This post was originally published on this site.
Also, the secret ad network move that could be killer
Since the pandemic, e-commerce has been surging, and retail media has exploded – as people’s shopping habits have seemed to undergo a permanent shift.
Just a few years later, is the entire retail category, along with its RM cousin, about to be completely upended again?
Just in the past few weeks:
-
OpenAI announced plans to finally start introducing ads into ChatGPT
-
Google announced a partnership to incorporate Walmart into ChatGPT competitor, Google Gemini
These two moves come on the heels of Amazon, Walmart and others incorporating some version of AI-powered chat into their shopping experiences, along with lots of noise about agents shopping for us.
To be sure, this is still all very theoretical. Will ChatGPT ads work as well as search ads? What role will RM ads play, or not play? How will Google make Walmart, and every other potential shopping partners happy?
What do consumers actually want? I personally have major doubts about agentic shopping. I’m less certain that ads will be completely welcome in chat interfaces, where people are seeking ‘answers,’ not lists of choices (like in search). It’s not a layup that OpenAI will just turn on ads and be the next Facebook or Google.
I’m also not sure how Gemini and others will incorporate retailers, while maintaining perceived objectivity. How many Walmart-like deals can a Gemini have before it becomes a mess, for example.
To help break it all down, I chatted with Kiri Masters, host of Retail Media Breakfast Club, on the Next in Media podcast this week.
Masters founded and sold the eCommerce specialty agency Bobsled Marketing, has become a leading voice in the sector. She managed to challenge several of my assumptions, while providing an unvarnished take on where things might be headed.
On how AI Chat ads might actually work, and how they’d be different than standard internet fare:
“It all depends what these ads actually look like, right? As to whether people will engage with [these ads], if they will still feel like their AI assistant is a trusted collaborator rather than some sleazy salesperson trying to pitch things to them. I am personally am very optimistic.”
As Masters noted, for certain power users, their chat interface of choice might ‘know’ them better than even some of the highly intelligent social platforms. So the ad promise could represent a combination of strong intent (search) and a deep knowledge of what a person likes (social).
“All of the contacts that these LLMs have [with consumers], we’re sharing not just our requests for recipe ideas, but we’re sharing our hopes, dreams, fears, marital counseling questions. So I think that ads in LLMs have the potential to actually be really cool. And the big question is if they sort of take that direction and run with it, vesus just trying to sort of copy what has been done on other platforms.”
Ok, so what about shopping, and shopping-related advertising? Could that serious dent retail media’s footprint, as I’ve been wondering recently?
“This is the question, if AI-enabled commerce becomes one of these surfaces that people are using for transactions or very close to transaction behavior – I like to say brands are fair weather friends. They will just take whatever budget they have that’s not working as well somewhere else and they’ll move it right over. There is absolutely no loyalty that they have.”
That of course, assumes that AI shopping works well, and actually makes like easier for consumers. Which is TBD right now.
“I was just trying to do my grocery shopping last night on ChatGPT with Instacart. It was okay. It was an okay experience. There wasn’t anything really about it that was better than going to Instacart’s app. If anything, it was a little bit more tedious.”
What about deals like the Walmart one? How do Google or OpenAI balance making partners happy, and servicing consumers? Could these companies actually be making a play to take on Amazon in eCommerce?
“[When you talk to retailers], a line that they are not prepared to cross is, giving up being the merchant of record with. So they’re interested in [AI chat] being a new surface that shoppers use to engage with their assortment or even have an agent handle part of that transaction. There’s lots of different iterations, but what, they all, all said about the limitations is they want to be the merchant of record. They want to handle the returns, handle the customer service, handle the warranties, etc.”
Otherwise, what is the, what is the value being a retailer? Plus, as Masters pointed out to me, what makes Amazon Amazon isn’t just being the default shopping vehicle online, it’s the company’s ability to deliver – literally and figuratively. Do these AI giants really want to get into warehousing, logistics, etc.?
Getting back to ads, here’s an interesting Masters prediction/speculative idea. Could OpenAI, Gemini, etc. take their potential shopping data and use it for ad targeting all over the internet, as many retailers are trying now?
“I see that as being, as creating a big risk for retailers’ off-site media networks, because now another party has that transaction data and they have that intent data and the pre-purchase activity data.” That said, OpenAI has said it would never ‘sell’ people’s data. The company also said it had no interest in ads.
Check out the full conversation here.