We expect it will give us greater fungibility in the way that we plan for CPU and GPU capacity. So we expect that we’ll be realizing the cost benefits and efficiencies and the planning flexibility that the architecture gives us in the years to come.
Operator: And your next question comes from the line of Mark Shmulik with Bernstein.
Mark Shmulik: Yes. Hi, thanks for taking the questions. The first is, this month, you started to roll out some of those first kind of gen AI tools for ad creative. I’d love to hear a little bit about kind of how that’s going. Are advertisers using this? And really, is it creating better ads on their behalf? And then secondly, as we kind of look ahead here to the fourth quarter, there’s certainly been a lot of unfortunate geopolitical kind of activity around the globe. Would love to just understand some color on how that affects kind of Meta’s ad business. Thank you.
Susan Li: Hi, thanks, Mark. I can take both of those. So your first question was around gen AI tools, especially for advertisers and you’ll see that we have been increasingly testing these in our AI sandbox. And then as they become more mature, we incorporate them into our ads manager directly. We’ve incorporated them into some of our Advantage+ solutions. A few that I would highlight that we’re rolling out this quarter are text variations, so generating multiple versions of ad text based on an advertiser’s original copy that helps highlight the selling points of their products and services, giving them multiple text options to better reach their audience. Another one is image expansion, which helps adjust creative assets to fit different aspect ratios across multiple services like Feed or Reels.
That allows advertisers to spend less time themselves trying to repurpose their creative assets in these different formats. Another one is background generation, creating multiple backgrounds to complement the advertisers’ product images, allowing advertisers to tailor their creative assets for different audiences. And we’re making this available actually through Advantage+ catalog ads. And so we really feel like we’ve introduced quite a lot of new ads products and features. You asked about the gen AI one specifically. So those are the ones I highlighted. We’ve actually introduced a number of others that are related to other dimensions of the ad creation experience that we expect will help improve our advertising performance, will help advertisers drive sales, especially over the holidays and especially in the Advantage+ shopping suite.
So we’re very excited about all of those upcoming launches, and we think that the early advertiser feedback has been very positive. Your second question was on looking ahead in Q4 and the impact of some of the geopolitical activity that we’ve seen around the world and how that might be affecting our business. So first, I think I should start by saying that our thoughts are with everyone who has been impacted by the horrific violence in the Middle East, and we know that our services can be a vital tool for information and connection and expression at a moment like this. And we’re continuing to monitor the situation and are doing everything we can to keep people safe and to keep our services secure. Now in terms of how this translates into impact on the Q4 business, first of all, I should say that coming into Q4, we’ve been seeing continued strong advertiser demand in key segments, including online commerce and gaming.
But having said that, we are also seeing more volatility at the start of the quarter. That’s in part why we widened our guidance range to capture that uncertainty. And so for instance, while we don’t have material direct revenue exposure to Israel and the Middle East, we have observed softer ad spend in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook. It’s hard for us to attribute demand softness directly to any specific geopolitical event. Historically, we have seen broader demand softness follow other regional conflicts in the past such as in the Ukraine war. So this is something that we’re continuing to monitor. We’ve reflected the latest trends and advertiser reaction that we’ve seen into our Q4 outlook, which again, we think, reflects the greater uncertainty and volatility in the landscape ahead.
I want to add here, too, that we are pleased with the fundamentals of the business and with our execution. We’ve seen promising engagement trends. We’re continuing to drive ad performance improvements. We’re executing well on our company priorities. So we’ll continue to stay focused in those areas, and we’ll also remain disciplined with our investment approach as we navigate a volatile environment.
Operator: Your next question comes from the line of Doug Anmuth with JPMorgan.
Doug Anmuth: Thanks for taking the questions. One for Mark and one for Susan. Mark, I was hoping you could talk more about the gen AI-driven vertical chatbots and Meta AI assistant rolled out of Connect a few weeks ago. How do you think about the potential for these products to improve both engagement and monetization over time? And then Susan, I know it’s early but I was hoping you could talk a little bit qualitatively about some of the puts and takes to 2024 revenue growth. And then in particular, whether you’d expect revenue to grow faster than expenses off a normalized revenue base backing out restructuring? Thanks.
Mark Zuckerberg: Sure. I could talk about some of the AI launches first. We launched Meta AI, which is sort of an AI assistant that you can ask different questions and get access to real-time information as well as generating images. And we also launched the first version of AI Studio with several initial AI characters that you can interact with. And part of the idea here is that we think that having a basic assistant is really important, but we think that people are going to — there are going to be lots of different AIs that people interact with. We think ultimately, most creators are going to want one to help grow and engage their community. We think most businesses are going to want one to help support their customers and help drive commerce.
So we think that there are going to be a lot of different AIs. In terms of engagement, the first order effect is, I think at scale, I think that this is going to be one of the ways that people use our messaging apps and communicate with, and you’re going to talk to people and you’ll talk to AIs. What the mix of that is, I think, will kind of shift over time and I don’t think anyone can really predict that. But this is a new use case that doesn’t take away from people interacting with people. If anything, it should — we’re designing these to make it so that they can help facilitate and encourage interactions between people and make things more fun by making it so you can drop in some of these AIs into group chats and things like that just to make the experiences more engaging.
So this should be incremental and create additional engagement. The AIs also have profiles in Instagram and Facebook and can produce content, and over time, going to be able to interact with each other. And I think that’s going to be an interesting dynamic and an interesting, almost a new kind of medium and art form. So I think that will be an interesting vector for increasing engagement and entertainment as well. So I’m excited about that. Of course, whenever there’s more engagement in the apps, that creates the opportunity for more monetization, so there’s that on the monetization side. And then the other big opportunity on monetization, which I talked about upfront is just business messaging. One of the big things that I think is a key unlock for making the business messaging — for making that business model work around the globe is effectively making it so that businesses in countries where there’s a higher cost of labor can have an AI that can respond to messages from people so that way, it’s not cost prohibitive for them to engage in that type of interaction with customers.
