Seedtag applies advanced AI to deliver privacy-first advertising at scale. As the creator of neuro-contextual advertising, Seedtag moves beyond traditional contextual targeting methods such as keywords and categories. Instead, Seedtag understands deeper signals of interest, intent, and emotion to create custom audiences based on a brand’s objectives.

Marcus Johnson (00:00):

Ever seen an ad that just fits perfectly? That Seedtag, their neuro contextual technology combines AI and neuroscience principles to place brands exactly where they belong. It's privacy first advertising that taps into users' interests, emotions, and intentions, making every interaction feel natural and relevant Seedtag, where context becomes intelligence. Hey gang, it's Monday, February 9th, Minda, Max, and listeners, welcome to Behind the Numbers: An EMARKETER video podcast made possible by Seedtag. I'm Marcus. Join me for today. We have two of our social media expert senior analysts living in New York. It's Minda Smiley.

Minda Smiley (00:38):

Hey, Marcus. How are you?

Marcus Johnson (00:40):

Hello there. Very good. Very good. Thank you for joining. We're also joined by Principal Analyst living in Philadelphia, Max Willens.

Max Willens (00:46):

Yo.

Marcus Johnson (00:46):

Hello. Today's fact. Who invented the drive-through? Great question. Red's Giant Hamburg. Not hamburger. It's a diner, so that makes sense, I guess. Along Route 66 in Springfield, Missouri, opened in 1947. It was widely credited with being America's first drive-through restaurant. Who knows though? It could have been somewhere else. Just didn't write it down. The first drive-through restaurant with a two-way speaker was created the year after 1948 by Harry and Esther Snyder at their first In-N-Out Burger in Baldwin Park, California. The world's largest restaurant chain, McDonald's, opened its first drive through in Sierra Vista, Arizona in 1975, according to popular accounts. A nearby location was experiencing declining sales because soldiers at a local army base were required to follow military regulations, AR 670-1, which classified fatigues as dirty work clothing and inappropriate for appearing in civilian spaces. As a result, soldiers wearing their uniforms off base were required to remain in their vehicles, creating the need for a drive-through option. So they used to go off base, but they weren't allowed to get out of their cars. And so McDonald said, "We'll throw a drive-through in there for you."

Minda Smiley (02:14):

Wow. This all just got me thinking, I can't even remember the last time I've been to a drive-through.

Marcus Johnson (02:18):

No.

Minda Smiley (02:19):

I mean, living in New York, I mean, I don't drive, so I don't go to drive-throughs. I don't know.

Marcus Johnson (02:22):

Yeah.

Minda Smiley (02:23):

It's crazy.

Marcus Johnson (02:24):

So a lot of people, according to the National Restaurant Association, 75% of all restaurant traffic is now takeout orders. That's not all drive-through, but even drive-through numbers that I saw were somewhere between the kind of 50, 60%.

Max Willens (02:36):

I'm still struggling with the idea of there being a drive-through without a two-way speaker.

Minda Smiley (02:43):

Yes.

Max Willens (02:43):

Like you just drive to the front and they're like, "You get filet of fish." But I don't want that. "Pay or..." Yeah.

Minda Smiley (02:50):

"That's what I heard. Get out of there."

Max Willens (02:51):

"People behind you are honking. Stop being a dirt bag." We'll have to go back in time and figure that out. I find it so unsatisfying when we don't know who actually invented something.

Marcus Johnson (03:06):

Anyway, today's real topic, the big three questions surrounding Meta. All right. We set the table first. For year 2025, Meta grew revenue, 22%, same as last year, approaching $200 billion in 2025. Q4 revenue was better than 2024 up 24%. So they're the numbers. But in this episode, it's one of our top three things that a company, this is Meta for this one. We've done Netflix already, Google, Amazon, others to come. It's thinking about at the moment, what are some of the top things on their mind? And so we're going to come up with a consensus list. I'll throw something into the ring to start. I have, is AI spending really that big of a problem? So here's my take. It sounds like a lot because it is a lot and it's grown quickly, but I think that's why people maybe have, I don't want to say it's blown out of proportion, but Meta's CapEx spending on AI is expected to be between $115 to $135 billion this year.

