebook is just another business who needs customers (advertisers) to generate revenue. And here I am begging my boss to give them more and more money.

I was just an addict waiting for my next fix from the Facebook machine. My job depended on it. And I wasn’t alone, the entire world is made up of companies whose marketers are equally as dependent.

To dumb it down even further: most companies either sell to consumers or to businesses.

• Consumer businesses are difficult because you need to reach your target customer at precisely the right time, and then convince them to open up their wallet and spend their hard earned money on your product or service.

• Meanwhile selling to businesses means the ultimate decision maker is usually spending company funds, not their own. And it’s a whole lot easier to spend money when it’s not yours.

Facebook sells advertising to businesses, and they’re damn good at it. And when you can help hundreds of thousands of businesses efficiently find customers… the results speak for themselves.

That’s sort of how the entire startup industry works. An oversimplification…

• Company needs more customers

• Company raises millions of dollars

• Company spends millions of dollars on Facebook and Google to get more customers

• Company grows and raises more money at a higher valuation

• Repeat

And Facebook and Google are there reaping the benefits and making loads of cash all the way up. Chamath famously penned in a letter back in 2018 and claimed that “startups spend almost 40 cents of every VC dollar on Google, Facebook, and Amazon.”

Some people have refuted that metric, but recent studies show that Meta and Google still account for nearly 65% of digital ad spend. At beehiiv, that mostly holds true.

But we’re still so early…

I’ve never been a big watch guy. I used to think it was pretty silly to spend such a large sum of money on a status symbol that told you the time. A lot of my friends love watches… just wasn’t for me.

But more recently, I’d find myself at nice dinners or giving a presentation at some conference. I don’t know, I think I dress decently well. But the final touch to my outfit was an oversized Apple Watch Ultra. You know, just in case I wanted to track my heart rate when the steak frites came out.

So about a month ago I reached out to a friend who loves watches and he sent me a few pieces via Instagram DMs. I’d click through, browse around, read the comments, etc. I’m not really one to like these random posts or to follow the accounts… just a passive user. But Meta picked up on the signals nonetheless.

Here’s my Discover page today.

But it’s not just my Discover page, almost every other ad that I receive is watch related. Here’s one of the 10 Bezel ads I receive each day:

I can’t say for certain, but I am almost positive I had never once received an ad from Bezel prior to my Instagram being taken over by watches a few weeks ago. Now I can’t escape them.

But how fucking incredible is that for Bezel? They didn’t waste a dollar of their budget targeting me, until the moment I showed the slightest level of intent. Now the Meta machine is just doing what the Meta machine does.

Obviously Bezel has no idea who I am, but they don’t need to. Their growth team tells Meta who their target customer is and adds some budget… then Meta takes the wheel.

For comparison sake, imagine spending $100,000 for a billboard in SoHo:

• You have almost no control over the audience.

• You can’t accurately measure impressions or conversions.

• You’re reaching a ton of people who aren’t actually in your target audience.

• The ad is out of context with no recent history of intent.

• There’s little to no attribution possible.

Sure the SoHo billboard example is more brand awareness top of funnel, and the Instagram ads are more direct response… but startups need to be extremely deliberate with the efficiency of their ad spend. It’s hard to argue that anyone can do it better than Meta.

And it turns out, due to their heavy investment into AI over the past several years, no one can do it better than Meta. Some tidbits from their latest company earnings:

• Each Meta employee, on average, accounted for more than $1 million in revenue in the first half of 2024, a company record.

• Meta built a suite of new AI-driven ad tools called Advantage+, which almost all of Meta’s millions of advertising clients are using.

• A Meta-commissioned study of over 1 million U.S. advertisers, presented to clients in June, found that one dollar of investment per advertiser will now generate $3.71 in return for that advertisers' business, a 12% increase since 2022.

Without getting too into the weeds — Apple launched App Tracking Transparency (ATT) back in 2021, which hurt Facebook’s ability to track conversions (and thus the attribution and performance of their ads). In response, Facebook built probabilistic models leveraging AI and dumped tens of billions of dollars into massive fleets of GPUs.

The result: Not only does Meta have the most sophisticated targeting and most performant ad network in the industry… but it also has an estimated $35B moat of AI chips. Which means, just about no one will be able to compete with Meta on performance.

But sure, there are other social platforms you could leverage as an advertiser. Maybe X is a good option?

Oh, it turns out they’re actually suing advertisers because you can’t differentiate a 20 year old male from a banana with their targeting tools.

And while Google may currently have a larger ad network, AI is threatening their dominance in search and may potentially disrupt the need for search as we know it altogether.

So it turns out Meta isn’t going anywhere.

And if you have a dope watch, feel free to reply and show me (I know you want to).

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Some of my favorite content I found on the internet this week…

• I’ll be in San Francisco speaking at an event with Eric Ries, the author of The Lean Startup, on September 12th. Reserved a few spaces for BDE readers (RSVP)

• A deep dive into how Jensen Huang runs NVIDIA (Twitter)

• Speaking of founder mode, new essay dropped over the weekend (Paul Graham)

• How we ship so many features at beehiiv (Big Desk Energy)

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