History is on the side of the ad industry
I’ll start with the AI ad problem. At this point in GPT-4’s development, it seems like training data is what will differentiate one large language model (LLM) from another. So, if you have unique sources of data like Tweets or customer reviews, you might receive unique responses from the AI model. One possible future is that these LLMs could be built into the backend of many of our tech services. This outcome could hurt ad models in the long term. In theory, fewer eyeballs at Google means less ad revenue.
While it’s hard to imagine today what AI-powered ads will eventually look like, I believe advertisers will find a way into the AI ad funnel. Simply put, I don’t believe AI will kill advertising. Consumers want free services, and ads are the best way to support those products.
Over the past hundred years, incumbent advertising structures have evolved to work with new tech-enabled paradigms. When radio came out, advertisements built on print shifted to live read spots. When TV launched, the live read spots migrated and were quickly replaced by the 30-second ad format, bringing in an entertainment component to the ad experience. When the internet grew, display ads, search, and the 10-second video ad formats took off. Mobile introduced native ads through social feeds.
Now we’re entering the age of AI powered search and discovery and a new ad model paradigm will emerge over the next decade. Like the past century, economic forces will once again play a central role in paving the way for advertisers to enter the funnel when we’re interacting with a chatbot.