(04:15):

It's nearly double what they spent on CapEx last year and about four to five times as much as they spent in 2023. So it's a lot of money is getting bigger very quickly. But Meta is an ad company. And advertising's doing really, really well. Meta made over $60 billion in net income in 2025. They would've made more, but they had a non-cash income tax charge related to, as they said, the One Big Beautiful Bill Act. And so that probably would've been closer to $80 billion. And we have Meta on pace, Max and Minda, to overtake Google just to become the number one seller of digital advertising in America by the end of next year. So I think they're doing okay money-wise. What do you think of this idea that they're spending too much on AI?

Max Willens (05:06):

I tend to align with your opinion on this, Marcus. I feel like, as you say, when you have that kind of operating profit coming in and when you are telling analysts and investors that you are projecting to have even more operating income in 2026 than you had in 2025, then it's kind of hard to argue with the results. The only thing that I would sort of throw out there in favor of the people who are skeptical of this is thinking a lot about the fact that not every bet that Meta has made historically has panned out. So you think about Horizon Worlds, the thing that precipitated them changing their name from Facebook to Meta is now kind of been consigned to something that Meta is trying to get right on mobile in the form of Horizon Worlds. And so you could argue that all this spending, we're not certain that it's going to deliver the same ROI that it's been delivering, but I think that when you post profit numbers like the ones that Meta is posting, it's really hard to be too skeptical of how they've conducted themselves so far.

Marcus Johnson (06:25):

Yeah. That's incredibly fair point. One of the other ones I had here in terms of one of the main things they're thinking about is this pivot away from VR to AR. Meta's Reality Labs unit posting an operating loss of $6 billion while generating less than one billion in Q4 full year. They posted a loss of nearly 20 billion whilst only making just over two. And now ever since late 2020, Reality Labs has lost nearly 80 billion total operating losses. They also recently laid off over a thousand folks who work for the VR related initiatives as they pivot more towards their Ray-Ban Meta Smart Glasses. So yes, I think that's a really good point.

(07:05):

Marissa Jones analyst noting that the FITs do appear to be paying off as well in terms of the AI investments. "Investors are scrutinizing Meta's pricey AR costs," she writes, "but marketers are seeing tangible upside in some automated, efficient and performance-driven ad tools." And maybe investors are changing their opinion a bit here. Meta's stock is up. If you go over the last 12 months, it's up less than 3%. However, Meghan Bobrowsky of the Wall Street Journal pointing out that its shares rose around 8% post-earnings suggesting that investors appear to bless Meta's plan to vastly increase spending in contrast from last year when shareholders responded wearily and pushed for more detail on the company's costly plans. Independent mobile analyst, Eric Seufert also agreeing saying, "I don't think investors care as much about CapEx with Meta now given the consistent traction with their AI optimization tools."

Minda Smiley (07:58):

Yeah. I mean, I think it's interesting because when we talk about AI and Meta, it's like, yeah, clearly their AI investments on the advertising front are working both in terms of just targeting and whatnot, but also engagement and keeping people around longer and fine-tuning the algorithm and whatnot. But I think the bigger issue when people talk about this is that they're often referring to the what's next of it all. It's like, yes, things are going well now, the investments are working, but I think people start to get skeptical when they hear Zuckerberg throw around words like super intelligence. And then it kind of gets into the broader discussions around AI in terms of where is all of this going and what role does Meta really play in all of this realistically? There's certainly a lot of skepticism around, will Meta really pull this off and become this massive AI player that it thinks it can become?

