Meta's AI Bet: Winning Over 250 Million Small Merchants

Opening

Reader, on March 25th, Mark Zuckerberg sent out a company-wide announcement. He was launching a new company-wide initiative called “Meta Small Business.” He told product managers, designers, and engineers alike: “If you want to work on this, reach out.” Just from that, you can tell this isn’t a small effort.

But there’s one line in Zuckerberg’s internal memo that stands out. In the middle of talking about supporting small businesses, he suddenly drops the word superintelligence. When “small business” and “superintelligence” show up in the same sentence, it tells you Meta isn’t treating this as just another small-business support program. Today I want to walk through both the surface and the substance of this initiative.

Why Meta Is Going All In on Small Business

Let’s start with the numbers. Meta’s 2025 annual revenue was roughly $201 billion (~₩280 trillion). Of that, advertising accounts for 97%.¹​ And globally, more than 250 million small businesses use Facebook, Instagram, and WhatsApp. That figure comes directly from Meta itself. I recently met a subscriber of this newsletter — a friend, actually — who told me I cover too much negative stuff about Meta, which honestly surprised me. I’m a Meta shareholder and, if anything, one of the more bullish people on its outlook.

The things I’ve covered before — Meta’s almost unsettlingly precise ad targeting, its aggressive AI investment — might rub consumers the wrong way, but for advertisers and business owners, they’re genuinely compelling. Here’s where it gets interesting: according to GroupM’s analysis, about 55% of Meta’s ad revenue comes from large advertisers in sectors like tech, retail, and finance. Small businesses vastly outnumber them, but because each one spends so little individually, their overall contribution to revenue is smaller. In short: a huge headcount, but thin wallets.

The core goal of Meta Small Business is to close that gap with AI — to raise ARPU (average revenue per user)²​ for each individual small business’s ad spend. Up to now, the reason small businesses haven’t fully utilized Meta’s ads is simple: creating ad creative, setting targeting, and optimizing budget — doing all three alone is hard. If AI automates these three steps, the barrier to entry drops dramatically.

Meta already runs an AI ad automation tool called Advantage+. As of 2024, more than 4 million advertisers had used it, and Meta’s internal data shows AI-driven campaigns saw an average 22% improvement in ROAS (return on ad spend). By the end of 2026, Meta’s roadmap calls for a system where a merchant just uploads one image and sets a budget, and AI handles everything else — creative production, targeting, and optimization — automatically.