Max Willens (08:51):

Yeah. To me, one of the most pressing questions for them as you move forward thinking a lot about what Minda just said is what's their vision for their agent? So they have gone back to the drawing board more than once when it comes to their approach to AI generally. They mentioned during their most recent earnings call that they've re-architected their LLM and are now pursuing a different vision for how this will work on the consumer facing side. But there's this big question, is this an agent that's designed to help you answer questions? Is it about helping you make friends? Is it about helping you shop? Is it about finding information about what's going on in the world? And I would imagine that they would say "It'll help you with all those things," but the sort of core use case that is going to help drive their business is probably one that they're hoping will stick around one thing.

(09:51):

And my suspicion is that it's going to be oriented around shopping, and that's largely because of how effective they have been for years now at driving and facilitating e-commerce. There are now tons and tons of advertisers that are using their automated systems to drive shopping transactions offline. And that to me feels like a kind of natural step forward. Another-

Marcus Johnson (10:21):

Yeah.

Max Willens (10:22):

Oh, I'm sorry, Go ahead.

Marcus Johnson (10:23):

Really quickly, just on this, I think it's a great point because a lot of the conversation has been around how fast is your AI? And this question of, is Meta behind in the AI race? Is Google out in front and then it's OpenAI, et cetera. And it's focusing on this idea that the fact that they've yet to release a successor to Llama 4, that the release last spring, the release fell a bit flat, a new model expected in the first half of the year. But the real question, Max, to what you're saying is, what's it going to do for people? How's it going to help? And I think that's a really important one. Sorry, Max, you were saying.

Max Willens (10:56):

Well, no, I was just going to sort of pivot toward another big question that I feel like I had for them, which is basically oriented around ad load and ad performance. So one of the sort of defining balancing acts that Meta has had to perform for the last little while has been balancing between engagement and monetization around Reels. So they famously launched Reels as this ripoff of the video experience that you get on TikTok, and they took their, as they often do, took their time introducing monetization. And similarly, as they rolled out Advantage+, which is their automated shopping suite, one of the introductory facets of that was their reliance on what I would call low-hanging fruit, so people that have been proven to be really heavy shoppers on Instagram and Facebook, people that have maybe already bought products from a company being targeted again. But it seems from looking at comments made by Susan Li and Mark Zuckerberg and just their general performance in light of some changes that they've made to the way their ad product works, it does seem like they've managed to move past the low-hanging fruit.

(12:17):

And to me, that's a really, really interesting thing to monitor closely. So if what that Meta says is true about their ability to do sequencing at a higher level has panned out, then that's, I think, a really profound thing. And I guess has Meta really cracked the code on driving incremental conversions with their ads versus just relying on low-hanging fruit? That's a mouthful, but do we like that as a potential entry in this episode? What do you think, Minda?

Minda Smiley (12:57):

I think so. Yeah. I think it's definitely a fair point. Yeah. I think Meta clearly is incredibly sophisticated compared to even a lot of its peers in this space, but I still think it's a question worth posing.

Max Willens (13:14):

Yeah. So I guess the best way to think about this is that once upon a time, the way that these systems might've worked, if you are looking around on Instagram and you buy a ski jacket, the thing that you might see the next time you open up Instagram is more ads for more ski jackets. And you would go like, "Okay. Yes, congratulations. You have noticed this is an area of interest, but I already have a ski jacket." But the way that they have rearchitected their systems is to understand consumer journey and context. What they've been saying now for a while is that what you are likely to have happen if you have bought that ski jacket is the next ad you see is going to be for ski gloves or for ski poles or for a discount on hotel rooms to a ski chalet in Colorado.

(14:12):

And that kind of greater window of context than understanding potentially has a huge implication for the efficiency of the ads that they serve you and the amount of conversion that they can drive. And again, based on the comments that their CFO, Susan Li, has made and some other stuff, it does seem like that's started to work. And if that turns out to be true, then that potentially has huge implications for their ad business because instead of having to drive at these very ambitious revenue growth targets that they have laid out by cramming more ad inventory into our user experiences, that potentially opens them up to some risk of people going, "Every time I open up Instagram, all I see is ads," and them getting annoyed and engaging with the platform less. But if they're able to drive this growth while keeping ad load pretty close to what it is, that's a huge, huge advantage for them, both in terms of their own growth prospects and just their ability to stay ahead of their competitors as we move forward.

Marcus Johnson (15:19):

Yeah. I mean, as we said, we expect them to overtake Google, so they're doing really well, but they're held to their own standard. They're held to a completely different standard. And so I think your point's well taken because even if they're doing really, really, really well compared to everybody else, that's not how the market's measuring them.

Minda Smiley (15:36):

Yeah. Well, I can come in and totally change the subject.

Marcus Johnson (15:39):

Please, what do you have for us? Yeah. What else do you think is on their mind?

Minda Smiley (15:43):

Well, I have a lot of questions I think Meta, and really a lot of the social networks are facing this year. But one thing I'm super curious to get both of your perspectives on is, should Meta be putting this much stock into smart glasses? I mean, I certainly have my own opinions on this area that I've talked about on the pod before, but what do you guys think as we start the year? Is this finally the year where they really start to see real momentum?

Max Willens (16:08):

I love this question. Like you, I'm sort of dubious about the mainstream upside of these technologies. Although I will say what's interesting to me is this is no longer something that just a handful of companies are bullish on. Right before I left CES, I decided to take a stroll across the convention center floor just to see what was on offer. And I was really struck by just how many brands, some of which were familiar to me, a lot of which were not, were showing off smart glasses of some form or fashion. And I think that, as I said before, I still kind of don't understand or see the value, the mainstream consumer value of having a computer that you wear on your face, but at least not in a consumer context. Not to repeat myself too much, but I do think that it's possible that they turn into a kind of workplace technology whose use is sort of enforced by management.

(17:18):

But as far as having something on your face that gives you Yelp information or translates something in real time, to me, that's not worth several hundred extra dollars of spending and having to plug my glasses in when I go home every night. It just doesn't make a lot of sense.

Marcus Johnson (17:35):

If you ask consumers, they'll probably say, "No, I don't need them." But no one asked consumers whether they wanted a lot of technology. It was the tech companies that said, "We're going to design this thing and we're going to tell you why you want it." And so I would argue from the consumer side, no, but I'd argue from a tech side, yes, because so many tech companies continue to remain so interesting. I mean, Snap have been multiple pairs of spectacles. Amazon, Max, to what you were just saying, last year released glasses for its drivers to help them with their jobs, their delivery drivers, so that they could track packages quicker and give them turn by turn navigation as they're going around dropping things off. So there's a use case for them. Google apparently releasing another pair of glasses that they had some obviously way back when, 10, 20, how many years ago, and now it's reportedly going to be put out, their own pair.

(18:27):

So I think if I had to buy another pair and they looked quite clunky, no. If you said that you could put smart technology in my existing pair of glasses, maybe.

Minda Smiley (18:37):

I also think when we're talking about Meta specifically, I think they have some branding issues going on and to what extent that actually matters for broader adoption, I don't know how much I can speak to that right now, but I think because of everything with the Metaverse and how that just was such a swing and a miss, it's almost weird hearing Zuckerberg now put so much stock into smart classes because I feel like it's like, well, you said a lot of this stuff about the Metaverse and we saw how that went. I was even kind of laughing. He said something on the most recent earnings call, it's hard to imagine a future without smart glasses or something. And I don't know, this is maybe a weird analogy, but it just reminded me of when couples go on Instagram and talk about how happy everything is, then you're immediately like, "Oh, they're going to break up soon. Why are they trying to prove to us they're so happy?"

(19:22):

It feels like this thing, it's like the more he talks about this is inevitable. And the more you're sort of like, if you need to say it, it makes me more skeptical. I don't know.

Marcus Johnson (19:33):

But to your point about branding, I think that's a huge part of this because when they paired up with Ray-Bans, that's when I started taking them seriously. And so I wonder how much of this will be Meta eventually saying, "It's going to be Ray-Ban's smart glasses powered by Meta."

Minda Smiley (19:47):

Yes. Yeah. Good point. How much do they even want the Meta name involved? How much did they even want him talking about this publicly? So it's a good question.

Max Willens (19:54):

Yeah. They absolutely were renting Ray-Ban's kind of credibility or brand cache by doing the partnership. But I think to your point too about the kind of brand challenges, Minda, that they absolutely have not solved for one of the things that nuked Google Glass 10 years ago too. There's already been a kind of steady flurry of stories about people using Meta Ray-Bans to film women surreptitiously without their consent, about using them to create clandestine pornography by going into massage parlors and trying to coerce people into doing stuff that's illegal in spaces like that. And Meta's spokespeople whenever they're reached for comment for these stories is always saying, "This is an abhorrent use of our technology. We don't condone this, but it doesn't really matter that much."

Marcus Johnson (20:52):

On that note, in terms of the brand of Meta and social media at large, I want to take us to another point that I had here, which is in 2026, will this be Meta's big tobacco moment? There are a few articles referring, referencing to big tobacco as the moment when people turn on tobacco companies. Stephen Desaulniers and Jonathan Vanian of CNBC noting that Meta's several high profile legal cases kicking off in 2026 centered around allegations of the company and other tech giants misled the public about the safety of their apps, despite knowing that certain design choices contributed to various harms on young users. There's an LA case that's about to kick off a separate trial in Santa Fe, New Mexico, another in Northern District of California, another in New York City, et cetera, et cetera. And so how much do we think that this could be a big part of what is at top of Meta's mind in 2026 or right now, I should say?

Minda Smiley (21:46):

We've definitely had a turning point. I would say we're in a moment where between, there's all these trials that social media companies are facing around to what extent claims that they've harmed young users, addicted harm users. We're seeing regulation at the state level and the federal level. Classroom cell phone bans have really taken off very quickly. I mean, yeah, there's no doubting that we're in a moment that people are really wanting to hold these platforms accountable. To what extent that is working, I think is a different question.

Marcus Johnson (22:16):

Yeah. Classroom-

Max Willens (22:17):

I-

Marcus Johnson (22:17):

Oh, sorry. I was going to say, classroom cell phone bans. Also, Minda, we spoke about this. Max, I'm not sure if you were on the episode, but Meta also reckoning with increasing calls for social media bans for kids under 16, Australia being the first country to enact such a ban.

Max Willens (22:31):

Yeah. I think that it's going to be really, really interesting to see how all of this trickles down to the ... Or not trickles down, but sort of adds up in terms of the court of public opinion. But I think that it's definitely notable that in their sort of 2026 outlook, I feel like we've talked a lot about this conference call that Meta did already, but Susan Li did point to the fact that they are facing a lot of litigation this year and it may materially affect their bottom line. And that's partly them just doing what they have to do in a setting like that in terms of acknowledging that, but it's nothing that she had to make that disclosure on that kind of quarterly call.

(23:17):

And I personally think that it's going to be really interesting to see how this shakes out and whether also too, this kind of change will wind up being permanent. I mean, I think about this all the time in the context of the NFL. So you think back about 15 years when CTE first became a thing that the public became broadly aware of, and speaking purely from my own personal experience, that fundamentally changed the way that I physically and emotionally processed watching football. It went from being like watching a wide receiver run over the middle and get run over by a safety. And understanding what CTE was changed from being like, "Oh, that was awesome," to being like, "Oh my God, I hope he's okay." And it seemed for a while, that kind of experience was widespread enough that we were entering some kind of moment of existential peril for the NFL.

(24:18):

Fast-forward 10 years, the NFL is probably more culturally essential than it's ever been in its history, and there seems like there's zero in its way to keep that from remaining the case. And so I think that social media is quite different for lots of reasons, but it is also, I think, useful to remember that even when something comes up and enters the public consciousness that seems like, again, like an existential threat to something like social media, it's entirely possible that 10 years from now, people will go like, "Yeah. Remember when people worried that short form video made children anti-social and able to read and focus?" Who cares? It's really important to ask the question of what happens when the entire, as you pointed out in your preamble, literally the entire world is fixated on this. It's not just a bunch of cranky, crunchy moms in California. It's Australia, it's France, it's Denmark, it's the United States, it's Canada, like all of-

Marcus Johnson (25:24):

India, Indonesia, Malaysia, yeah.

Max Willens (25:26):

That's exactly right. And so that is a different kind of circumstance and scrutiny. And it seems impossible that it's not going to change something, but we just don't know what that changes.

Minda Smiley (25:39):

Exactly.

Marcus Johnson (25:39):

I love the analogy, Max, as well, because this did happen a long time ago, this attention to concussion, and then Superbowl's never been more popular in terms of the numbers and how much people pay attention to it and to the NFL as well. If this is Meta's big tobacco moment, folks certainly still love to smoke social media, to put it for lack of a better phrase, because in 2025, they said that they added 230 million new people. 230 million new people started using one of its family of apps, Facebook, Instagram, WhatsApp, or Facebook Messenger. That's the size of Nigeria, which is the fifth-biggest country in the world, and they just added that many people. So that may be more ...

(26:24):

I mean, with smoking, talking about big tobacco, there are still over a billion people who smoke today in the world. And so just because things may be calming down in one area of the planet, maybe they're not calming down so much in another. So I think that's a really good one. The only other one I had was Meta just getting the green light to go on a spending spree. So what do I mean by this? New York Times pointing out that Meta's AI spending spree continued last month when it bought Manus, an AI startup based in Singapore for $2 billion right after a federal judge ruled in November that Meta did not violate US antitrust law by buying WhatsApp and Instagram a decade ago.

(26:59):

In the US, the FTC is going to appeal the loss. But for now, it could be a green light for them to say we want ... I mean, they already bought scale for about $14 billion last year to take Alexandr Wang and place them as the chief of AI for Meta. So maybe there's more deals to be done here because they won the case. But apart from that, I don't know if that makes the list, but the list we have is what's the vision for their agent? Is AI spending actually a problem? Has Meta really cracked the code on driving conversions with their ads? The pivot away from VR towards AR. And is 2026 Meta's big tobacco moment? Minda, what do you think we should get rid of or keep? What should be the top three?

Minda Smiley (27:48):

I'm going to keep the big tobacco question in there for sure.

Marcus Johnson (27:52):

Okay.

Minda Smiley (27:52):

I think it's just an interesting discussion, I think, and I don't think it's going anywhere anytime soon.

Marcus Johnson (27:57):

Okay. Max?

Minda Smiley (27:57):

So that's the one I'll choose to keep.

Marcus Johnson (28:00):

What do you want to keep, Max?

Max Willens (28:02):

I like the question about what its vision for its AI is. We can't have a podcast episode in 2026 without talking about AI, so I choose that one.

Marcus Johnson (28:14):

All right, nice. I'm going to hang on to, is AI spending actually a problem just because their earnings just came out Q4 and it was a big topic there. So I really like your one about Meta cracking the code on driving conversions, but I think that could spread out throughout the year. And then my pivot from VR to AR is that they've been doing that for a while. We're just seeing maybe even more of a pivot. So top three we have for Meta questions at the moment in no particular order is 2026 Meta's big tobacco moment. What's the vision for their agent and is AI spending actually a problem? It's a great list to me. That's what we've got time for for today's episode. Thank you so much to my guests. Thank you to Minda.

Minda Smiley (28:52):

Yeah. Thank you.

Marcus Johnson (28:53):

And to Max.

Max Willens (28:54):

Always a pleasure, Marcus. Thank you.

Marcus Johnson (28:55):

Yes, indeed. Thanks to the whole production crew, Lance and maybe Danny working on this one. Who knows? Lazy. And everyone listening, thank you so much listening into Behind the Numbers: An EMARKETER video podcast made possible by Seedtag. Suzy will have the re-imagining retail show for you Wednesday talking all about the social commerce trends you need to know in 2026.